Living Economics

Protest-free Drug Testing
China's low labor cost, abundant test animals, tax incentives, and permissive research environment have contributed to its comparative advantage in drug development.

Bridge Pharmaceuticals, a contract research organization in the San Francisco Bay Area, has set up an animal testing lab in Beijing's Zhongguancun Life Science Park. Such a move allows the company to enjoy a 5-year tax holiday, draw upon lower-pay Chinese lab scientists, and escape from the incessant and rancorous protests from U.S. animal-rights activists.

China's lower cost means that even mid-sized drug companies can afford to outsource their animal testing or pre-clinical trials to companies such as Bridge for about half of the prices charged by US-based competitors. This is good news for the development of orphan drugs with limited revenues which the big pharmaceutical companies ignore in favor of big-ticket mass-market drugs.

The migration of animal testing to China is a logical response to two conflicting forces. US regulations require all drugs be tested on at least 2 non-human species before submission to the Food and Drug Administration for clinical trials. But US animal-rights groups are vehemently and sometimes violently against animal testing. Although China has its own animal-rights defenders, they are not openly militant against government wishes.

So China enjoys comparative advantage in animal testing not only because its labor is cheaper, testing animals are plentiful, but also because its moral qualms against animal testing are less vocal. More relaxed moral qualms are also instrumental in China's faster advances in stem-cell research than more developed countries which are still debating the morality of human embryonic stem-cell research. A report by top British scientists has identified China as being at the cutting edge of stem-cell research and well positioned to discover major breakthroughs in medical treatments of intractable human diseases (South China Morning Post).

  1. See also Healthcare Tourism
  • Boston Globe. 11/25/2006. "Outsourcing animal testing."
  • Forbes. 11/13/2006. "Comparative advantage."
  • South China Morning Post. 2/24/2005. "A cutting edge."
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