China could be the first country to conduct human stem cell trials and presents a significant opportunity for Western companies who are brave enough to use this risky destination as a place to pursue this potentially lucrative sector of the biotech industry.
While stem cell research continues to be one of the most hotly debated topics in the Western world, relaxed government laws continue to attract both Western scientists and companies to China as a place where they can comfortably conduct this controversial research, or have it carried out for them, according to a new report by market research firm Kline & Company.
"Chinese scientists have made significant progress in the development of stem cell research," said Dr Hong Peng, co-author of the report and vice president of Innovase Consulting.
"Compared to most Western countries, China's culture has fewer religious or moral objections to the use of embryonic stem cells, and the government has no qualms with funding this research when it is for academic, educational, or therapeutic purposes," said Peng.
The report, titled "Licensing strategies & opportunities in the China pharma/biotech industry," highlights the growing opportunities for Western companies in China for outsourcing R&D, licensing, partnerships, joint ventures, and technology transfer, particularly in the areas of gene therapy, stem cell research and infectious diseases.
However, China may offer low barriers to stem cell research, but not without risks, and there are several considerations Western companies must be aware of when entering into research deals in China.
"While the Chinese are making some progress in protecting intellectual property (IP), enforcement of IP protection laws is still weak compared to that of Western countries," said report co-author Dr. Albert Wai-Kit Chan, whose law firm specialises in IP matters for major research, biotech, and pharma companies.
"To complicate matters even further, actual IP ownership is often unclear, as many of the Chinese biotech companies are partially supported by government-owned universities and research centres," said Chan.
Another issue that should make Western companies nervous about investing in stem cell research in China is the recent scandal involving once-revered South Korean scientist, Hwang Woo Suk.
Five months after he made international headlines for the world's first cloned dog, Hwang Woo Suk was exposed as a fraud, shattering South Korea's reputation as leader in the field of stem cell research.
Although no such large-scale cases of academic scandal have yet emerged from China, this case still has significant implications for the country's scientific credibility.
This is because a weak review and evaluation system for research results, which was a major factor in Hwang's fraudulent act going unchecked for so long, is also a problem in China.
Incidents of plagiarism and falsified results in Chinese researchers' work have been known to occur in recent years and much of this faked research has been given the seal of approval by Chinese academic judges and peers, only to be exposed afterwards as fraudulent by whistleblowers.
Until China seriously addresses such issues it will continue to sacrifice its competitive edge in the fields of scientific innovation.
However, Peng believes that China still holds significant opportunities in this field for Western companies to take advantage of - if they are first willing to invest in an exhaustive due-diligence effort.