The impact of China’s economic downturn on the biopharmaceutical industry parks is becoming increasingly evident. In Ji’nan’s Bianque Health and Wellness Ecological Valley, only two enterprises have settled in over the past two years. The vacancy rate at Shanghai Zhangjiang Medicine Valley has soared, with Guangzhou’s attempts at revitalization through “zero rent” measures showing minimal effect. In light of this, by analyzing various case studies and industry perspectives, reporters aim to present the current reality of the biopharmaceutical parks across the mainland China.
Before the outbreak of the COVID-19 pandemic in early 2020, Shanghai’s Zhangjiang Medicine Valley was considered a benchmark for China’s biopharmaceutical industry, with almost all parks being fully occupied. However, the situation has drastically changed. According to official reports by Beijing Health Navigation Technology Co., Ltd.’s account “Jianshiju,” the vacancy rate in most of Zhangjiang has risen to 20-30%, and some newly constructed areas struggle to attract occupants. Even Lingang Industrial Park, an essential development area in Shanghai’s plan, faces similar challenges. An employee at the park mentioned that many businesses have downsized office spaces since last year, or have even relocated their research and development centers back to Jiangsu and Zhejiang.
Adjacent to Shanghai, Suzhou Biopharmaceutical Industrial Park, representative of biopharmaceutical technology innovation in eastern China, is also showing signs of fatigue amidst the country’s economic decline. The occupancy rates for phases four and five have dropped to around fifty percent, significantly lower than the over ninety percent peak. While related parks in Beijing are slightly better off, they still had to reduce rental prices by thirty percent to attract companies.
Mr. Li from Lianjia Beijing Real Estate Agency stated over the phone on September 23rd that current prices for second-hand homes in Beijing have dropped by thirty percent compared to 2018. The vacancy rate in the city’s biopharmaceutical industrial parks is nearing forty percent: “Industrial parks such as Yizhuang, Daxing, and Zhongguancun in Haidian have approximately a forty percent vacancy rate. Many pharmaceutical companies have moved out, and some foreign companies have also withdrawn, leading to a natural increase in vacant properties. Even halving the rental prices hasn’t attracted tenants.”
Reports from “Jianshiju” highlighted the case of Bianque Health and Wellness Ecological Valley in Ji’nan. According to the initial plan, the park was supposed to attract 50 companies within two years of its opening, but to date, only two enterprises have settled in. The contrast between the vacant park buildings and the meager number of occupied companies is glaring.
As revealed on Shandong Radio and Television’s program “Questioning Shandong,” the situation is similarly concerning for Hai Ping Medical Equipment Industrial Park in Ji’nan. Four main buildings in the park remain vacant to this day, with only one building managing to attract a single company.
Mr. He, a prominent researcher in industrial economics at a well-known Chinese university, expressed in a phone interview with reporters that such projects often overly rely on local government investment promotion slogans and financial subsidies during the initial planning phase, neglecting the industry’s own agglomeration effects. The lack of leading companies and complete upstream and downstream support ultimately results in parks and buildings that struggle to form a genuine industrial ecology.
To rescue the real estate sector, Guangzhou authorities introduced a “zero rent” policy to attract companies, but the results have been underwhelming. In July of this year, the Guangzhou Development Zone Management Committee announced the allocation of 150,000 square meters of industrial space for state-owned enterprises, initiating a pilot “zero rent” policy that covers multiple international biopharmaceutical innovation centers and industrial buildings. However, this policy has not addressed the fundamental issues at hand.
Regarding this matter, a former staff member from the Economic and Industrial Department of the Guangzhou Development Zone Management Committee, Mr. Huang Qiang (pseudonym), shared in a phone interview, “Rent constitutes a relatively small proportion of a company’s expenditures. For small and medium-sized enterprises, the primary pressures are on labor costs and research and development investments. With yearly wage increases, continuous R&D funding requirements, coupled with insufficient market demand, tightening financing environments, unstable supply chains, many companies soon reach a breaking point. Waiving rent may alleviate the situation temporarily, but it doesn’t solve the root problem.”
Some scholars emphasize the “lack of industry agglomeration effects in parks,” a view echoed by Huang Qiang and the aforementioned scholar, both pointing out that the crux of the issue lies not in rental prices, but in inadequate market demand, tightened financial chains, and the absence of an industrial ecosystem. Huang Qiang added from an enterprise perspective, “Labor and R&D costs are particularly burdensome for small and medium-sized pharmaceutical companies.” Their consensus is that without systematic industry support and improvement in financing environments, rent incentives can only provide temporary relief.
Data from the PharmCube shows that innovation drug financing in mainland China has been steadily declining since 2022, with financing events and amounts hitting recent lows in 2024, reverting the early-stage financing activity back to 2018 levels. Numerous experts and industry insiders conclude that the simultaneous contraction of financing and weakening demand is the fundamental reason behind the rising vacancy rates in biopharmaceutical parks and the ineffectiveness of preferential policies.