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The Shift in Global Drug Development - The a16z Show | Wave AI Podcast Notes

The Shift in Global Drug Development

Wed Apr 29 2026

Theo Jaffee and Gabriel Dickinson speak with Cremieux about China’s rapid rise to the top of global clinical trial output. They discuss the regulatory reforms that accelerated China’s progress, the surge in novel drug development, and what the US would need to change to stay competitive in biomedical innovation.

Summary

The a16z Show: The Shift in Global Drug Development

Episode Date: April 29, 2026
Participants: Host(s) from a16z, Theo Jaffe, Gabriel Dickinson, and Co-host

Episode Overview

This episode explores a pivotal shift in global biomedical innovation: China's dramatic rise as a leader in drug development and clinical trials, surpassing the United States in several key metrics. The discussion centers on the factors underpinning China’s recent surge—systemic reforms, regulatory design, and incentives—and examines what the U.S. and other countries can learn (or fear) from this new balance of power in biotech. Featuring in-depth commentary by researcher Theo Jaffe, the episode is both an accessible primer and a policy deep-dive into the frontlines of 21st-century drug development.

Key Discussion Points & Insights

1. The New World Order in Drug Development

China Overtakes US in Biopharma Innovation
- Since 2016, China has become the global leader in clinical trial volume and novel drug development, outpacing the U.S. and Europe.
- [03:58] Theo: "China is actually ahead of the US now... Some people haven't realized it yet. It hasn't really leaked to the press at this point... It changes a lot."
- This extends beyond "me too" drugs—China is leading in completely novel therapies, including first-in-class gene and cell therapies.
Why This Shift Matters
- Increased innovation means potentially more treatments and cures worldwide.
- Strategic risk: If China withholds novel drugs for economic or geopolitical reasons, global health could be affected.
- [06:42] Theo (on strategic risk): "China could just at some point say, hey, we've got the cure for cancer and we're not going to share with you. Which would be... really bad."

2. Anatomy of a Clinical Trial & US vs China Pipeline

Trial Phases Explained
- Four phases: Safety (1), Efficacy (2), Broad Efficacy (3), and Post-approval Monitoring (4).
- Historically, the U.S. dominated in number and scale of trials, but now China leads, particularly due to larger sample sizes and faster processes.
Clinical Trial Failures
- Most trials—over 90%—fail at some point, often due to safety or efficacy issues.
- [10:38] Theo: "It's more than 90% failures. It's really bad..."
Rise of China’s Clinical Trials
- After regulatory reforms in 2016, China’s annual clinical trials skyrocketed, overtaking the U.S. and EU, particularly for pioneering therapeutics.
- [11:38] Theo: "China's done better. They're definitely rising more... In 20 years, they've managed to go from doing practically no clinical trials to doing more than America."

3. Beyond “Me Too” Drugs: China’s Novelty Edge

Not Just Copycats
- China’s reputation for "me too" drugs is outdated; they now lead in cell/gene therapies, innovative drug targets, and entirely new drug classes.
- [16:05] Theo: "These are cell and gene therapy trials... China is doing tons of these trials. They are going after enormous numbers for things that have just never been touched before."
Ethics and Policy Differences
- China has fewer ethical restrictions (e.g., on germline gene therapy), allowing more ambitious trials that are banned in the West.
- [17:44] Theo: "We don't do [heritable gene therapy] in the West. China's willing to actually cure families forever."

4. Institutional and Policy Differences: Why Is China Winning?

2016 Reform as a Game-Changer
- Pre-2016: Bureaucratic bottlenecks, slow approvals (6+ yrs), and domestic-only trial requirements.
- Post-2016: Sweeping reforms slashed approval times and opened the system—accepting foreign data, allowing parallel ethics review, and streamlining accreditation.
- [23:09]: "This is when China really just like starts ripping and roaring..."
- Market Authorization Holder (MAH) System allows for more continuous data collection and auditing at the end, versus constant scrutiny.
Streamlining and Abundance-Minded Policy
- Parallel ethics: One approval at a site quickly enables others.
- Administrative review is concentrated and made efficient.
- [24:46] Theo: "One ethics committee already signed off. Yeah, it's great."
- Remarkably, the Chinese system can "audit you at the end" instead of reviewing every procedural step, cutting months and costs from the pipeline.
Review Time Compression
- Approval backlogs shrank from nearly 2 years to ~65 days, with even shorter targets coming.
- [30:09] Theo: "They have shortened the review times. They've made everything just go quicker. They made everything streamlined."

5. Structural Barriers & Incentives in the US

Regulatory Bottlenecks
- Many small, repeated reviews delay U.S. drug approval; regulatory capture also occurs via mechanisms that protect profit for incumbent manufacturers, not consumers.
- [31:50] Theo: "You might burn through all your capital just waiting on the regulator. That's kind of the intent with some of the regulations in the US..."
Innovation Pipeline at Risk
- Funding and “most favored nation” (MFN) policies risk depressing profits below the cost of capital, potentially stifling U.S. innovation.
- [47:20] Theo: "There has to be money for this. In America, people don't pay enough. The returns for pharmaceuticals are below the cost of capital."

6. China’s Market Design: A Win-Win for State, Consumers, and Firms

Centralized Negotiation with Positive Spillovers
- China negotiates public drug prices, increases volumes sold by lowering prices, and ensures firms’ profitability, removing the dynamic where foreign governments drive up U.S. prices by negotiating too hard.
- [43:15] Theo: "China says, well, no, we're going to make you profitable... If you lower those costs, we're going to help you sell more so you don't have a reduction in profit... everybody's just better off in general."
Aligning Capital & Competition
- Clinics and manufacturers facing less bureaucracy and more predictable returns.
- Market incentives are better aligned with public health needs; targeted negotiations correlate with increased trials and innovation in those disease areas.

7. Looking Forward: Can the US Catch Up?

Emulation May Be the Path
- US could benefit from imitating China’s process reforms—streamlining IRBs, adopting “audit at the end” models, and promoting innovative trial designs (e.g., synthetic or shared control arms).
- [45:13] Theo: "There is no shame in just studying what China did and trying to replicate it."
But Politics, Awareness, and Funding Gaps Remain
- Regulatory changes aren't always well-communicated to the industry; bipartisan opportunity exists, but execution lags.
- [46:12] Theo: "There's an awareness problem in the market... There's a long list of learnings that we could take from Chinese structural reform and apply..."
The Unknown: Strategic Cutoffs
- For now, China’s health innovation benefits the whole world, but a future cutoff could be a major geopolitical and health risk.
- [50:49] Theo: "If they cut us off, then China might just be able to keep pushing ahead because they run cheaper trials... we might just lose an edge entirely."

Notable Quotes & Memorable Moments

On the scale and opportunity of Chinese innovation:
[05:50] Theo: "The Asia region... is something like half the world population... and now they're pulling more than their weight. They're out innovating per capita, Europe now, which is really incredible."
On streamlining ethics and oversight:
[24:46] Theo: "Parallel ethics committees... if one site in one region of the country approves the experiment, then every other site suddenly gets the same approval. One ethics committee already signed off."
On the efficiency of Chinese drug approval:
[30:09] Theo: "They have shortened the review times... They made everything streamlined."
On China's market reforms and beneficial negotiation:
[43:15] Theo: "China is actually doing market design that is really effective and it's... kind of daunting."
Cautious optimism or concern about the future:
[54:13] Theo: "You can imagine you can come up with doomer scenarios where we need a strategic cancer drug reserve because China's days away from cutting us off from our GLP-1s... I think the optimistic take is... everyone gets a cheap iPhone. That's a kind of good story to me."

Memorable Lighter Moments

Joking about "jumping jacks" during acronym confusion:
[03:31] Theo: "You said plyometrics. I like to do, you know, jumping jacks and stuff..."
Regarding gray market drugs for ‘looksmaxxing’:
[55:48] Gabriel (jokingly): "They said we're mod by tbpm... get me on the gray market peptide plus steroid stack. And you know what? We'll see if we can looksmax, MTS looksmaxing stack."

Key Segment Timestamps

[03:58] – China surpasses the US as leader in drug trials
[10:31] – Clinical trial attrition and “repurposing” drugs
[13:28] – The reality of “me too” drugs v.s. true innovation
[17:00] – Policy drivers behind China’s surge in innovation
[23:09] – 2016: The decisive year of Chinese clinical trial reform
[30:09] – The efficiency revolution: Backlog drops from years to days
[43:15] – China's buyer-negotiated pricing: more drugs, more profit
[45:13] – On simply copying China’s reforms
[50:49] – Strategic risks of relying on Chinese clinical trials
[54:13] – Optimism/pessimism regarding the global landscape

Summary Takeaways

China's institutional and regulatory reforms have given it a substantial lead in drug development, not just for existing diseases but for groundbreaking therapies.
The United States faces challenges from regulatory friction, lack of awareness about reforms, and profit pressures, but has the opportunity to borrow successful strategies from China.
The risk: If China chooses to restrict access or “pull ahead” geopolitically, the US and the world could suffer from reduced access to life-changing drugs.
However, for now, global innovation is benefiting from an ‘abundance mindset’ proliferating in China’s policy—potentially a harbinger for broader healthcare gains worldwide.

[45:13] Theo Jaffe: “There is no shame in just studying what China did and trying to replicate it.”

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Transcript

Theo Jaffe (0:00)

America is 4% of the world's population. It's about 13% of all the drug buying, but it's also more than half of the sales in terms of dollar amounts. So it's huge. And this is a big advantage because, like, you know, innovation does respond to the money, and it has to. We're more likely to have false positives and false negatives in our trials because they are smaller than theirs. Theirs are less likely to have both the type 1 and type 2. Error rates are both down for China because they run bigger, better trials. China says, well, no, we're going to make you profitable. We're actually going to make you money. If you are a firm that we are negotiating with and lower those costs, we're going to help you sell more so that you don't have a reduction in your profits, so they become more profitable and we pay less money, and everybody's just better off in general.

Podcast Host (a16z) (0:41)

What happens when the United States is no longer the leader in biomedical innovation? For decades, the US Dominated drug development, producing a large share of the world's new therapies and setting the pace for clinical research. But over the last few years, that's started to change. China has rapidly expanded its clinical trial system, accelerated approvals, and is now leading in both volume and novel drug development. This shift isn't about scale. It's about systems. Regulatory design, trial structure, funding models, and incentives all shape how quickly new treatments reach patients and where innovation happens. The question now is whether the US can adapt or whether the center of gravity for biotech continues to move. Theo Jaffe and Gabriel Dickinson speak with Cremieux.

Gabriel Dickinson (1:34)

Welcome to mts. Cremeux. How do you pronounce it in the French?

Theo Jaffe (1:40)

Creme.

Co-host (possibly another MTS host) (1:41)

That was pretty good.

Gabriel Dickinson (1:42)

We're gonna add.

Co-host (possibly another MTS host) (1:43)

That was like a. Yeah, slight Canadian accent there to the tweet wall. Oh, straight on the tweet wall.

Theo Jaffe (1:52)

Let me make this bigger so I can look at it.

Co-host (possibly another MTS host) (1:54)

Nothing ever happens. That's what it says. That's the watchword of mts. Welcome to mts. Nothing ever happens. Here are the situations. All right, great.

Theo Jaffe (2:07)

Theo Jaffe (17:49)

I mean the thing is, it's, it's, all the excuses are kind of bogus. If we can cure a family of like a horrible debilitating disease for all time, why, why don't we. I think we're slowly coming around on this to society and we're going to do that because China's going to do that. In part, I think that might be like a little bit of our motivation to do that. But they don't, they don't have as much resistance to that. So they are willing to actually cure families forever, which is something we don't do in the West. Oh, well, another thing is they are actually ahead in antibody based drug trials. They are also ahead and antibodies have been like a big thing in recent years. They're really, they're really good drugs. Small molecule drug trials. You've been ahead in that those are very easily produced like pills and stuff. When you just look at all novel drug compounds, again, what are they? All molecules. So for example, you know, those new, there are oral small molecule GLP1 drugs now and they are basically just like a pill form, easily mass produced version of the GLP1 drugs you're familiar with. Like tons of drugs are small molecule drugs. It's a very broad category of drugs that can be easily produced in a bioreactor and just like, you know, shoot a lot of pills in a week there. It's a useful modality. If you want to look that up later, you can, it's fine. Anyway, novel drug compounds, again, they're ahead in this novel frontier drugs, like the first drugs to ever be done for some big category of thing. This includes like even MRNA vaccines and stuff. Like they're just, they're ahead in all of it and they're gaining faster actually on totally novel things than they are in general. So they're already ahead of the US when it comes to clinical trials in general. And they're way ahead. They've been ahead for several years when it comes to things that are completely new and novel. Put the US and China next to each other in terms of totally novel things. China's even more ahead than it was for things in general. It is a rough, rough situation. Some other people have documented also that China's trials fail less for statistical reasons because they have Bigger enrollments, they make it easier to enroll and they have a bigger population. It's a lot easier to run a big clinical trial in the US that actually just works.

Co-host (possibly another MTS host) (27:04)

Right, right, right. So I should pause there. And so if you're joining us right now, MTS Live, we're here with creme. We're talking about basically progress reform in the Chinese clinical trial space. The headline here from, from CREMO is that China is ahead on all of these, has just. Has kind of just pulled ahead just recently over the last few years on new drug approvals and particularly on new drug approvals for kind of novel clinical targets, which is like, I mean, and the significance here, we can talk about it later, but. But it seems significant in a bunch of different ways. Potentially. The takeaway here is the thing that drove, or at least in part the thing that drove this change has been some major process change, some major reform in China about the actual process of running a clinical trial and taking a target through to approval. And this, I mean, it's good to just, I think it's good to just pick one out. It can get, we can kind of get lost in the detail here. But it sounds like this particular example that you're talking about, creme, is like, how do things work in the U.S. in the U.S. you go through a clinical trial. Throughout that process, you have to provide a bunch of different data and assurances to the regulator. And I imagine there's a review period for that. So they say, submit it by this date. We'll get back to you in 60 days. Oh, you got something wrong. We'll have another request for information. That'll take another 90 days to get back to. So you just have all of these kind of like, kind of stop points in the process of bringing a drug to market. What you're saying is that the model that China is using right now that they've gone to as part of this reform process is that each, if you're bringing a drug to clinical trial or if you're bringing intervention to clinical trial, you kind of keep all of the records throughout the entire process. You abide by a certain set of standards set by the regulator, but they don't check them until you reach the final phase three trial. And then they go, okay, let's audit your entire history here.

Theo Jaffe (47:20)

Yeah, it should be. The only issue though is that ultimately you must have the funding element that is crucial. There has to be money for this. I'm going to have to pay. In America, people don't pay enough. Honestly, it's kind of weird. The returns for pharmaceuticals are below the cost of capital. I mean, this last year, it's actually gotten worse since then. And there's a bigger issue with this current administration. This current administration can do all the regulation it wants and it might have. It'll have marginal benefits, it will be good, and it'll have great benefits after this administration is out and all that. But the issue is the mfn, the most favored nation. Pricing is a really huge problem. If you want to actually, and Trump loves this stuff most. Favorination pricing is where you try and make it so America's medications match the like peer country prices. So if Germany pays 100 bucks for medication, America will not pay more than 100 bucks for medication. That's the idea. If you do this comparison with a lot of different countries, you can lower pharmaceutical profits a lot in the process. If you actually, you know, are committed to doing it properly, you will do that. You will hurt those profits. And the profits are already too low to make this stuff self financing. And we have too many structural barriers. And if you cut them all down, we still have the issue of the funding. So America faces a lot of, a lot of headwinds, unfortunately, and very few tailwinds. The pharmaceutical province are actually taking a hit from mfn. The regulators, like at the cber, they were just like approving designs and then going back and not approving the actual trial results when it got done. That was, that's chaotic. It hurts the ability of companies to plan ahead and like actually schedule innovations and all that. Like, they can't, you can't make a clinical trial. Why would you invest money in a clinical trial if the regulator is not going to stick to their word and actually approve it if the thing turns out good?