For nearly a century, Merck, the German scientific and technological giant, has woven its legacy into the fabric of China's healthcare industry. As global uncertainties loom, the company's dedication to the Chinese market remains unshaken. Peter Guenter, CEO of Healthcare at Merck, offers a compelling vision for China's pivotal role in global pharmaceutical innovation, propelled by artificial intelligence (AI).

"The Chinese local pharmaceutical market has developed incredibly over the last 10 to 20 years. The changes are remarkable, with the industry migrating from copying small molecules to innovation," recalls Peter Guenter, whose voice tinged with admiration. Reflecting on his early visits to China, Guenter remembers a time when the local industry was predominantly focused on generic small molecule drugs. Today, the landscape is totally different, transformed by cutting-edge innovation. Technological advancements, especially in areas like antibody-drug conjugates, have catapulted China to the forefront of pharmaceutical progress. Furthermore, China's efforts in upstream innovation, such as target discovery, are gaining significant momentum.

Technological Revolution in Healthcare

Guenter says the technological revolution reshaping the healthcare landscape is akin to the discovery of the human genome. "In the last 5 to 10 years, we have seen the emergence of many new technologies making certain biological targets druggable. We can reach them with medicines that would have been impossible with small or large molecules," he explains. Innovations like mRNA technology, pivotal in developing COVID-19 vaccines, and cell and gene therapies are pushing the boundaries of what's possible, offering more targeted and effective treatments. From reprogramming a patient's own cells to fight cancer to repairing genetic defects, these advancements are opening new frontiers in medicine.

AI and big data analytics are further enhancing drug research, speeding up discovery processes, and improving target identification. Merck is deeply engaged in these areas, leveraging these technologies to bring new treatments to the market more efficiently.

"The sheer volume of data is the secret sauce," Guenter states with conviction. Merck's collaborations with companies like BenevolentAI and Exscientia, which use AI to identify potential drug candidates, exemplify how AI accelerates the discovery process. By analyzing biological targets provided by Merck, these partnerships generate promising drug candidates faster than traditional methods.

Challenges and Opportunities in China

However, Guenter is candid about the challenges that remain. "In the pharmaceutical industry, we work with long innovation cycles. If we don't have predictability of a certain framework and that framework will remain in place for the foreseeable future, we struggle," he says. Incentivization measures, such as tax breaks for R&D, available in many European countries, are crucial for sustaining innovation and are also present in China.

China's significant role in the global pharmaceutical market is undeniable. As the world's second-largest pharmaceutical market, it offers ample opportunities for Merck to introduce its innovations and source local breakthroughs for global distribution. Yet, the high costs of drug development, estimated at a minimum of $2 billion to bring a new medicine to market, necessitate adequate pricing to recoup investments and fund further research. This balance between rewarding innovation and ensuring accessibility under universal healthcare systems is a global challenge, one that China is well-equipped to navigate.

In China for China

Merck's commitment to China is unwavering. "We believe we live in a complex world with a lot of geopolitical tensions. But we do believe in working together," Guenter says. Over the past decade, Merck has invested around 6 billion yuan in China, growing from 22 employees to 4,500. The company's diverse activities in healthcare, electronics, and life sciences reflect its holistic investment strategy. Local collaborations with Chinese biotech firms have been fruitful, and Merck aims to expand these partnerships further.

As China grapples with an aging population and rising incidences of cancer and diabetes, Merck stands as a committed partner, determined to help create, improve, and prolong lives. Guenter's personal resolve shines through in his reflections. "Whether we like it or not, sooner or later, we are all patients ourselves. When I'm in a meeting with many people, and they ask me, 'Peter, why are you in this business?' I ask the audience one question: 'How many of you have a friend or family member who was lost to disease? Please stand up.' And then everybody stands up. I say, 'That's why I'm in this business. It's as simple as that.'"

This deeply personal connection to the mission underscores Merck's commitment. Through fruitful collaborations with local biotech firms and a steadfast focus on innovation, Merck aims to expand its partnerships further, ensuring that its efforts benefit both Chinese patients and patients around the globe. 

"Our commitment to China is clear. We will continue to grow, and we will continue to invest in the country," Guenter says.