by Wang Kai

BEIJING, Jun 26 (China Economic Net) - From AI-assisted high-complexity cardiovascular interventions—where digital algorithms pre-simulate intricate surgical workflows, accurately predict intraoperative risks, and tailor personalized treatment plans to significantly boost procedural efficiency—to AI-powered FFRangio systems that slash measurement time from 20 minutes to just four... As China, the world's second-largest pharmaceutical market, is rapidly transcending its traditional role from a low-cost manufacturing base to a co-developer of cutting-edge therapies and a vital node in global R&D networks, an increasing number of multinational pharmaceutical companies are reshaping their investment and partnership strategies on the ground.

According to Ms. Cao Shan, Vice President of Corporate Affairs and Communications for Greater China at Medtronic, China is rapidly emerging as a major global source of medical technology innovation.

“Medtronic’s China strategy is evolving from being a traditional importer of advanced technologies to becoming a co-builder of local innovation ecosystem,” she said.

In late 2025, the company opened its first global digital innovation center in Beijing’s Yizhuang Economic Development Zone. Cao noted that healthcare systems worldwide face a longstanding “impossible triangle”: delivering high-quality care at low cost while maintaining broad accessibility. AI, she argued, has the potential to help resolve this challenge.

China’s AI healthcare sector is expanding rapidly. According to Huafu Securities, the sectir exceeded RMB 100 billion in 2025 and is expected to surpass RMB 150 billion in 2026, maintaining annual growth of more than 30 percent. Policy support and capital investment are driving growth across a complete industrial ecosystem spanning algorithms, hardware manufacturing, and healthcare applications. Medical imaging, telemedicine, and chronic disease management are among the most commercially advanced segments.

As a result, international healthcare companies are no longer viewing China solely as a sales market. Increasingly, they are embedding themselves within the country’s innovation chain.

Medtronic now works with nearly 7,000 supply-chain partners across China. In fiscal year 2026, its procurement spending in China reached approximately RMB 5.7 billion, with local suppliers accounting for 90 percent of indirect procurement. In direct procurement—including key components, raw materials, and contract manufacturing—around 90 percent of locally sourced products are supplied to Medtronic facilities worldwide, creating a deeply integrated and globally connected manufacturing ecosystem. Products from its four manufacturing bases in China are exported to markets around the world.

Another U.S. medical giant, GE HealthCare, is also elevating the strategic importance of its China-based operations. Its manufacturing base in Tianjin has grown into the only facility outside the U.S. capable of producing both MRI magnets and complete MRI systems, gaining RMB 500 million investment within 5 years from 2024. In Shanghai, it has set up one of its largest diagnostic imaging contrast media production sites; and in Wuxi, it places its largest global ultrasound R&D and manufacturing center.

“Annual procurement in China now exceeds RMB 10 billion, supported by nearly 160 specialized high-tech local suppliers. This footprint has been enabled by China’s comprehensive industrial ecosystem, mature supporting industries, and favorable business environment,” Wang Yi, Vice President of GE HealthCare Greater China said.

According to China National Intellectual Property Administration, as biomedicine becomes one of the most important frontiers in global drug development, Chinese biotech patent filings tripled from around 5,000 in 2015 to 15,000 in 2024, increasing their share of global filings to more than 30 percent. In biomanufacturing, China’s share of global patent applications exceeded two-thirds of the global total by 2025. In genetic testing, Chinese applicants contributed the majority of global growth, with their share rising to approximately 80 percent in 2025.

For U.S. pharma companies operating in China, this means lower cost, higher profit margin, and competitive edge being reshaped. A report by Wellington Management attributed China’s edge to cost, speed, and capital efficiency. Clinical trial costs in China are about 70% of those in the United States, and per capita R&D expenditure is only a quarter of that in the U.S. Additionally, the development cycle from candidate drug nomination to approval is 30% to 40% faster than in the U.S., saving approximately four years in time to market.

For U.S. consumers, these partnerships can translate into broader access to innovative medicines at lower cost. Last month, China's Biotech Pharmaceuticals and U.S.-based Accord BioPharma announced that their jointly developed golimumab biosimilar had received approval from the U.S. Food and Drug Administration (FDA). As the world's first approved biosimilar to golimumab, the drug is expected to provide a more affordable treatment option for millions of Americans living with chronic autoimmune diseases.

The need is significant. According to the latest Annual Drug Shortages Report released by the United States Pharmacopeia (USP) earlier this month, the average duration of a drug shortage in the United States has exceeded five years, up from roughly two years in 2019.

Against this backdrop, U.S. pharmaceutical companies are placing increasingly large bets on China. Eli Lilly, which recorded 18% growth in revenue in China last year, has just entered a partnership with a Shanghai-based biotech firm to jointly develop innovative drug candidates targeting multiple diseases with global commercial potential, following its first innovation incubation platform outside the U.S. launched last year. In May, Pfizer signed a $10.5 billion oncology drug development agreement with Innovent Bio, and Bristol Myers Squibb reached a global strategic partnership with Jiangsu Hengrui Pharmaceuticals, with the potential value of the deal exceeding $15 billion.

China is also increasingly becoming an important source of high-value research data. In 2025, Chinese pharmaceutical companies completed 157 outbound licensing agreements with a total disclosed value of US$135.7 billion, most involving major European and American pharmaceutical firms. In the first quarter of 2026 alone, outbound licensing transactions by Chinese biotech companies exceeded US$60 billion—nearly half of the previous year’s total.

China Research Institute Puhua forecasts that China’s AI drug-discovery industry will maintain annual growth of more than 15 percent between 2025 and 2030. Measures are being continuously introduced aimed at improving the operating environment for foreign-invested healthcare companies.

On Monday, the Chinese government released a new action plan to stabilize and improve foreign investment. The measures include expanding pilot programs for cross-border segmented production of pharmaceuticals, broadening the scope of biotechnology and wholly foreign-owned hospital pilot projects, supporting the inclusion of more innovative drugs and medical devices in commercial insurance programs, and facilitating market access for medicines produced by foreign-invested enterprises.

According to Lin Honghong, Vice Chairperson of the China Council for the Promotion of International Trade (CCPIT), technological revolution is fundamentally reshaping healthcare innovation.

“In the past, it typically took around 15 years for a new drug to move from the laboratory to the market,” she said. “Today, artificial intelligence can reduce that timeline to as little as 18 months to three years, while dramatically improving clinical trial efficiency. As a result, international cooperation in healthcare is increasingly moving beyond trade and investment toward ecosystem co-development, underscoring the growing importance of open cooperation as a driver of medical and industrial progress. ”