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China: What To Do About It?

China: What To Do About It?

By Gordon G. Chang, via The Gatestone Institute,

What does China really want?

Well, China really wants to rule planet Earth. It also wants to possess and rule the near portions of the solar system. No, I am not..

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China: What To Do About It?

By Gordon G. Chang, via The Gatestone Institute,

What does China really want?

Well, China really wants to rule planet Earth. It also wants to possess and rule the near portions of the solar system. No, I am not exaggerating. No nation in history has been this ambitious.

With regard to our planet, Xi Jinping wants the world to reject the current Westphalian international system, in place since 1648. In its place, he wants China's imperial-era system, where Chinese emperors believed they not only had the right to rule tianxia, all under heaven, but also the heavens compelled them to do so.

Xi has been grabbing territory from his neighbors. In just the past few months, the Chinese have been encroaching on India's Sikkim as well as Nepalese territory.

With regard to Nepal, let us talk about how China actually moves against its neighbors. In January, Beijing's propagandists, as they have in the past, bragged about how Chinese scientists were able to come up with the exact measurement of a mountain in Nepal. Not in China, in Nepal.

Now, the Chinese, and only the Chinese, call this feature Mount Qomolangma. The rest of the world, all of us, know it as Mount Everest.

What is China doing by bragging about its measurement? It is establishing the basis for a territorial claim to this mountain, which happens to be close to China. They are eventually going to say, "Well, look, we named the place, we measured it, therefore, it's ours."

This is subtle, but that is the way Beijing has been working. Of course, sometimes Beijing is not so indirect. We have also seen in recent months China's encroachments into India's Ladakh, high in the Himalayas, and its killing of Indian soldiers.

Chinese planes have regularly been flying through Taiwan's air defense identification zone. China's armed ships have been intruding into Japanese waters in the East China Sea around those uninhabited islets, the Senkakus. Beijing has been trying to take territory from its neighbors. It is acting especially provocatively. We have got to be concerned.

Amendments to China's National Defense Law, effective the beginning of this year, take sweeping powers from the State Council, which leads China's civilian government, and give them to the Communist Party's Central Military Commission. These powers include the power to mobilize all of society for war.

Moreover, Xi Jinping himself in January told the troops of the People's Liberation Army that they must be prepared for conflict "at any second." Beijing could well start history's next great conflict.

Many people will tell you that China is just bluffing, but we know from history that countries that continually talk about war, that continually bluff about it, usually manage to start them. This is the situation in which we find ourselves.

On the topic of controlling the solar system, China will land a rover, its rover, on Mars in either May or June. Mere exploration for the good of humanity? China's officials have been talking about the moon and Mars as if they are sovereign Chinese territory -- part of the People's Republic.

They look at near heavenly bodies the same way they do the South China Sea, something that should be theirs. This means that if they get there, China believes it has the right to exclude other nations.

Everything they do, whether it is seemingly innocuous, such as measuring a mountain or putting a rover on Mars, is a means of claiming sovereignty, of enlarging the People's Republic.

Now, of course, there are, in addition to these acts, China's militant, hostile, belligerent actions. We see these all the time.

We all have heard about China's behavior, but today let's focus on three things that China is doing relating to genetics.

  • First, China is collecting the world's DNA.

  • Second, China is genetically engineering the Chinese to become a superhuman race, in other words, eugenics.

  • Third, Chinese researchers are working on pathogens, new pathogens, artificial ones, to create the world's next pandemic.

First, China is gobbling up the world's DNA. So far, it has amassed the world's largest collection of DNA profiles of humans. It claims about 80 million of them. Of course, it wants more. We need to be concerned about the way China is doing this.

Chinese hackers, for instance, are going after insurance and healthcare companies to get DNA profiles. We saw this in January 2015, when we learned that China had hacked Anthem, America's second‑largest insurance company. It got health information on 80 million Americans who were either insured or Anthem employees.

Beijing is building this massive database also with its Phase 3 trials for its two vaccines, especially in Africa, both north and south of the Sahara. Think of Morocco as well as Nigeria.

China is also getting DNA by buying American businesses. For instance, China's BGI Group, the world's largest genomic sequencing company, collected the largest group of DNA profiles of Americans when it purchased Complete Genomics in 2013. In January, China's Harbin Pharmaceutical Group passed its last hurdle in purchasing GNC, which has health information of Americans as well.

Another way China is collecting DNA is by offering low‑cost genetic sequencing services to ancestry companies and also to research laboratories and others. In 2019, there were 23 Chinese or Chinese‑linked companies that were accredited in the US to provide DNA sequencing services.

We know, of course, that China has had a number of research partnerships and other ventures with American institutions, such as Johns Hopkins.

If you want to find the largest collection of genetic information of Americans, you do not go to America. You go to Beijing.

The story here is that we allowed the Chinese to plunder our society for data.

The second point, eugenics, is downright frightening because biological research in China is heading in very distressing directions.

Bing Su, a geneticist at the state‑run Kunming Institute of Virology, recently engaged in a number of experiments putting human genes into monkeys, including the MCPH1 gene relating to brain development. That means these monkeys will have intelligence closer to humans than to lower primates.

Bing Su is not stopping there. His next experiments are going to be taking the SRGAP2C gene, which relates to human intelligence, and the FOXP2 gene, which permits language development, and also putting them into monkeys. It is as if nobody in China has seen the "Planet of the Apes.".

In China, there is an unrestrained ambition to experiment in weird ways. For instance, if you want to know what happens when you mix pig and monkey DNA, well, just ask the Chinese. They have been involved in other similar experiments as well.

This whole subject was brought to the attention of the American public by John Ratcliffe, then director of National Intelligence, when he wrote that China was trying to grow super‑soldiers. Ratcliffe mentioned that China is already conducting experiments on people in the People's Liberation Army to enhance their abilities, to create, as he called it, "biologically enhanced capabilities."

The Communist Party is also experimenting with humans other than soldiers. It was, for instance, a Chinese researcher who was the first, and so far only, person to use gene‑editing tools on human embryos to create live births.

A Chinese professor, He Jiankui, in Shenzhen in southern China, actually used CRISPR, a gene‑editing tool, to remove the CCR5 gene to create live births of twins in late 2018.

He said he did this because he wanted to make the twins resistant to HIV, but there are also suggestions he was enhancing the intelligence of the twins. This, of course, evokes the eugenics experiments of the Third Reich to create a "master race."

He is not the only person to experiment on human embryos. We are seeing similar experiments across the Chinese research community. Chinese geneticists are now trying to use the CRISPR tool to fundamentally alter humans.

The Chinese regime does not have ethics or morality. It is not restrained by law. It does not have a sense of restraint. The regime is trying to create the perfect communist. China has the ability and the will to do this, which means that the world has got to prevent this experimentation.

As for the third topic, pathogens, a little background might help. China uses its doctrine of Comprehensive National Power, CNP, which they got from the Soviet Union. It is an empirical tool to rate the strength of countries. China is relentlessly seeking the Number One CNP ranking.

China can become number one in two ways. It can enhance its own CNP ranking by becoming stronger, or it can decrease the CNP rankings of other countries. That's where pathogens come in. This notion of decreasing CNP of others meant that China had no inhibitions about spreading the coronavirus around the world.

We don't know whether the pathogen causing COVID‑19 naturally jumped from animals to humans, a zoonotic transfer, or whether it was cooked up in the Wuhan Institute of Virology. That has yet to be determined.

We do know one thing. We know that China's leader, Xi Jinping, took steps deliberately to spread the pathogen beyond China's borders. He did that primarily in two ways. First of all, he lied about the contagiousness of the disease. He knew it was highly transmissible human-to-human. He told the world it was not.

Then he leaned on countries to not impose travel restrictions and quarantines on arrivals from China while he was locking down Wuhan and other portions of China, which meant he thought that these travel restrictions and quarantines were effective in preventing the spread of disease. This means, of course, that he thought he was spreading disease by forcing other countries to take arrivals from China. That shows malicious intent.

Now, China's ranking of CNP will increase dramatically, of course, if the next disease leaves the Chinese alone and sickens only foreigners. This is where some particularly distressing information has come to light.

China's State Council which, as mentioned, is the civilian government, in May 2019 imposed new rules preventing the transfer of DNA profiles of Chinese out of the country. At the same time, Chinese officials started enforcing existing rules and the new rule more effectively.

That points to a sinister intention, but we do not really have to speculate because China's National Defense University, in its 2017 edition of The Science of Military Strategy, actually talked about a new form of biological warfare of "specific ethnic genetic attacks."

Bill Gertz of The Washington Times recently quoted an unnamed American official, who said China was working on germ weapons capable of attacking only specific groups. Now, China denies it has the doctrine of "unrestricted warfare." That term comes from a 1999 book by two Chinese Air Force colonels: Unrestricted Warfare: China's Master Plan to Destroy America by Qiao Liang and Wang Xiangsui.

The spreading of the coronavirus is indeed an application of unrestricted warfare. Many analysts have said that biological warfare does not work. I can understand why they say that, but unfortunately we have just seen a disease kill about 2.4 million people as well as hobble societies across the world. [Editor's note: The toll, since this talk was given, has increased to 2.7 million].

COVID-19 is the ultimate proof that biological weapons work. If Chinese scientists actually succeed in developing viruses that attack only foreigners, China could end up as the only viable society in the world. This is communist China's weapon against the world and against the United States as well.

About two decades ago, Chi Haotian, then China's defense minister, reportedly gave a secret speech about how China should use germ weapons to exterminate Americans so that the Chinese could then inhabit North America. "Living space." You have heard this concept, "Lebensraum," before.

Also, in October of last year, Dr. Li Yi, a Chinese sociologist, returned to the extermination theme, this time in public. "We are driving America to its death," Dr. Li approvingly said at a forum.

Before the Chinese actually succeed in exterminating Americans, we should start thinking about what we can do to block China.

I'm now going to give you my to‑do list. Many of the items may sound pedestrian, but remember that American policy towards China had been devoid of common sense for decades, especially during the Bush, Clinton, Bush, and Obama administrations.

These presidents maintained policies that were the opposite of common sense. I'm afraid it looks as if that is where Biden is heading to. His administration right now is engaged in a top-to-bottom review of China policy, which will probably be finished sometime in April. We do not know how it will turn out.

Yet we know what Biden has done in his first month as president. He has issued a slew of executive orders dismantling protections the Trump administration built against a militant China.

Some of Biden's actions have been merely questionable, but some of them have been downright inexcusable and indefensible. For instance, on January 20 -- just hours after taking the oath of office -- Biden issued an executive order that repealed President Trump's executive order of May 1st, 2020, preventing grid operators in the US from buying Chinese equipment.

This means China is now free to sell sabotaged equipment to the US. This is not just a theoretical concern.

Every administration looks at the China policies of its predecessors. I'm not saying Biden shouldn't do that. What he should do is leave President Trump's protections in place while he engages in that review because he should not leave the United States vulnerable in the interim.

China's Communist Party, of course, has not been shy in attacking the United States. We should not be defenseless in the interim.

Moreover, whatever one thinks of Biden's executive orders, he has ordered big giveaways to China and gotten nothing in return. In other words, his giveaways have been unilateral, a unilateral taking down of America's protections.

There are a few things that we should be doing now to protect ourselves against China's genetic initiatives.

Here goes:

The first thing we should do is require everyone that maintains a computer network in the US, whether they are private or whether they are government, to harden them against espionage. The Chinese are villains, but we have allowed them to be villainous by leaving our networks undefended.

I am angry at the Chinese for stealing our stuff, but I'm much more angry at a series of presidents who decided to do nothing or do nothing effective. Let us impose a cost on China for stealing US intellectual property. That means we have got to go well beyond the Section 301 tariffs that President Trump imposed in 2018 for the theft of our IP.

Then-Director of National Intelligence John Ratcliffe, in his December 3, 2021 Wall Street Journal op‑ed, put the figure of China's theft at about $500 billion a year. This means the costs we impose are going to have to be greater than that amount if we are going to deter China.

Second, we should simply prevent China from buying any American company that possesses DNA profiles of Americans or is involved in biotechnology or genetic research. That's just common sense.

Third, we should prohibit any Chinese or Chinese‑linked company from providing sequencing services for the DNA of Americans.

Fourth, we should end all research partnerships with Chinese institutions.

Fifth, we should withdraw from the biological weapons convention. China is almost certainly violating it at the Wuhan Institute of Virology and other locations. The convention has no inspections regime. That means this is a unilateral obligation on our part.

Sixth, we should get out - again - of the World Health Organization. The WHO was complicit in Xi Jinping's spread of the disease. The WHO didn't make a mistake. It absolutely knew what it was doing.

Senior doctors at the WHO knew that the coronavirus was highly transmissible, yet on two occasions, January 9th and January 14th, 2020, the political leadership of WHO spread China's false proposition that the disease was not transmissible. I think the WHO is unreformable.

Seventh, we should impose costs on China for spreading COVID‑19. Recently, we passed that grim milestone of more than 500,000 deaths. This pathogen is not finished with us yet. We have to impose these costs on China to convince Xi Jinping that he cannot spread the next disease beyond his borders.

The next virus, as mentioned, could leave the Chinese alone and sicken everyone else. It could be a civilization-killer, which means that China could be the only viable society left on earth.

When I talk about Xi Jinping believing that he should rule the entire world, people say, "Oh, that's ludicrous," or, "It's impossible."

No, it's not ludicrous. It's not impossible if China is the only functioning society on this planet.

We are far stronger than China. We can defend ourselves.

The Chinese unrelentingly attack us, and we do not have the political will to defend ourselves.

Let me end with one question. What are our children going to think when they realize that we had the means to protect them but chose not to do so?

*  *  *

Question: You mentioned that the CCP is collecting DNA. What are they utilizing this knowledge for?

Chang: There are two things. First of all, they want to be a leader in biotechnology. We know this because biotech was one of the 10 original areas in Xi Jinping's Made in China 2025 initiative, announced in 2015. That initiative is designed to make China both self‑sufficient and a world leader in the enumerated areas.

The second thing is, as mentioned, they want to build a biological weapons capability. They have got a dual purpose here ‑‑ to lead biotech and, second, to be able to kill everybody else on the planet.

Question: What would you tell these American businesses who are eager to open up on China?

Chang: Business is business. Business will always want to make money. It will go anywhere, do anything. We have seen this, of course, with regard to China, but we also saw it in the run‑up to World War II. IBM, for instance, was providing census‑tabulating machines so that the Third Reich could count Jews.

They were doing this even after war in Europe started with the bombing of London. We know how bad and how free of morals business can be.

This is really up to the President of the United States to use his powers under the International Emergency Economic Powers Act of 1977 or the Trading with the Enemy Act of 1917 because he can prohibit businesses from going to China. He can prohibit investment into China's markets. He can do all of the things we need as a society to do.

I know this sounds drastic to many people, but China uses all its points of contact with the United States to undermine us. Right now, the FBI and local law enforcement are just overwhelmed by what China is doing.

We do not have the capability to keep up. Until we can get a handle on this, the president, I believe, has the constitutional responsibility to end these contacts with China, business and otherwise. Yes, it is drastic, but our republic is at stake.

We know, for instance, that China does not really believe in capitalism. People say -- Bill Gates has said this a number of times -- that China is more capitalist than the United States. If we look at what China has been doing with regard to Jack Ma and others, we can see that no, they are not capitalists. They want to use capitalists to further their objectives, but they are not capitalists themselves. Until we come to that fundamental understanding, we are at risk.

Question: What are your thoughts about China hosting the Winter Olympics in 2022?

Chang: The International Olympic Committee should move the games to a country not tainted with crimes against humanity and other atrocities. Plus, there's something else the IOC must do. It must ban China's teams from athletic competition.

If we go back to 1963, the IOC banned the teams from South Africa because a large portion of the South African population was not permitted to participate in sport. That was because of apartheid.

We have the same situation in China today where Uyghurs, Tibetans, and others are not permitted to participate in sport. The IOC, I believe, has an obligation to ban China's teams until the regime stops committing those crimes against humanity, until others can participate in sport just as well as the majority Han athletes can.

If the IOC does not do both these things, move the games and ban China's teams from competition, we should boycott the 2022 games. I do not like the boycott idea because this punishes athletes, but ultimately, we have to do this if the IOC doesn't make the two moves.

Question: What is the state of play today between Iran and China, especially given that the Iran deal is apparently back on with the US?

Chang: About eight months ago, we learned Tehran and Beijing signed a 25‑year, $400 billion strategic partnership deal. That, of course, would cover business relations. Also, it is military-linked. A lot of analysts correctly say that this strategic partnership will not end up being as robust as it now appears. Nevertheless, Beijing's support of Iran will be crucial.

Indeed, what Iran has been doing in the Middle East, especially in Lebanon, almost certainly has Beijing's blessing, because Tehran knows China has its back—and will back it with money.

China, of course, has made sure that its nuclear weapons technology has found its way to the mullahs. It has done that a number of different ways, one of them through the A. Q. Khan black market network run by Pakistan and since rolled up by the United States. It was not rolled up before Pakistan was able to send enrichment technology to the Iranians.

Also, China has facilitated North Korea's sale of ballistic missiles and ballistic missile technology to Iran, which gives Iran the ability to deliver nuclear weapons.

You put all that together and it shows that the relationship between Beijing and Tehran is sinister, and it will continue to grow over time because Iran, right now, needs a backer and it has found it in Beijing.

Question: We are all frightened, of course, of China's strengths. What do you see as their weaknesses? Is it their internal oppression? What is happening in Hong Kong?

Chang: China is making great progress in imposing its system on Hong Kong. It did that with the June 30 imposition of the National Security Law, which has given Beijing the ability to do whatever it wants in the territory, including extraditing people to be prosecuted in China. As people have said, the National Security Law is the end of law in Hong Kong. That's about right.

Beijing's most recent initiatives, if reports are correct, will be to further restrict those people who can sit on the Election Committee, which is composed of 1,200 people who choose the chief executive, the top political officer. Beijing is also going to add, according to rumors, 20 members to the 70-seat Legislative Council.

As the war correspondent Michael Yon says, what we witnessed in Hong Kong in 2019 especially, was not a protest movement but an insurgency. Yon points out insurgencies rarely die out. They can disappear for a time. They can go into tactical retreat, but they almost always come back.

That is essentially what exists in Hong Kong right now. This is going to be a long‑term struggle. It is not going to be easy, but we need to have the President of the United States impose costs on China for what it's doing in Hong Kong. President Trump started imposing costs but did not do enough.

I hope that Biden, who ran on a campaign of trying to help the people of Hong Kong, will do so.

With regard to the broader question of China's weaknesses, it is really a matter of overstretch. Paul Kennedy, the Yale professor, talked about this. It is a good way, a framework, of looking at it because China does not have the money to accomplish all its objectives.

Beijing spends an enormous amount of its resources on repressing the Chinese people. The government has been moving back to totalitarian controls with its social credit system, surveillance cameras, and Great Firewall. All of this is not cheap.

Also, the Belt and Road Initiative, which is to connect the world to China, means China is putting a lot of money into infrastructure that the private sector has not wanted to build. Indeed, a number of countries are not paying back China on their loans, which is a drain, certainly, on the Chinese treasury. Yes, China ends up owning infrastructure and assets, but the cost to it is exceedingly high.

This overcommitment is also evident in China's rapid expansion of its military, for a purpose that makes people in Asia realize the aggressiveness of China's regime.

We can see that Beijing does not really have the resources to accomplish all these outsized ambitions.

Right now, the Chinese economy may be growing, but it did not grow at the 2.3 percent that Beijing announced for 2020. It is probably just a smidgen over zero, if it is zero. We are seeing a lot of weakness in the Chinese economy, especially in the consumption area, which is a bad sign for Beijing.

Ultimately, it is a question of how productive their economy can be. It really cannot be that productive as Xi Jinping goes back to more of a state‑dominated system, where state enterprises have a greater role in the economy. They are the least productive part of that economy. The private sector is far more important and far more productive, but it now being deemphasized.

We are approaching a point where ‑‑ this will be critical ‑‑ where Biden will have to decide whether to run to the rescue of China's regime. We know that Nixon in 1972, George H.W. Bush in 1989, and Bill Clinton in 1999 rescued Chinese communism. I hope Biden does not do that a fourth time.

Question: How do you think China will now be acting towards Taiwan?

Chang: China is especially aggressive with its aerial maneuvers. They have been doing two things. They have been flying through Taiwan's air defense identification zone, AZID, as mentioned.

An ADIZ includes international airspace, so China has every right to fly through it. Flying through another country's air defense identification zone is nonetheless considered to be hostile. China's been doing that regularly.

The other thing that China has been doing in the air is flying on Taiwan's side of the median line. The median line runs straight down the middle of the Taiwan Strait. For decades, there has been an understanding between Beijing and Taipei that Taiwan's planes stay to the east of that line and Beijing's planes stay to the west.

Over the last six months or so, Beijing has been violating that commitment and has been flying on Taiwan's side of the line.

The reason why all this is important to us is that on January 23 there was a very large incursion into Taiwan's air defense zone by nuclear‑capable H‑6K bombers.

Those bombers then, as part of this incursion, flew a simulated attack against our Theodore Roosevelt strike group, also in the South China Sea at the time. This is extremely dangerous.

Most people believe that China is not going to invade Taiwan. I agree, with one possible exception I'll talk about later. Generally, it is not going to invade Taiwan because it does not have the capability to do so.

All of this bluffing, however, does have consequences. China has been engaging in these hostile air maneuvers. One of these maneuvers could go wrong. A plane could hit the deck. That could create a dynamic that ends up in a conflict.

That that almost occurred on April 1st, 2001, when a Chinese fighter jet clipped our US Navy EP‑3, an unarmed reconnaissance plane.

The Bush administration avoided conflict by offering to pay China a ransom, by allowing China to strip the plane, by allowing China to keep our aviators in custody, which was, in my mind, the most disgraceful incident in recent US diplomatic history. This is a stain that George W. Bush will never be able to erase, but put that aside for a moment.

I did say there was one exception where China might actually engage in aggression against Taiwan. Some of Taiwan's islands are only two miles off China's coast, Kinmen and Matsu.

China could grab one of those islands and then say to the world, "What are you going to do about it?" That is a real possibility. That is what I worry about, but I do not worry about an invasion of the main island of Taiwan. So far, we have been able to deter them.

The question is whether the Biden administration will act. So far, Biden has been really good on Taiwan. He has been better on Taiwan than anything else with regard to China. At least there is a little bit of comfort here. Nonetheless, this is something that could change day by day and change in a way that leads to the next great war.

Question: What do you think, in order, are the most serious, what would be your most urgent messages to the new US administration on China?

Chang: China has done so many awful things that it is really hard to put them in order.

The most important thing that Biden needs to understand is that China's regime is not legitimate. We have to understand the fundamental nature of China's challenge. Last year, China engaged in a series of acts of war against the US.

They were actively trying to foment violence on American streets, which is more than just subversion. They fomented violence this year in connection with the Capital Hill riots of January 6th. Both before and after that, they were openly urging Americans to engage in acts of insurrection.

I do not see how you can have a dialogue with a country like that. The first indication is that the Biden team -- and they have talked about this in public -- they say, "We will impose costs on China for those things which are unacceptable, we will criticize them on others, and we will cooperate where there are common interests."

I don't think we can do that because I do not see that we have common interests with a country that's trying to overthrow our government. My message is understand the fundamental nature, the hostility, and the maliciousness of China, and remember one other thing.

That is, China deliberately released the disease that has killed more than 500,000 Americans. That alone means there can be no cooperation with China.

Question: If indeed China is working with Iran, how do we warn Israel where every second biotech company start‑up looks to a China exit?

Chang: This is a broader question of US relations with Jerusalem. So far, American presidents have been pretty tolerant of Israeli links with China. I generally believe that the United States ‑‑ and this is not just Israel ‑‑ we need to say this to France, to Germany, to everybody else, that this is a zero‑sum game.

You either work with the US or we do not consider you to be our friend. I think Israel would choose the right side. I'm not so sure about some of the other countries I mentioned. The point is this is something American presidents have not communicated to our friends, allies, and partners, how we feel about China.

I say we should no longer support China's Communist regime. We consider it to be an enemy, and we will act to protect ourselves in an appropriate fashion. Remember, in May 2019 People's Daily ran a piece that declared a "people's war" on the US. That is all Biden needs to know.

Question: "What do they want all that DNA for?"

Chang: The more DNA you have, the better you will be able to develop, for instance, biotechnology products. The more DNA you have, the easier it will be to figure out how to create the next penicillin or whatever. The more DNA you have, the better you are able and the faster you are able to come out with drugs. Then, of course, there is their biological weapons program: the more DNA they have, the better they can figure out how to create a pathogen that attacks us and leaves them alone. The more you have, the more you can do.

Question: You mentioned that China saying that the US was not a legitimate state. Could you amplify on that a little bit more?

Chang: China is committing atrocities. Forget about what it is doing to its own people, the Han. It is committing atrocities in what it calls Xinjiang, what it considers to be the northwest part of its country and what the Uyghurs, Kazakhs, and others consider to be East Turkestan, conquered by Mao in 1950.

China's regime has not only been running concentration camps where they have held somewhere between 1.1 and 3.3 million Uyghurs, Kazakhs, and others, but it has also institutionalized slavery, offering labor to both domestic and foreign companies, -- and not just in Xinjiang, but across China, as Uyghurs are being transported in cattle cars to provide labor in factories that look like concentration camps.

The regime has institutionalized rape, with Han Chinese officials in Uyghur homes, where the male has been sent off to a concentration camp. This is the BBC story of about a few weeks ago, plus other reporting, which is absolutely horrific. Rape is used as a policy of the government to subdue the Uyghurs.

There has been the violation of Uyghur girls, minors. There has been forced organ harvesting, in all probability. That is the tribunal led by Geoffrey Nice in London. They have put children into basically jails. Because the parents get sent off to "re-education" camps, the children are put into "orphanages" that look like prisons. The list goes on and on.

We know the Uyghurs, Kazakhs, and others are dying in these facilities. The only thing that separates the People's Republic of China from the Third Reich is that China has not gone to mass exterminations -- yet.

Its acts meet the definition of "genocide" in the Genocide Convention of 1948. If Biden needs another message, this is not just a policy choice for him. We are a party to that Genocide Convention, which requires signatories to "prevent and punish" acts of genocide.

Yes, China is committing genocide. Secretary of State Pompeo issued that formal determination on January 19th of this year. Candidate Biden, during the campaign in August of last year, said the Chinese were committing genocide. Secretary of State Antony Blinken, during his confirmation hearings, said China was committing genocide. China's regime is committing genocide. We have an obligation to do something about it.

Question: It appears we are dealing -- or not dealing with -- a Chinese Communist Party that is promoting "a superior race" and "a superior government," which has, as you say, horrible echoes of the 1930s. How would you suggest the Biden administration deal with it?

Chang: I would force every US company off Chinese soil. I'd force every Chinese company in the US, every Chinese bank, to leave. I would close every Chinese consulate. There are four remaining consulates. I would strip the embassy staff in Washington down to the ambassador, his family, his secretary, and maybe a few personal guards.

I would close all the Confucius Institutes on our college campuses. I would toss out every Confucius Classroom in our secondary schools. [Editor's note: China is rebranding Confucius Institutes "to avoid scrutiny."]

The list goes on. I would cut all these contacts with China. As mentioned, they are overwhelming us right now. We cannot deal with it. Until we can deal with it, as a practical matter, we need to cut these contacts.

China is committing atrocities. We should have nothing to do with it. It's not a legitimate state. It's a danger to humanity. China is a threat to humanity.

We have got to recognize the threat. We have got to defend our society. We have an obligation, if not to ourselves, to our children.

Question: Another important question: Does the popular DNA testing company 23andMe, where you send in a sample of your DNA for information on your ancestry, have any connection to China?

Chang: This is really murky, but China has tried to compromise 23andMe, to get a bigger ownership interest in it. I believe, but I am not positive, that some of the 23andMe sequencing is done by Chinese‑linked companies. There is that link there.

The 23andMe chief executive mentioned recently about China's attempts to take over her company, and that she successfully resisted.

Question: A final question. Xi has said that he wants all tariffs lifted to repair the relations with the US. What would you advise the US do?

Chang: I would increase those additional tariffs, which are at 10% or 25% percent, to 1000% or 5000%. I would prevent China from selling stuff to us. Even if you put aside all the things we talked about, just if you look at this as a trade matter, those Section 301 tariffs were put in place to stop China's theft of US intellectual property.

Whatever figure you take, whether it is $125 billion at the low end or $600 billion at the high end, China is stealing our intellectual property. Obviously, what we have been doing so far has not been sufficient to stop them. We cannot do what China wants.

Wang Yi, the foreign minister, a couple weeks ago ‑‑ and this is a continuation of things that Chinese officials have said for several months – he is saying, "Look, you have to get rid of the tariffs, you have got to do X, you have got to do Y, and you have got to Z in order to create a favorable relationship." In other words, we have to make a lot of unilateral concessions and then China will think about reciprocating.

Of course, they never will reciprocate. My sense is if you look at this as just a tariff matter, our tariffs should go to the sky. In other words, no trade until China stops stealing our tech and know-how and IP. When China stops stealing, then we can talk about reducing tariffs.

You have asked, "What should Biden do?" One of the things Secretary Pompeo said that really unnerved the Chinese was talking about in‑person diplomacy, talking to the Chinese people directly.

He also mentioned this at his Nixon Center speech in July of last year. Biden needs to do the same thing. Not every solution is military. As a matter of fact, our solutions with China are not military. They really start with talking to the Chinese people.

Tyler Durden Sun, 03/21/2021 - 23:30

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int


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Pharma and biotech’s top R&D spenders in 2023: a $153B total with M&A as a focus

At a time when biotech is still counting its losses as a thaw gradually sets in after the long market winter, pharma has been on a tear. M&A took off…

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At a time when biotech is still counting its losses as a thaw gradually sets in after the long market winter, pharma has been on a tear. M&A took off in Q4 as the industry’s biggest R&D spenders either rolled the dice on the back of their blockbuster bonanzas, were forced to address gaping holes in the pipeline in the face of looming patent expirations, or simply had no choice in the face of repeated setbacks.

Bioregnum Opinion Column by John Carroll

For some, it was all of the above.

As a result, Merck flipped into the lead position generally occupied by Roche with an M&A-inflated expense line for research. The companies joined a hunt for new drugs frequently focused on Phase III; premiums are in — heavy preclinical risks are out of favor. The majors followed some well-worn paths into immunology and oncology. And 2024 kicked off with a new round of buyouts and licensing deals.

The sudden end of Covid as a vaccine, drug and diagnostic market left the likes of Pfizer scrambling to convince investors that they had an exciting new plan. (It’s not working so far.) Eli Lilly has become one of the most valuable companies on the planet as obesity drugs go mainstream. Leaders like Takeda kept upping the ante on the R&D budget as the numbers frayed, with all but Pfizer and Bristol Myers Squibb — two of the most deeply off-balance biopharmas — spending more in 2023. Across the board, we saw $153 billion accounted for in R&D budget lines for last year — which would have registered as a record even without the sudden bolus of spending at Merck.

New, promising drugs at biotechs aren’t getting cheaper. And some of the blockbusters pharma has to cover as the patent cliff approaches will demand multiple replacement franchises.

The Big 15 have the money, desire and need to do much, much more in R&D. And all signs indicate that we’ll see more through 2024.

  • Merck
  • Roche
  • J&J
  • Novartis
  • AstraZeneca
  • Pfizer
  • Eli Lilly
  • Bristol Myers Squibb
  • GSK
  • AbbVie
  • Sanofi
  • Gilead
  • Takeda
  • Amgen
  • Novo Nordisk

1. Merck: The BD team is remaking the pipeline, and they are moving fast

  • R&D spending 2023: $30.5 billion
  • R&D spending 2022: $13.5 billion
  • Change: +125%
  • Revenue: $60.1 billion
  • R&D as a % of revenue: 51%
  • R&D chief: Dean Li
  • Ticker: $MRK — up 16% in the past year

The big picture: Merck moved up to the top of the list this year by bundling a mother lode of M&A and drug licensing deals into the R&D expense line. Otherwise, the top slot would have gone to Roche, the traditional top title holder in the R&D 15.

Merck has been parlaying its unchallenged position as number one in the PD-1 game with Keytruda — a drug that earned $25 billion last year but will face a loss of exclusivity as patents start to expire in 2028 — into a host of big deals in 2023. Keytruda, meanwhile, has cruised to 39 approvals, leaving Bristol Myers’ Opdivo in its wake.

Too much commercial success, though, doesn’t translate into unending praise. Analysts had been grumbling for some time that Merck wasn’t doing enough to diversify its pipeline bets. But that’s been changing.

Merck tallied $5.5 billion upfront for its Daiichi Sankyo deal — picking up rights to three ADCs in the move — along with the across-the-slate hikes in costs for clinical programs, bigger payrolls and benefits. There was another charge for the $11.4 billion that went to buying Prometheus and Imago. Prometheus accounted for $10.8 billion of that — one of the biggest deals that followed the $11.5 billion Acceleron buyout in 2021. With $690 million in cash for a group of partners that includes Moderna, Orna and Orion.

Merck kicked off the new year with a $680 million buyout of Harpoon Therapeutics, underscoring its enduring interest in the oncology market. And it’s leaving no popular stone unturned, capturing attention with its expressed interest in GLP-1 combos as the next generation of weight loss drugs takes shape.

Merck CEO Rob Davis also recently made it clear that the pharma giant can afford more $1 billion-to-$15 billion deals, making it a top candidate for more deals in 2024.

Merck’s firepower on the deals side, though, is needed after some deep wrinkles marred the pipeline plan, like the FDA’s back-to-back CRLs for chronic cough drug gefapixant. The data, however, never matched up to Merck’s rhetoric. Failures in Alzheimer’s and depression underscored Merck’s traditional ill fortunes in neuro.

Merck has a few years to plan for its next big thing. They show every sign of remaining focused on the big prize ahead.


2. Roche: 2023 was a tough year. Will 2024 be any better on the R&D side?

  • R&D spending 2023:  $16.1 billion/group — pharma and diagnostics (14.2 billion CHF)
  • R&D spending 2022: $16 billion/group (14.1 billion (CHF)
  • Change:
  • Revenue: $67 billion (58.7 billion CHF, -7% from 63.3 billion CHF in 2022)
  • R&D as a % of revenue: 24%
  • R&D chiefs: Hans Clevers (pRED), Aviv Regev (gRED), CMO Levi Garraway
  • Ticker: $RHHBY — down 4.8% in the past year

The big picture: It’s not easy being Roche. The behemoth has long had a near-omnivorous approach to R&D, buying up and down the pipeline at all stages with a big appetite for oncology ahead of neuro, ophthalmology and immunology. This year, it’s had to contend with the elimination of its Covid revenue, once a big player on the diagnostics side as testing soared during the pandemic. They’ve had to lower investors’ expectations of 2024 sales to an embarrassingly modest level and saw their stock price slide.

It’s surprising they have any growth, given the corresponding knockoff competition building for Lucentis and Esbriet, but you can’t play with market expectations. They’ll kill you every time you’re off.

Roche found some silver linings in the Vabysmo franchise and they’ve been a significant player on the M&A side, scoring the Carmot buyout for $3 billion after bagging Telavant for $7.1 billion back in October, paying a price for something Pfizer all but gave away to Roivant. James Sabry and the BD team, meanwhile, have kept up their globetrotting ways, uncorking a slate of deals for JP Morgan.

Sabry moved to global BD chief at Roche after winning his spurs at Genentech, and he’s been in the game for quite a long time. His résumé includes a stint as a biotech CEO. He’s the doyen of dealmakers and isn’t sitting on the sidelines. Hope grows eternal at Roche, and to keep it growing, Sabry has to stay busy.

“We have in total 12 NMEs that could potentially transition into a Phase III during this year,” CEO Thomas Schinecker told analysts hopefully during their Q4 call.

On this scale, Roche tends to do things on a wholesale basis. So when execs recently unveiled a pipeline review, they mapped 146 programs covering 82 new molecular entities. That can be hard to keep up with. If raw numbers like that were a good indicator of future success, though, Roche wouldn’t have these troubles.

It’s less difficult to follow the culls. That includes a slate of neurology drugs, with several axed from the oncology area. The write-offs include the longtime disappointment crenezumab, which had been partnered with AC Immune in Alzheimer’s. Roche recently handed back crenezumab as well as semorinemab after working with AC Immune for close to an R&D generation. Some analysts gave up long ago.

We’ve also been hearing complaints about a lack of upcoming pivotal clinical data to arouse enthusiasm. But Roche has two big R&D groups at work trying to counter those impressions, with gRED (Genentech) and pRED (the traditional Roche research group) at bat. They now have a straight-up GLP-1/GIP drug in the clinic for obesity, with oral therapies in the works alongside many others. It may be late to the obesity game with the Carmot buyout, but Roche still sees opportunities worth paying for.

Execs are promising to play a better R&D game, prioritizing their best assets and piling on resources. But Roche has always been willing to invest heavily in R&D. Now the company needs to see some clinical cards fall its way. This has not been a patient market.


3. J&J: Under new management, J&J doubles down on the innovative side of R&D. Can they still surprise us?

  • R&D spending 2023: $11.96 billion in meds
  • R&D spending 2022: $11.64 billion in meds
  • Change: Up 3%
  • Revenue: $54.7 billion (pharma side)
  • R&D as a % of spending: 21.8%
  • R&D chief: John Reed
  • Ticker: $JNJ —  up 5.3% in the past year

The big picture: J&J typically has weighed in heavy on R&D, particularly if you add its medtech work to the total. Even after splitting that out, though, it’s still in the top five, hoovering up large numbers of early-stage licensing deals while occasionally nabbing something major in the $1 billion-plus category.

Last year the pharma giant punted its consumer division, following the footsteps of many major industry outfits, and shut down its work in infectious diseases and vaccines. RSV, a highly competitive field now, went out the window with a host of smaller programs and alliances. Its major fields of interest zero in on oncology, immunology, cardio and retinal disorders. And they chipped in close to $2 billion to join the ADC hunt in January with its acquisition of Ambrx.

J&J earned a rep for out-of-the-box thinking in oncology under former oncology R&D chief Peter Lebowitz, striking a deal with China’s Legend that delivered an approved drug — Carvykti — and following up with a $245 million pact to gain worldwide rights to another CAR-T from CBMG, a low-profile Chinese biotech that erupted into mainstream view with its Big Pharma deal.

Now the big questions about J&J focus on its new leadership after Joaquin Duato moved into the CEO’s role in 2022 and John Reed — leaping into his third Big Pharma R&D posting in 10 years, following Roche and Sanofi — takes command of the global R&D side of the company.

They have plenty of motivation to hustle up major new approvals. Stelara — raking in more than $10 billion a year — will see its patent protection erode in the US in 2025, with Europe moving first this year. That will take a few big wins to cover.

But J&J has been making big promises for years. Just a few months ago, it touted 20 drugs in the pipeline that could fuel 5% to 7% growth through 2030. One of the prime candidates is a drug they picked up from Protagonist: JNJ-2113, an IL-23 they believe can bring in blockbuster revenue in immunology. J&J, though, is likely far from done when it comes to new deals. Oncology R&D has been changing rapidly in the wake of the Inflation Reduction Act, with researchers moving up OS as a primary initial focus in Phase III. And it’s going to take a behemoth effort to deliver on these numbers, with likely failures and shortfalls along the way.

Don’t look for J&J to cut R&D anytime soon. They have a big agenda.


4. Novartis: Another streamlining move is wrapping up as Novartis vows to get back to basics in R&D — again

  • R&D spending 2023: $11.37 billion
  • R&D spending 2022: $9.17 billion
  • Change: Up 24%
  • Revenue: $45.44 billion
  • R&D as a % of revenue:  27%
  • Development chief: Shreeram Aradhye, NIBR chief: Fiona Marshall
  • Ticker: $NVS — up 31% in the past year

The big picture: Novartis CEO Vas Narasimhan has been crystal clear about the Big Pharma’s M&A strategy. He’s sticking with the industry sweet spot now in favor: picking up late-stage assets below the $5 billion range. A few weeks ago, that led Novartis to MorphoSys, where they have been partnered for years while distancing themselves from rumors of a pricey Cytokinetics play.

And it springs right off another $3 billion acquisition — for Chinook — that went straight to positive Phase III data for the kidney drug atrasentan, which likely wasn’t much of a surprise inside Novartis.

These days, Narasimhan and Novartis are all about focus. They want to make a deeper impact where they emphasize their priorities — cardio, immunology, neuroscience and oncology. And they also want to be leaders where they are centered, slashing oncology while emphasizing at every opportunity that they jumped out front in radioligands, now a hot commodity in R&D.

Lest anyone forget, Novartis was a pioneer in autologous CAR-T and has held on as it slowly works through all the challenges a cutting-edge technology can inspire.

Narasimhan had been five years before the mast as CEO, after being promoted from development chief, and he’s revising a pipeline strategy away from something he describes now as akin to everything everywhere all at once. Downsizing in 2023 was the big focus, dropping programs, reassigning scientists and promising a swifter pace — a never-ending problem in Big Pharma land. Narasimhan has also been pushing “seamlessness,” projecting a new era of cooperation among scientists and sales.

There’s nothing new about streamlining at Novartis, though. Narasimhan had a billion dollars of cuts in mind back in the spring of 2022. And periodically, the company has been well-known for going in and ironing out budgets. Changes have included an exit for development chief John Tsai, now a biotech CEO, who was replaced by Shreeram Aradhye. Fiona Marshall took the helm at NIBR in the fall of 2022, taking the place of Jay Bradner, who left and later wound up running R&D at Amgen.

The recent cleanup at Novartis included the end of the deal for BeiGene’s PD-1, an area that proved enormously frustrating to Novartis. Their TIGIT pact ended last summer. Phase II for GT005, a gene therapy it picked up in the $800 million Gyroscope buyout, didn’t end well. That program got the axe. And their anti-TGFß antibody, picked up in a small deal with Xoma nine years ago, failed after execs once billed it as a high-risk, high-reward play. Other setbacks include Adakveo, which faced global regulatory challenges following the failure of the Phase III confirmatory study. At the beginning of this year, there was a snafu in Phase III for ligelizumab, once billed as a top asset for peanut allergies.

Warning clouds have also formed around their top-selling drug Entresto, as Novartis fights a battle against the IRA and price negotiations.

The CEO, though, has been able to transition while the stock price was headed up, with a few big drugs driving revenue growth as a struggling Sandoz finally got the heave-ho in a spinout. Their franchise drug Kisqali, for example, is now billed as a $4 billion earner at the peak. As a result, their story has played well on Wall Street. Investors want to see the money and the trajectory. R&D follows sales in priority when it comes to the majors.


5. AstraZeneca: Pascal Soriot never takes defeat lying down. And that stubborn attitude has delivered big dividends as another big R&D test takes shape

  • R&D spending 2023: $10.93 billion
  • R&D spending 2022: $9.76 billion
  • Change: Up 12%
  • Revenue: $45.8 billion
  • R&D as a % of revenue: 24%
  • R&D chiefs: Sharon Barr (biopharmaceuticals); Susan Galbraith (oncology)
  • Ticker: $AZN — up 1.8% in the past year

The big picture: Back in 2018, AstraZeneca reported R&D expenses just under $6 billion. In the past five years, that big line item has grown 85%, and investors have seen the stock price grow 56%.

The R&D leaders at AstraZeneca have changed, but CEO Pascal Soriot has become a longtime fixture at the company. During his stint he took the weakest pipeline in biopharma and turned it into one of the strongest, building a slate of blockbuster oncology franchises while building a research machine based in Cambridge, UK, that consumes about $1 out of every $4 in revenue. He bet the ranch on Enhertu and won, with some analysts bullishly projecting peak sales that will break $10 billion. And he’s kept many of the promises he had to fire out to investors to keep an unwanted Pfizer takeover at bay in the way back when.

So what’s next?

That’s a question that’s vexing quite a few analysts. AstraZeneca is a restless player and the company takes a lot of chances — which means it racks up a lot of setbacks.

A major initiative aimed at protecting its revenue involves its legal fight against the IRA, which AstraZeneca has so far lost. Its next big ADC with Daiichi Sankyo, Dato-DXd, has sparked a running debate on its potential approval and some analysts have doubted if it can live up to the hype following weak PFS results for the TROP2 ADC. Last summer an early-stage GLP-1 went down in flames, unable to take the heat in a kitchen currently controlled by the commercial chefs at Novo Nordisk and Eli Lilly. Lokelma, picked up in a 2015 buyout, got hit when R&D decided to quash two Phase III studies, denting once-big hopes for blockbuster status. And Soriot has recently been forced to finally give up on one old failure when he finally punted roxadustat’s US rights.

Soriot, though, is a weathered player when it comes to setbacks. Every loss is an opportunity to do better the next time, and no one can be more stubborn. You could see that play out over Covid when its vaccine came in for some undue criticism that blighted its impact in the face of the mRNA stars. That spurred some angry responses as execs dug in. But there was an unexpected upside. The giant didn’t have to readjust as the Covid market went pfffffft.

Their next step: A couple of months ago AstraZeneca touted its new vaccine platform, buying Icosavax for $838 million in cash while contributing an RSV vaccine to the pipeline — a field where GSK has made major headway — and a virus-like particle platform that the company intends to build on.

Volrustomig, a PD-1/CTLA-4 bispecific antibody, has been accelerated into Phase III, with Soriot claiming a leadership spot in bispecifics: “Our portfolio of bispecifics has the potential to replace the first-generation checkpoint inhibitors across a range of cancers.”

And that GLP-1 fail? Last November AstraZeneca paid $185 million to gain a Phase I GLP-1 drug out of China’s Eccogene. And now they’re mapping combo studies with some of their other drugs in a play at creating the next wave of obesity therapies with an edge.

Word in biopharma is that Soriot has been devoting a considerable amount of face time to China, where he committed the company years ago. That’s another one of those market promises that has seen plenty of ups and downs. But Soriot tends to win the big gambles more than he loses, and in this industry, seeing it through can be a major long-term advantage.


6. Pfizer: What the hell happened to the Covid king?

  • R&D spending 2023: $10.57 billion
  • R&D spending 2022: $11.4 billion
  • Change: -7.3%
  • Revenue: $58.5 billion (down 42% from $100.3 billion)
  • R&D as a % of revenue: 18%
  • R&D chief: Mikael Dolsten
  • Ticker: $PFE — down 29% in the past year

The big picture: There was one brief, shining moment — or two — when Pfizer could seemingly do no wrong. It had taken a leading role in breaking through scientific barriers to create a new Covid vaccine in record time, harvested a bumper crop of cash and CEO Albert Bourla was the darling of the world’s favored pharma industry.

That was then.

Now, Bourla and his team are having a tough time convincing Wall Street that the company can do even simple things right. They paid $43 billion to bag Seagen and mount a major new campaign on the cancer front, but its stock has been blighted and the focus turned to cost-cutting as revenue plunged. There was fresh humiliation when Roivant flipped a drug it had grabbed from Pfizer for lunch money and sold it to Roche for $7.1 billion a year later. And Pfizer has lost the narrative in convincing investors it can get back to growth.

That somewhat hapless rep was burnished considerably when Pfizer reported that its first try at an oral GLP-1 obesity drug had flopped. It’s still working to move the dial in the hottest new field in pharma, but so is a long list of rivals. Instead of spurring renewed faith in Pfizer, the obesity play turned into another example of getting it wrong, and the focus at Pfizer shifted squarely to downsizing and cost-cutting in acknowledgment of the new reality that set in.

Bourla, though, is committed to pushing the story that a new period of growth lies ahead. And it’s not proving easy.

At the end of February, Pfizer made its best pitch for oncology, underscoring plans to seize the leadership role in genitourinary and breast cancer while making promises for eight-plus possible blockbusters in the next six years. R&D promises, though, are easy to make and hard to keep. Right now, the clarion call in pharma is “show me the money.”

With Covid and the mRNA revolution forgotten like last season’s hit show, there’s an enormous gap now that will be devilishly hard to bridge. But don’t expect anyone at Pfizer to stop trying anytime soon.


7. Eli Lilly: Built for the long term, Lilly’s day has arrived — and they don’t want to let go

  • R&D spending 2023: $9.31 billion
  • R&D spending 2022: $7.2 billion
  • Change: +30%
  • Revenue: $34.1 billion
  • R&D as a % of revenue: 27%
  • R&D chief: Dan Skovronsky
  • Ticker: $LLY — up 126% in the past year

The big picture: Historically, Eli Lilly has been known as a ponderously slow pharma outfit that often slowly cruised its way into Phase III squalls. But that view is so 2017. In 2024, Lilly has rebranded itself as the Big Pharma engine that could, and did, blow out expectations. And if it’s still not quite as nimble as some analysts might like, its ability to deliver in massively expensive late-stage studies for drugs aimed at big populations has made it a darling of quite the investor crowd.

Lilly, for example, was thwarted at getting an accelerated approval for its Alzheimer’s med, but that didn’t really cut expectations, with blockbuster peak sales projections — even as Biogen/Eisai’s Leqembi suffers from dimming prospects as their high hopes are lowered by the reality of limited sales in the face of limited efficacy.

That pales, though, in comparison to the bright rainbow that’s emerged in obesity. Lilly continues to work up manufacturing capacity to meet demand for its new obesity version of tirzepatide, the GLP-1/GIP drug building up the diabetes franchise, where neither of the two leaders has been able to meet a seemingly limitless demand.

Lilly attracted considerable attention for its vow to build out manufacturing capacity ahead of Phase III data for its next-gen oral version, orforglipron, while clearly so unhappy about Novo’s decision to muscle in and snap up Catalent that CEO Dave Ricks is grousing about the antitrust implications of their rival’s move. Lilly, though, has bragging rights to solid pivotal data in a market that is nowhere close to saturation point.

Like a lot of the big spenders on the list, Eli Lilly has been hunting new immunology drugs and plunked down $2.4 billion for Dice last summer. That was part of a full slate of acquisitions, including a pair of small ADC companies. Following yet another hot trend, there was a $1.4 billion deal for Point, which put them into radiopharmaceuticals.

Lilly nabbed two new drug approvals last year as it waited on the 2 big franchises in obesity and Alzheimer’s. That’s a testament to the progress that Dan Skovronsky spurred after the global player made him R&D chief 6 years ago. Eli Lilly execs still may not always be first, in an industry where first can be tremendously important to commercialization. But they’ve been right where it counts big in drug development, and it will take a therapeutic earthquake to alter that perception anytime in the near term.


8. Bristol Myers Squibb: A rough year spurs a cut in R&D spending and some major late-stage R&D deals

  • R&D spending 2023:  $9.299 billion
  • R&D spending 2022: $9.5 billion
  • Change: -2%
  • Revenue: $45 billion
  • R&D as a % of revenue: 20.6%
  • Development chief: Samit Hirawat; Research chief: Robert Plenge
  • Ticker: $BMY — down 18% in the past year

The big picture:  This is a terrible time to try and explain why your Big Pharma company has structural issues that flattened or eroded sales revenue. Pfizer understands that and Bristol Myers got a bad taste of it as its shares slid 18% in the last year.

In both cases, the CEOs stepped up with a transition plan. The companies did some deals, but the late-stage stuff wasn’t cheap. And in Bristol Myers’ case, a new CEO was able to draw a line between its aging franchises and the new arrivals on the market, which saw some growth. The company line now: Just wait for the big pipeline hits to come and give us some time to weather the decline of these legacy drugs and you’ll love what you see.

Investors may not be cheering, but Bristol Myers’ stock did get some traction out of it in the last few weeks.

It was clear well before 2023 arrived that Bristol Myers understood it was facing some of those dreaded headwinds. That 2% drop in R&D spending highlighted the tight rein on spending for what remains a top 10 player in the pharma R&D world. Major figures in R&D, headed by Rupert Vessey, exited the company — in Vessey’s case, later making the flip to biotech at Flagship. And there was an unusual spat with Dragonfly after the pharma giant walked away from its $650 million investment.

New CEO Chris Boerner spotlighted the immediate strategy at hand: M&A. Mirati and KRAS came their way for $5.8 billion. RayzeBio happily landed a premium on top of the premium they had just scored in an IPO, as Bristol Myers followed rivals into radiopharmaceuticals. The $14 billion Karuna buyout put them into a late-stage race on Alzheimer’s, another R&D category that’s been enjoying a renaissance some years after pharma fled the scene.

Boerner’s bottom line in the Q4 review is that the company will steer more into bolt-on plays — rather than big buyouts — and licensing deals like the SystImmune alliance. That sets the stage for a “transition” period that will last until 2028, four long years ahead, when it’s promising “top-tier” results. It will also be looking at lower-priced competition for Opdivo.

Even before 2028, though, BMS will start losing patent protection on Eliquis. They’ve already begun price negotiations with Medicare. And Eliquis earned $12.2 billion in 2022, making it their number-one franchise. That’s left Bristol Myers and Pfizer, both under huge pressure to perform and do more late-stage deals, backing a full-court press in the courts to keep generics at bay.

Bristol Myers has had an active dealmaking arm for years, including in the wake of its big $74 billion buyout of Celgene, which also delivered Vessey to the pharma giant. That was just five years ago after Celgene had fallen on some troubled times. Celgene had been a standout in the licensing field, known for sampling a wide variety of drug plays in the industry pipeline. One of Bristol’s big failures, though, was ceding the high ground in PD-1 to Merck’s Keytruda, which has been buoying its rival for years. Bristol needs major drug franchises to make a difference in this world, and any future setbacks on the leading drugs it’s been buying now will not be welcome by investors.

There is a path forward for Bristol, of course, even as it vows to pay down debt. But it’s fairly narrow, and this field is known for some treacherous results.


9. GSK: After picking up some badly-needed revenue steam, what’s next for R&D?

  • R&D spending 2023: $7.9 billion (£6.22 billion)
  • R&D spending 2022: $7 billion (£5.5 billion)
  • Change: +13%
  • Revenue: $39 billion (£30.3 billion)
  • R&D as a % of revenue: 20.5%
  • R&D chief: Tony Wood
  • Ticker: $GSK — up 28% in the past year

The big picture: Tony Wood is still shy of his second anniversary as the CSO at GSK, but with an RSV vaccine riding high as a new blockbuster franchise and Shingrix looking every bit the long-distance franchise player GSK needs, he has a reassuring revenue foundation to work with. ViiV’s steady work in HIV — where GSK is a majority owner — also offers a confidence-building revenue stream. And the departure of the consumer unit is well into the rearview mirror now.

Its stock has done well, too, up 28% in the past year.

That’s quite a changed picture from the early days of his predecessor, Hal Barron, who came in with deep oncology experience and a big need to demonstrate a broad-based pipeline reorganization to overcome a well-earned rep for underperformance. Wood’s first moves in R&D were largely defensive, giving up some major alliances — such as a partnership with Adaptimmune — that looked shaky.

GSK has made a lot of early bets, and the risks involved naturally portend that many of its deals won’t survive. You can see that in play right through its recent decision to dump a pair of Vir partnerships in infectious diseases.

In their place, GSK has been inking major new development deals with the likes of China’s Hansoh, for ADCs. Oncology, though, is still only a small performer overall. And it’s been a focus for a while.

GSK spent a billion dollars upfront to bag a mid-stage asthma drug at Aiolos in a rare M&A deal. There was also the $2 billion Bellus buyout last fall, with an eye to creating a new franchise for chronic cough. But there’s been a notable absence of any splashy deals at GSK, with a reorg in research that offers GSK’s latest take on improving efficiency.

We’ll see how that goes.

In the meantime, GSK is doing what it can to stir up some excitement for late-stage drugs like depemokimab (again in asthma), camlipixant (from Bellus) as well as the antibiotic gepotidacin for UTIs/gonorrhea. It’s an uphill fight, though, without much megablockbuster razzmatazz built in. But GSK is a careful player.

After getting stuck with the rep for having one of the worst pipelines in pharma, though, reliable and steady progress with a high-profile launch in RSV will suit just fine. At least for now. It’s likely that investors will keep pressing for something big in Phase III, and that could cost CEO Emma Walmsley a considerable amount of BD money.


10. AbbVie: The slow-motion collapse of Humira keeps them focused on the bottom line while growing R&D spending

  • R&D spending 2023: $7.67 billion
  • R&D spending 2022: $6.51 billion
  • Change: Up 18%
  • Revenue: $54.3 billion
  • R&D as a % of revenue: 14%
  • CMO: Roopal Thakkar
  • Ticker: $ABBV — up 18% in the past year

The big picture: As Rick Gonzalez finishes his final run as CEO, he’s able to look back on a year that saw AbbVie complete its revamp period as the long-awaited — long, long-awaited — arrival of generic Humira bites into its old cash cow.

The great split at Abbott that created AbbVie set up a scenario where the company would pull out every stop to milk Humira for every conceivable dollar possible, delivering mega-returns while Gonzalez became the poster child of patent reform. The bottom line for AbbVie’s team: What’s repeated waves of congressional criticism with the stock price on the line?

Now AbbVie is able to boost expected revenue on the two big drugs developed on Gonzalez’s watch — Skyrizi and Rinvoq — with two new acquisitions to feed future sales projections. The buyout of Botox created a new, highly reliable franchise for AbbVie’s commercial team to lean on.

AbbVie is skilled at acquiring and building revenue. It had its eyes set on the ADC drug Elahere when it acquired ImmunoGen for $10 billion. Initially approved in 2022 for ovarian cancer, the drug is now being positioned for earlier lines of therapy.

Less than a week after the ImmunoGen deal was announced, AbbVie was back for a late-stage acquisition with the $8.7 billion for Cerevel’s neuro play. The deal will bring in clinical-stage assets for schizophrenia, Parkinson’s and dementia, as CNS moves back into a warmer phase in Wall Street circles. Both buyouts underscore Big Pharma’s considerable appetite for new products, with premiums in play for de-risked drug programs.

Gonzalez’s departure barely caused a murmur on the markets, which is a testament to his success in delivering for shareholders a secure, long-term rebuild. His legacy is a company with a ruthless rep for shepherding drug revenue while building a big interest in curtailing patents for pharma. But looking only at the numbers, he proved the winner at the company as the game was played during his tenure.


11. Sanofi: Paul Hudson is still out to make a great first impression in R&D

  • R&D spending 2023: $7.09 billion (6.509 billion euros)
  • R&D spending 2022: $7.08 billion (6.503 billion euros)
  • Change:  flat
  • Revenue: $41.3 billion (37.9 billion euros)
  • R&D as a % of revenue: 17.1%
  • R&D chief: Houman Ashrafian
  • Ticker: $SNY — up 2.8% in the past year

The big picture: When Paul Hudson showed up in San Francisco for JP Morgan in January, ready to talk up plans for the road ahead, he noted: “It feels like a lot longer than four years that we’ve been on this journey.”

But Hudson has always been more comfortable sounding like a newly-coined CEO, plotting a turnaround. And in the last few months, he’s played every card in that deck. The announcement late last year that Sanofi is bumping its R&D budget is central to that theme, though the news of its impact on profitability led to a rout of the stock price. And he delights in spotlighting late-stage assets, even though a slate of his early bets failed or have yet to prove themselves.

In what is now standard in pharma, Hudson made what he could out of the news he was spinning out the consumer division. Again, though, investors were less than thrilled by the gambit.

This time around the PR track, Hudson has boasting rights to the recently approved RSV drug Beyfortus, which comes with some big peak sales projections from Jefferies and much, much less from others. We’ll know soon enough if this is a winner or the latest disappointment at Sanofi. And, as always, there’s the Sanofi touchstone: Its megablockbuster Dupixent, which the pharma giant was able to partner on with Regeneron years ago — keeping the franchise fresh and expanding. Dupixent is the cash cow that gives Sanofi the financial strength needed to move ahead.

And that means there’s capacity for more dealmaking.

Not long after the San Francisco appearance, Hudson followed up on his M&A assurances with a $1.7 billion drug buyout, carving out a Phase II drug for a rare disease called alpha-1 antitrypsin deficiency, or AATD. It fits right into the zone for 2024, where pharma can only get positive attention for something within sight of an approval.

Like others on this list, Sanofi’s R&D rep will ultimately rest on its ability to deliver on the 12 would-be blockbusters the company is betting on. That includes three “products in a pipeline“: amlitelimab, frexalimab and SAR441566 (oral TNFR1si). They’re followed by tolebrutinib, lunsekimig, rilzabrutinib, an anti-TL1A in IBD, an IRAK4 degrader and itepekimab for COPD.

Behind it all, Hudson has also been promising to make Sanofi a leader in AI-assisted pharma operations. Sanofi, though, has been promising a makeover in innovation for well over a decade and has done nothing to prove it’s worked beyond staying on track with the megablockbuster it got from Regeneron. One breakout franchise delivered on Hudson’s watch would change that in a heartbeat.

We’re waiting.


12. Gilead: The CEO gambled on big innovation — and often lost. But the wagers keep coming

  • R&D spending 2023: $5.72 billion
  • R&D spending 2022: $4.98 billion
  • Change: +14.6%
  • Revenue: $27.1 billion
  • R&D as a % of revenue: 21%
  • CMO: Merdad Parsey
  • Ticker: $GILD — down 5.3% over the past year

The big picture: Daniel O’Day jumped into the CEO job at Gilead five years ago and hit the ground running. He hasn’t stopped, even though some of his biggest bets have run into brick walls.

That was apparent weeks ago with the news that Gilead would ice its work on blood cancer involving magrolimab, the CD47 drug picked up in a $5 billion buyout back in 2020. Their mid-stage work on solid tumors ground to a halt shortly after.

Rehashing and refocusing their deal with Arcus, putting in significantly more money while axing one of the Phase IIIs, didn’t help.

Gilead’s rep was built around HIV, where it has remained dominant, though more than a bit taken for granted. The old regime’s follow-up — after a cloudburst of cash for curing hep C that quickly dried up — was to buy out Kite and take a pioneering position in CAR-T, which hasn’t lived up to the financial hype that attended its arrival, despite the clear scientific innovation it brought to the field.

The stock was hammered hard in January after Trodelvy — acquired in the 2020 Immunomedics buyout, which achieved blockbuster status last year — failed a Phase III in second-line lung cancer.

But when you raise doubts and see your stock sinking, counter with a late-stage buyout. That’s clearly what O’Day had in mind when he plunked down more than $4 billion to buy CymaBay after the biotech unveiled late-stage data on seladelpar. Gilead bought a would-be blockbuster with a PDUFA date. And that’s a sign of some desperation at a company that badly needs a breakout.


13. Takeda: Moving up another notch on the top 15, as profitability wobbles, Takeda execs are still reaching for the golden ring in R&D

  • R&D spending 2023: $4.93 billion
  • R&D spending 2022: $4.49 billion
  • Change: +10%
  • Revenue: $29.54 billion
  • R&D as a % of revenue: 17%
  • R&D chief: Andy Plump
  • Ticker: $TAK — down 8.4% in the past year

The big picture: Takeda has been aggressively taking chances in R&D right from the time CEO Christophe Weber and R&D chief Andy Plump teamed up to remake the aging Japanese pharma company into a global drug player back in 2015. That meant steadily upping the ante in R&D — now up another slot in this year’s rankings — and investing in deals like the Shire buyout, which gave Plump his base in the Cambridge/Boston hub, along with a big stake in rare diseases.

For Takeda, that mission meant a broad effort to develop a major pipeline, from collaborations through Phase III. More recently, it’s been about concentrating their new work around a pair of key deals, particularly the $4 billion acquisition of Nimbus’ TYK2. It likely wasn’t much of a surprise, but their drug — which also has a $2 billion rider for milestones — cleared a Phase IIb hurdle in psoriatic arthritis.

For Takeda, it’s a clear indication of just how popular it is these days for pharma players to zero in on late-stage therapies in search of relatively near-term approvals.

Want more evidence of that?

Takeda bet $400 million in cash and more than a billion dollars in milestones to gain rights to Hutchmed’s fruquintinib and then was rewarded with an approval for treatment-naive cases of colorectal cancer in the fall. And they demonstrated its continued appetite in the rare disease space with the recent $300 million deal for Protagonist’s late-stage drug rusfertide, designed to treat a rare blood disease called polycythemia vera (PV).

The risks it’s taken on have been readily apparent to Takeda’s leaders, with its decision to drop Exkivity after flunking the Phase III NSCLC confirmatory trial, a Phase II fail for its key metachromatic leukodystrophy program, as well as a decision to drop Theravance as a partner after a seven-year alliance. The late-stage setbacks cost Takeda a $770 million write-down. Add in a loss of exclusivity for Vyvanse in 2023 — a $3 billion blockbuster in fiscal 2022 — and you have the outlines of unsteady performance for the pharma player, with Weber promising to do better in the near term.

Takeda is unusual in the Big Pharma world for winding up its fiscal year at the end of March. In order to do an apples-to-apples comparison, they prepared a summary of their R&D expenses and revenue for all of 2023 for Endpoints News.


14. Amgen: Capitalizing on a history of striking high-profile deals, Amgen stays in the spotlight

  • R&D spending 2023: $4.8 billion
  • R&D spending 2022: $4.4 billion
  • Change: Up 9%
  • Revenue: $28.2 billion
  • R&D as a % of revenue: 17%
  • R&D chief: Jay Bradner
  • Ticker: $AMGN — up 18% over the last year

The big picture: Amgen is a considerable distance from spending on research like the top 10 players in our R&D 15, but it frequently finds ways to box competitively in the biggest heavyweight category. It had done that with KRAS, taking a legit scientific advance that couldn’t quickly move the dial in a major way on the commercial side. That happens a lot in oncology. And now it’s in the spotlight with an obesity drug — branded as MariTide now — with hopes to take on the likes of Eli Lilly and Novo Nordisk.

The chutzpah originates with longtime CEO Bob Bradway, who has parlayed his Wall Street cred as a former banker at Morgan Stanley into major league status with a savvy understanding of the numbers and investors. He skillfully navigated the $28 billion Horizon buyout last year, bagging a lineup of commercial therapies as the company looks for the approaching patent cliff on Enbrel, a reliable blockbuster that has kept the revenue flowing in.

Amgen may not do a lot in M&A or Phase III, but what it does do, it does with style.

To complete the Horizon deal, Bradway had to orchestrate a deal with the FTC to skirt its objections to price bundling, which essentially leaves the pharma company on commercial probation with regular reporting to the federal agency. That took skill and boldness while maintaining the CEO’s rep for delivering on the bottom line. Its stock is up 18% over the past year.

Analysts will be watching carefully to see how Jay Bradner does in the top R&D post after the Harvard prof-and-former-NIBR chief assumes the seat of David Reese, now chief technology officer. Reese seems truly energized in his new role heading up tech, and Bradner is a die-hard research enthusiast who loves nothing better than jumping into conversations about the details of target degeneration.

Amgen is all about message.


15. Novo Nordisk: The longtime diabetes franchise player has a breakout run going in obesity — with vows to stay in front

  • R&D spending 2023: $4.7 billion (32.4 billion Danish Krone)
  • R&D spending 2022: $3.5 billion (24 billion Danish Krone)
  • Change: 34%
  • Revenue: $22 billion (232.2 billion Danish Krone)
  • R&D as a % of revenue: 14%
  • R&D chief: Marcus Schindler
  • Ticker: $NOVO — up 87% in the past year

The big picture: R&D spending as a percentage of sales has edged up a bit in the last few years, but the key driver here is GLP-1, where Novo has capitalized on its first-in-class leadership position in obesity. After decades spent in the shadow of chronic R&D failure, safety issues and a recent swarm of largely ineffective drugs, the obesity field is crushing it. That has swelled sales revenue as semaglutide glowed, so Novo’s research spending has boomed at a fast pace.

Now that the good times are rolling, and Novo already has a well-earned rep as a realistic and committed player in diabetes, which didn’t come cheap or easy, the new player on the R&D 15 is promising to stay out front — no easy task with Eli Lilly gunning for it. Novo has been snapping up new obesity tech at a furious pace, determined to stay out front.

Its one limiting factor here has been manufacturing capacity. Novo can’t satisfy the demand for a drug that is now a staple of public conversation, as the field gets a boost from a wide range of celebrities, including Oprah Winfrey. That’s marketing you could buy, but don’t have to. It’s coming for free.

With uncharacteristic bravado, Novo doubled down by striking a deal to acquire the global CDMO giant Catalent for $16.5 billion, and Lilly has been fuming about the antitrust aspects as CEO Dave Ricks complains that worldwide manufacturing capacity has either been maxed out or is not easily converted from its existing uses.

Novo’s commitment to growing R&D has international implications that far exceed the limits of its home country of Denmark, extending to hubs in Oxford, Seattle and Beijing. Most recently, Novo has committed to boosting its Boston-area research hub. And it’s likely to remain a key player in its dominant fields — unless some other tech can topple the megablockbuster that is remaking this company.

Novo may be at the end of this list in terms of R&D spending, but it has overachieved with its success for semaglutide. It has the capacity to do more and should continue to climb for several years to come as it makes a case for continued growth.


Postscript: Regeneron, with $4.44 billion in research spending — up 23% over $3.6 billion in 2022 — deserves an honorable mention in the competitive 16th spot. This year, Regeneron expects R&D spending to top up at or close to $5 billion. The company’s value has swollen on the success of its high-profile founders, Len Schleifer and George Yancopoulos, who continue to build the company — hitting a market cap in excess of $100 billion with the stock up 29% over the past year. Regeneron will likely find its way into the top 15 at some point, and we’ll be watching for it.

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SoCal Industrial Prioritizes Speed, Power and Sustainability 

Movement is key in the SoCal industrial space. Industrial real estate occupies some 200 million square feet of space in the SoCal region, with much of…

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Movement is key in the SoCal industrial space. Industrial real estate occupies some 200 million square feet of space in the SoCal region, with much of the activity driven by the Ports of L.A. and Long Beach. The swift movement – not storage – of goods from the port to their destinations, is priority. Currently, the industrial vacancy rate sits at 4%. While the increase in e-commerce during the COVID-19 pandemic caused industrial volume in the region to surge, volumes have declined 30% over the past year, returning to more normal, though still high, levels comparable to 2019.  

Attendees of I.CON West in Long Beach, California, had the opportunity to visit three impressive industrial properties in the SoCal region. The projects by Goodman, Watson Land Company and Bridge Industrial are in three different phases of completion and range in size from 165,000-500,000 square feet. 

The I.CON West group toured a 90-acre site in Long Beach purchased by Goodman, a globally traded real estate company, five years ago. The Goodman Commerce Center Long Beach was previously a Boeing manufacturing center with 100-foot clear heights that made it well suited for the current tenant Relativity, a company that makes 3-D printed rockets.  

Power is a major consideration for tenants in the region. Tenants are also asking for clear heights that are increasingly taller; the typical height in 2012 was closer to 32 feet, but buildings in the area are inching closer to the 40-foot range.  

Environmental concerns are top of mind in California. Long Beach requires a methane mitigation system and Boeing also required a vapor barrier to be added to the site as part of their land use covenant. The area was previously heavily comprised of oil fields, so vapor barriers are common. The state is working toward a 2035 goal of having 100% of new cars and light trucks sold in California be zero-emission vehicles, so sites are considering the current usage and future expansion of EV charging stations. Goodman’s site is equipped with 26 EV-charging stations but has the capability to expand to 100 more, as needs require. 

Watson Land Company’s site in Carson, California, is located in the South Bay, an area that includes many 1980s-era Class B buildings that are being redeveloped to meet modern usage and demand.  

One of the main challenges faced in this area is the heavy clay soil; Watson had to install an underground storm drain system to allow for percolation.  

One of the main advantages of the area is that it’s within the “Overweight Container Corridor” that allows for heavier vehicles – up to 95,000 pounds – to pass through with containers from the port.  

Watson Land Company is pursuing U.S. Green Building Council LEED Gold certification for this site; they were able to reuse or recycle 98.6% of the material crushed from the previous buildings. The company aims for LEED Silver or Gold in many of their buildings in California, part of its early legacy dating to the founding of Watson Land Company in 1912 with a commitment to serve as “good stewards of the land.” 

Another feature of the Watson Land Company’s building: ample skylights – a 3% skylight to roof ratio – and clerestory windows to bring in maximum natural light. 

For the final stop of the tour, attendees visited a former brownfield site in Torrance, California, developed by Bridge Industrial. Bridge Industrial considers their team problem solvers who can tackle sites like this one that require significant remediation. They have transformed the brownfield site into a modern, airy industrial facility with two stories of office space.  

Power, again, came up as a critical concern for tenants. Bridge Industrial used to provide 2,000 amps as the standard but now provides 4,000 amps as the new standard in response to tenant needs. One of Bridge Industrial’s buildings in Rancho Cucamonga (roughly a two-hour drive east from Long Beach) offers 4,000 amps with provisions for additional future service up to an astonishing 8,000 amps.   

With the dual ports and the LAX airport nearby, SoCal is poised to continue its strong industrial presence. Port activity, environmental regulations and evolving tenant demands – including for increasing power capabilities – are critical considerations for developers, owners and investors operating in this bustling region.


This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON West 2024. Learn more about JLL at www.us.jll.com or www.jll.ca.

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