Pharma R&D in China: The Role of the "Hai Gui" - the returnees

A contingent the Chinese government is particularly fond of is the returnees—known as the Hai Gui, or Sea Turtles, in China. In the past five years, what was a trickle of returnees has become a steady flow,  as 340,000 Chinese students embarked on study abroad in 2011—a 20% increase over the previous year.  

Thus far, 818,400 have returned to China, including 150,000 life science graduates over the last five years, and the flow gained particular momentum recently. 186,000 have returned in 2011 alone, which was a 38% increase from 2010 (Fig. 1).

Figure 1. The number of Chinese returnees annually, 2005-2010

The practice is gaining popularity due to the benefits and privileges being a Hai Gui provides. Above all, returnees can now take advantage of significantly improved work opportunities upon their return: many are scouted into top management and executive positions, and already constitute the majority of senior positions in the corporate world. The Hai Gui constitute 78% of university presidents, 72% directors of key research centers and labs, 81% of academics of the Chinese Science Academy, and 54% engineering academics.

In 2009, only 10% of Chinese students had plans to remain in the United States, 52% believed that opportunities were greater in China than abroad, 68% planned to start a business and an overwhelming 74% anticipated a boom in China’s economy.  Only 7% of Chinese student in the US believed the best days of the US economy lay ahead.

The expectations are that, as MNCs pave the way for an innovative pharma industry in China, the highly-skilled returnees will initially be assimilated into the foreign player arena. However, this is not unanimously so: the prominent bio-startups Bei Gene, Hua Medicine and Ascletis were all founded by returnees in the recent past, and investor confidence in this contingent is evident in the amount of capital the three companies were able to raise. Setting a new fundraising record, Ascletis was able to attract a US$ 100 million investment from government and private sources, while Hua Medicine raised over US$ 50 million from well-known PE firms including ARCH Venture Partners, Fidelity Biosciences and Wuxi Pharmatech’s Venture Arm. Meanwhile, Bei Gene raised its funds from co-development deals with Janssen and Merck.

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