“Did you watch the opening ceremony of the Beijing Olympics?” Sen. Amy Klobuchar (D-Minnesota) asked the mostly medical tech audience at a recent LifeScience Alley symposium on healthcare. “Did you see the 2,000 synchronized drummers?”
I sure did. And like millions of other Americans, I thought: “Oh, crap. We’re in trouble.”
For that spectacle seemed to confirm what many of us already suspected and feared: that China’s rising power soon would eclipse our own. And why not? China recently surpassed Japan as the world’s second-largest economy, now trailing only the United States.
BioLabs Pegasus Park Cultivates Life Science Ecosystem
Gabby Everett, the site director for BioLabs Pegasus Park, offered a tour of the space and shared some examples of why early-stage life science companies should choose North Texas.
It wasn’t the first time Klobuchar invoked the image of those drummers. At an event hosted by Medtronic Inc. (NYSE: MDT) to promote medical device exports, Klobuchar argued that Minnesota and the United States must preserve their edge in high-tech innovation because China and India are producing math and science engineers with PhD. and master’s degrees the same way Henry Ford’s Model Ts roared down the assembly line.
But as Gov. Tim Pawlenty prepares to lead another Minnesota trade mission to China in September, we should take a moment to breathe deeply and relax. When it comes to medical technology, China is nowhere near the point at which a Chinese Medtronic could challenge its American counterpart.
The Chinese may be good at low-cost manufacturing, but they still lack the expertise and skill to develop innovative, breakthrough medical technology and pharmaceuticals. Part of that may have to do with that country’s own developing domestic market. The Chinese are spending billions of dollars in stimulus money on boosting healthcare services, but that country — like India — still values price over innovation.
Right now, the Chinese are interested in simpler diagnostic devices like heart-rate monitors, said Amy Xu, an intellectual property lawyer with Dorsey & Whitney in Minneapolis and a member of the trade mission. And the demand for healthcare products in that country comes from consumers, not hospitals and doctors, Xu said.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Not that the Chinese aren’t trying to narrow the gap in scientific acumen. The country — a major hub for foreign manufacturing plants, and research and development centers — is rushing to build dozens of massive science and technology parks in the mold of Research Triangle Park in North Carolina or University Research Park near the University of Wisconsin in Madison.
And Chinese firms are shopping for Western companies. For example, WuXi PharmaTech Inc. in 2008 paid $162.7 million for biologics maker AppTec Laboratory Services in St. Paul — the largest Chinese acquisition of an American company since Lenovo Group bought IBM Corp.’s personal computers business for $1.75 billion in 2004.
But what about all of those Chinese science and math engineers Klobuchar is worried about?
There’s no doubt there are a lot of them. But quantity doesn’t always equal quality.
According to a little-noticed study by Duke University and published in the Journal of Engineering Education in 2008, Chinese engineering graduates and students lag those in the United States.
“Despite China’s recent surge in engineering graduates, only a fraction of the country’s top institutions have maintained their commitment to the quality of the education they deliver,” the study said.
“We spoke with executives and recruiters from 10 different multinational engineering firms in China,” the paper continued. “During these meetings we were told that the majority of [foreign companies] in China target a listing of about 10 to 15 Chinese universities…. Beyond this list, recruiters stated, the quality of engineering education drops off drastically. Demand for engineers from China’s top-tier universities is high, but the supply is limited, making it difficult for global firms to recruit and retain talent.”
This doesn’t mean the United States should declare victory. While the American higher-education system remains the best in the world, the supply of high-quality math and science students attending those colleges and universities is worrisome, Xu said.
In math, Minnesota’s fourth-graders are statistically tied for first place with those in four other states, and the state’s eighth-graders are second only to counterparts in Massachusetts, according to the 2009 “Nation’s Report Card,” also called the National Assessment of Education Progress.
But the state’s larger-than-average gap persists between the achievement of white students and those of color. And average scores for all students haven’t gone up significantly in recent years, a troubling notion for companies such as Cargill, 3M and Medtronic, which are pumping money into teacher training, trying to improve the skills of their future workforces.
So let’s not give China any more credit than it deserves. We have our own challenges to worry about.
