"China is coming up, especially with returnees coming back. The innovation will come with the people," said Jimmy Zhang, a vice-president at Johnson & Johnson Innovation, which opened a regional center in Shanghai last autumn.

China calling

"I sometimes ask myself, 'why did I return to China?' I had a very comfortable life in the US and my family's still there," said Michael Yu, Innovent's founder and CEO. "But for lots of Chinese men, there's always something in the heart ... a desire to go back and do something. Biotech has only just started in China so you can have significant impact for a whole industry, for a country."

After completing postdoctoral training at the University of California, San Francisco, Yu spent a decade at US biotech firms before going home in 2006 to co-found Kanghong Biotech, which developed the first homegrown innovative monoclonal antibody to be approved by China's regulators. He later launched Innovent with funding from Chinese and US-based investors, including bioBAY, a government-funded biosciences park in Suzhou. BioBAY spent $140 million on Innovent's 1 million square foot (92,903 square metre) laboratory and production facility.

Another returnee, Li Chen, was chief scientific officer at Roche's China R&D center when, in 2009, he was invited to dinner by US-based ARCH Venture Partners, which encouraged him to go out on his own. "It wasn't something I was expecting," Chen said. He launched Hua Medicine in 2011 with $50 million from US and Chinese investors. Last month, it closed another $25 million in series-B financing.

The returnee start-ups are leveraging shifts in the global R&D landscape. The financial crisis, expiry of blockbuster drug patents, and mega-mergers have forced major drugs firms to reprioritize, giving newcomers a chance to develop promising compounds already in the pipeline.

Hua is about to launch Phase 2 trials for a novel Type 2 diabetes drug in-licensed from Roche. Zai Laboratory, another returnee firm, has an in-licensing deal with Sanofi to develop two compounds to potentially treat chronic respiratory diseases.

By focusing on diseases that are on the rise in China, these firms can recruit from a vast patient population, speeding up the time it takes to conduct clinical studies.

However, China's regulatory environment, especially for drug approval, "has been quite inefficient and often inadequate," says Jonathan Wang at OrbiMed, a global healthcare-dedicated investment firm. Getting approval for human trials can take over a year, compared to just weeks in the United States.