The most binding constraint in drug development is identifying a mechanism by which the disease works, and targeting a weak point through which the mechanism can be slowed or shut down. Since this is the hardest, scarcest part of drug development, firms that achieve it should be rewarded. If they are, then we would find more resources going into searches for mechanisms of disease, and ultimately achieve more effective therapies and even cures. But Chinese firms are increasingly alert to U.S. firms’ advances in mechanism discovery. “After Novo Nordisk published landmark results in February 2021 showing strong results for its weight-loss drug semaglutide, at least 16 Chinese programs targeting the same mechanism filed for clinical-trial approval or dosed patients in China within 18 months, according to the biopharma market-intelligence firm Sleuth, and at least 62 such Chinese programs have launched through June 2026” (Martinez 2026, p. A10).
When Chinese pharma firms learn of the discovery of a new mechanism they are quickly developing, and running trials on, “fast follower” drugs that make use of the same mechanism, but affect the mechanism with a slightly different chemical entity. They can run the trials more quickly, partly because their government and scientific institutions tolerate, and even encourage, them to cut corners in a variety of ways (Ritchie 2020, p. 70). They can then gain fast approval of their fast follower drugs, receiving a larger part of the rewards from the therapy than the firms that achieved the hardest part by discovering and proving the mechanism.
As long as this system continues, it creates a perverse incentive for firms to be fast followers, rather than discoverers of fundamental mechanisms. It also creates a perverse incentive for firms discovering new mechanisms to practice secrecy rather than transparency.
Small mission-oriented startups are the most likely source of the discovery of new mechanisms. But they are also the most resource-constrained, and the least able to conduct large trials. Secrecy will make it harder for them to raise funds, making it harder for them to survive, let alone thrive. The situation for the small firms is all the worse because the FDA requires large Phase 3 double-blind randomized clinical trials, which are especially hard for small firms to fund and execute.
My musings above were informed and stimulated partly by the article:
(Note: the online version of this article has the date July 9, 2026, and has the title “U.S. Biotechs Are Keeping More Secrets to Beat Copycats in China.”)
The book I reference above on Chinese RCTs is:
Ritchie, Stuart. 2020. Science Fictions: How Fraud, Bias, Negligence, and Hype Undermine the Search for Truth. Metropolitan Books.