AFTER AMERICA, China is the world’s largest developer of new medicines and its companies ran about a third of the planet’s clinical trials last year. That is up from just 5% a decade before (see chart 1). It is also rising to the forefront in critical areas of research, such as those relating to cancer. Investors have taken note. Shares in Chinese biotech companies have surged by 110% this year, more than three times as much as their American peers.

Representational image.

For much of the past century drug discovery was dominated by Western firms, the companies collectively often called “big pharma”. No longer. These companies face some of the steepest “patent cliffs” in their history, as drugs expected to generate more than $300bn in total revenue over the next six years will lose their patent protection by 2030. To plug the gap, big American and European firms are…

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