CHINA-based biotechnology startups looking to go global are poaching talent from the biggest American pharmaceutical companies, promising managers and medical chiefs lucrative pay packages and a more entrepreneurial work environment—all without asking them to uproot their lives in the U.S.

At least a half-dozen Chinese biotech startups have established offices from Greater Boston to Silicon Valley in recent years, looking to commercialize their treatments in the world’s largest drug market by sales.

Former executives of companies such as Johnson & Johnson and Eli Lilly & Co. are spearheading these efforts, overseeing tests of Chinese experimental drugs on American patients and navigating their regulatory approval.

Eric Hedrick, a former medical director at Genentech Inc., had never been to China before he became the first U.S. employee of a little-known, then five-year-old Beijing company, BeiGene Co., in 2015.

Dr. Hedrick, who had co-led development of the blockbuster cancer drug Avastin at Genentech, joined BeiGene as a consultant and later was named chief medical officer. Now 54, Dr. Hedrick said he wanted to be on the front lines of China’s biotech boom but didn’t want to displace his three children from the U.S.

Dr. Eric Hedrick co-led development of the blockbuster cancer drug Avastin at Genentech Inc. before joining BeiGene, the Chinese biotech. PHOTO: BEIGENE
Dr. Hedrick said he persuaded other Genentech colleagues to leave, which helped BeiGene expand its U.S. head count to more than 400 today, with offices in Massachusetts, California and New Jersey. Three of its experimental drugs are in late-stage trials in the U.S.

Before BeiGene approached him, Dr. Hedrick said he “had no idea innovation was taking place at such a rapid pace” at Chinese companies. As early as this year, BeiGene says it plans to seek regulatory approval for a treatment for certain white blood cell malignancies in cancer patients.

An approval from the Food and Drug Administration would mark the first entry of an innovative, or nongeneric, drug from a Chinese company into the U.S.

BeiGene’s rapid expansion underscores how, from automobiles to technology, Chinese companies striving to be global players are setting up shop in the U.S. to draw on a talent pool they would otherwise struggle to lure.

Local talent is crucial for Chinese biotechs because they need to test their drugs in the U.S. to receive approval.

Big companies acknowledge the fight to retain top talent has become fierce as Chinese biotechs expand overseas. “As with any growth industry, demand for experienced leaders is naturally on the rise,” a J&J spokesman said in an email.

Some Chinese companies hiring in the U.S. declined to comment for this article because of concerns they could become targets in Washington, which has recently been placing restrictions on Chinese tech firms, citing alleged corporate espionage and an outflow of talent and technology.

For the employees, switching from a U.S.-based multinational to a China-based startup isn’t always smooth. Corporate managers say they struggle to retain people who aren’t multitaskers or risk takers.

BeiGene Chief Executive John Oyler said employees joining startups often find more uncertainty, as well as fewer administrative staff to support top functions. “A lot of people in big companies aren’t used to that,” he said.

At a cancer conference earlier this year, Richard Pazdur, director of the FDA’s Oncology Center of Excellence, which helps expedite development of cancer drugs, encouraged Chinese companies to bring their treatments to market, saying the increased competition could spur Western rivals to lower prices in the U.S.

Christian Hogg, chief executive of Hong Kong-based Hutchison China MediTech Ltd. HCM -2.74% , or Chi-Med, said it is cheaper to discover new drugs in China, where researcher salaries tend to be lower, and then test them in the U.S., versus to run the whole process overseas.

Chi-Med, whose drug discovery efforts like BeiGene’s are concentrated in China, last year hired a vice president at Lilly, Marek Kania, to lead its U.S. trials. Under his supervision, Chi-Med now is testing two experimental drugs and has received FDA clearance to test two more. Chi-Med plans to double the size of its 20-person U.S. team over the next year, Mr. Hogg said.

For years, scores of Western-trained Chinese scientists went to work in the U.S. pharmaceuticals industry, helping design drugs that fetch billions of dollars in sales. Now, many of them are switching to Chinese startups.

The San Francisco-based chief operating officer at Zai Lab , ZLAB 0.87% a four-year-old biotech headquartered in Shanghai, is a China-born executive who previously served as global head of mergers and acquisitions at J&J’s drug arm. He has hired 10 researchers in Silicon Valley to complement Zai Lab’s drug discovery efforts based in Shanghai since his appointment late last year.

Peter Brams, a molecular biologist leading the U.S. research team, joined Zai Lab late last year after nearly a decade at Bristol-Myers Squibb . The chance to work for an upstart meant “starting something exciting from scratch and getting to influence it,” he said.

Roles are more streamlined at large multinationals, Dr. Brams said, and many drugs arrive as the result of purchases of smaller companies rather than being developed in-house. Opdivo, Bristol-Myers’s best-selling cancer drug, came to it from Dr. Brams’s group at Medarex Inc., which Bristol-Myers acquired in 2009.

Zai Lab plans to seek FDA permission this year to test its first experimental drug in the U.S.

Suzhou-based Innovent Biologics Co. is building a base in Silicon Valley and hired a former global medical director at Novartis AG, Zane Yang, as its chief medical officer in the U.S. last year. Innovent is testing two experimental cancer drugs in the U.S. and recently got a signoff from the FDA to test two more.

Innovent plans to double the size of its 10-member U.S. team over the next few months, according to Chief Executive Michael Yu, who said he has sweetened the deal for prospective hires by offering shares in the fledgling company.

At BeiGene, Dr. Hedrick said he thinks his gamble is paying off. At first, some friends scorned his move, which included relocating his family to Lafayette, Calif., from New Jersey. But as experimental Chinese drugs gain traction at major U.S. health-care conferences, “there are a lot more believers now,” he said. - WSJ

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