China Showcase 2021 Highlights Trends and Areas Ripe for Investment

China

Biotech growth in China continued at a rapid pace in 2020, despite COVID-19, which emerged from that country to become a global pandemic. Opportunities in China remain good and are expected to continue, according to panelists at China Showcase, a pre-JP Morgan week virtual meeting at the Biotech Showcase.

“The first half of 2020 was a stellar year for venture capital and innovative life sciences companies in China, and 2021 is on track to set new records across the board,” moderator Greg Scott, founder and chairman of the ChinaBio® Group said, opening the discussion. “Venture capital investment in healthcare is expected to reach over U.S. $18 billion, with another $10 billion for cross border partnering, and $11 billion in initial public offerings (IPOs). There have been unprecedented opportunities in the life sciences this year, particularly in China."

“When COVID-19 hit, we saw companies retreating and then very quickly adapting to the situation. By mid-2020, we saw more normal operations,” Scott told the virtual audience.  As it happened globally, the COVID-19 pandemic accelerated investors’ interest in telemedicine, digital technologies, and AI-powered healthcare solutions.

Victor E. Tong, Jr., a partner at Decheng Capital (with four U.S. funds and one renminbi fund), noted rapid innovations in diagnostic testing and therapeutics. Historically, diagnostics has been behind therapeutics in terms of innovation.

“This year, investors and the biotech ecosystem, in general, have realized diagnostics can bring tremendous value,” Tong said.

For example, one of Decheng Capital’s portfolio companies recently signed a $481 million contract with the U.S. government for a test that can be used at nursing homes to provide PRC-like sensitivity in only 15 minutes.

“The COVID-19 pandemic has become an advertisement for the healthcare industry, showing that you can bring a vaccine from Phase I to Phase III to FDA approval in less than nine months,” Tong said. 

Importantly, advances aren’t limited to the pandemic. Decheng Capital, with offices in the U.S. and China, has seen “historic deal-making, with private and public fundings, partnerships and M&As.

"We see this in every sector, including technology devices and diagnostics, and with equity and M&A deals. Two weeks before the end of 2020 (when the session was recorded), it feels like JP Morgan every day,” Tong said. “Access to capital is there. It’s a great time to be an entrepreneur.”

Betty Huang, head of business development and licensing for China/APAC at Bayer AG, noted an uptick in interest in infectious disease.

“In the past, investment was relatively low. This year, you see multinational companies collaborating and setting up funds (to develop solutions) for drug-resistant infections,” Huang said.

She predicted the continued acceleration of digital transformation and called it “a must-have.” In the future, Huang pointed out, “We will have big data to cover more patients” and to develop a better understanding of diseases. To that end, Bayer “is partnering both globally and locally.” Within Bayer,  “China is becoming the number one contributing country for our biopharma division.”

Amy Tang, a venture partner at Qiming Venture Partners, focuses on early-stage development for companies that have the potential to be among the top three players in their fields. Despite COVID-19, “Our investment strategy won’t change,” she said.

“We can’t meet in person, so we’re meeting virtually. Therefore, there’s more opportunity to approach new companies,” Tang said. Qiming is particularly interested in point-of-care diagnostics and medical devices as well as AI-related healthcare technology. 

“The AI area will be hotter in the future,” she predicted. Vaccines and clinical laboratory services also are poised for growth, Tang added.

PC Zhu, founder and CEO, ATLATL Innovation Center (and landlord to the ChinaBio® Group), noted the increased levels of cooperation and collaboration that have emerged because of the pandemic.

The change in lifestyle – notably the proliferation of online conferences and meetings – has been a boon for Zhu.

“This year I joined meetings in Boston that previously were physical only. This year, because (they were presented online), I could participate," Zhu said. "New technology will develop to make us feel like real people in these meetings rather than 2D pictures. COVID-19 sped up this change.”

The 60 companies housed in his innovation center are leveraging the virtual environment, too. “Last year I launched a cloud lab, with a microscope room, sales and services, analysis center, etc., with Danaher.” Originally, the facility was used by Chinese companies to more quickly build their organizations.

Since the pandemic began, European and American companies have been using the cloud lab because their own lab spaces are shut down because of states’ work-from-home mandates.

“We provide a project manager and technician and run their experiments for them, working through Zoom,” Zhu said. As an industry, “COVID-19 made us work closer together. No nation is safe from this virus unless everyone is safe. We all must support each other rather than just compete.”

Cross-border deals, therefore, are likely to increase, Huang predicted. During the crisis, she noted, “There was more out-licensing from China to the rest of the world.” In 2012, cross-border deals typically meant talking with small to medium innovative companies. “Now, that means top-tier pharma companies worldwide.”

The global slowing of clinical trials is one of those drivers. Huang maintains that in China, “Clinical trials were not disrupted.”

The other drivers behind China’s growing numbers of cross-border deals are capital inflow and Chinese innovation. “In 2020, the total IPOs for China and Hong Kong was around $190 billion. It’s the highest IPO market in the world (by dollar figure),” Huang said. “For 2021, we will have more entrepreneurship in China. It’s part of our business culture. We are more innovative and more willing to try innovation than other cultures,” she told the audience.

Yet, even Huang admitted there was uncertainty in China, namely around reimbursement for products developed in China for China. Pricing in the home country “will be very important for determining pricing in the rest of the world,” she pointed out. “That is a big question mark.”

China also is discussing policies regarding online prescription drug sales, Huang said. COVID-19 accelerated those discussions and, “As digitalization of healthcare becomes more common, there is policy support for online prescription drugs to ensure availability to every family.” She said she hopes for continued innovation, “not limited to telemedicine, but also for insurance, because it all is about the affordability of innovation.”

Most Read Today

Back to news