Merck will continue to invest in China, which is not only the second-largest consumer market in the world but also has rising innovation capability, said a senior executive of the German science and technology company.

"China is a significant market for us, for looking at innovation to bring it outside China and bringing our innovation into China," said Peter Guenter, a member of the executive board and CEO of Healthcare at Merck.

"We have done a lot of investments in China. Our commitment to China is clear. We will continue to grow, and we will continue to invest in the country."

The executive is deeply impressed by the remarkable changes in China's pharmaceutical market as it has "developed incredibly over the last 10 to 20 years, transforming from a generic industry focused on small molecules to one driven by innovation".

China has become very strong in technological innovation, as reflected by its rapid progress and innovation in the field of antibody-drug conjugates, he said.

China's huge potential as a major innovation hub holds great promise for Merck to collaborate with local partners, including startups, biotech and biopharma firms, and research institutes, to drive innovation forward, said Guenter.

"At a certain point in time, China could be the country from which innovation comes, truly first. I think that's the next frontier for the Chinese R&D ecosystem, to continue being very, very good at perfecting technologies, but also going upstream to find a new molecule for a new disease."

Citing various dynamics behind China's growing innovation drive that include well-educated talent and enabling regulatory environment, the executive spoke particularly highly of the clinical development pace in China.

The speed, agility and quality of the Chinese investigators who conduct clinical trials are remarkable, he said, adding the massive number of patients with unmet medical needs also contributes to the speedy drug development pace in the country.

"We are very active in China, having been in China for more than 90 years. We are conducting our own R&D in China, and also look at all these local partners for collaborations. We have done a lot of local collaborations with Chinese biotech companies, and hopefully, we can do even more of that in the future," he said.

China is the second-biggest pharmaceutical market in the world, but still has a large growth potential. Within Merck, the China business takes up a double-digit share of the global contribution and is of great strategic significance.

There are three sectors where the company operates — life science, electronics and healthcare. In the past 10 years, Merck has invested around 6 billion yuan ($820 million) in China. Since last year, the company has closed two licensing deals with Chinese companies, one with Hengrui Pharmaceuticals and the other one with Abbisko Therapeutics, bringing Chinese innovations to the global stage and to benefit patients worldwide.

The executive, however, said concentration of efforts on certain known targets in new drug R&D, which tends to cause unhealthy competition, is a challenge facing the Chinese pharmaceutical industry.

He further said Merck is always ready to help China to build a multilayered reimbursement or insurance system, so as to expand insurance coverage for drugs and treatments, thereby providing more rewards for innovations.

In light of the complexities and geopolitical tensions in the world, Guenter called for more collaboration among countries, and among industries.

"Only through partnerships and working together will we be able to solve the big challenges of mankind. If you think about climate change or new treatments for patients, collaboration is the right recipe and the right answer," he said.

China will improve the mechanisms for supporting the development of innovative drugs and medical equipment, according to the resolution on further deepening reform in a comprehensive fashion to advance Chinese modernization, which was adopted at the recently concluded third plenary session of the 20th Central Committee of the Communist Party of China.

The country will also further reform medical insurance payment models and improve major disease insurance and medical assistance schemes, the resolution said.