The next Dynasty?

I can’t get the article “The Chinese Century” out of my mind. To my way of thinking, it’s got some awesome implications for all Americans—not 20 years from now, but today—and for the future of the conquest of cancer. No, seriously!

You can read the article for yourself, but what I get out of it is that, with the flop over into the New Millennium, a new demographic reality is exerting great influence on the economics, social norms, and politics of countries around the world, including the US. The huge labor supply that exists in China, India, Southeast Asia, and Asia-Pacific is exerting a big downward pull on salaries and benefits of workers everywhere and on the cost of goods produced worldwide. There’s a big labor supply already and, going forward, there’s plenty more where that came from. We’ve seen it already in the US with rising awareness of outsourcing and offshoring of jobs. There is now “the China price”: manufacturers worldwide can’t price their goods much above what it costs to do the work in China with its low wages. Prices of manufactured products and the wages of labor to produce them are beging to be set de facto by the Chinese norm.

It’s not just the US. In Europe they are reversing the short workweeks and long vacations that have become the standard in places like Germany and France. The “leisure society” is evidently coming to an end because there is an abundance of labor in Eastern Europe that is willing to do the work without those benefits.

But perhaps there’s a silver lining. If salaries in the US stagnate or even sink from deflation but DVD players only cost $10 and agricultural products go down too, what’s it matter? The relative standard of living may stay pretty much the same.

So what’s this have to do with the future of cancer conquest? Well, in a previous post I suggested that the pharmaceutical industry is up against it because the cost of developing drugs is borne primarily by the free market of America. But I think that’s coming to an end. The US consumer, the health plans, Medicare, etc., aren’t going to put up with footing the bill for drug development by themselves much longer. The public is now aware that drug companies charge a premium in the US to get a profit from their R&D, but people in other countries are getting the benefit of many drugs through government single-payer contracts with pharmas. They develop things in the US where there’s free market pricing and strong patent protection and then pick up extra change in fixed markets elsewhere.

I think that way of doing business has reached a crisis point and will have to change. One way to do that is to spread the cost of development out over a broader population. If the US puts the brakes on the free market practices of the pharmaceutical and biotech markets, the companies are going to have to negotiate steeper prices in other countries or cut them off.

But if the US stops being the core for therapeutics development there will also be the tendency to take drug development offshore to places like China and India to lower development costs. Some clinical trials are already going there and there’s talk of the whole industry shifting what labor it can abroad to cut costs—and isn’t that what we’re asking for? Or do we want to keep the jobs in America? Hmm, what a conundrum. In any case I think the process and costs of development of future drugs for cancer and other complex diseases are going to diffuse from the US and Western Europe to Asia and elsewhere. Another alternative is to choke down the flow of money to the industry and spread the cost over more time.

In any case, The Chinese Century is a factor of life in the 21st Century. Heck, even the ACS is making moves into Asia, and FI Center member June Chan is the Society’s emissary!