As China builds biotech sector, cash floods US startups
SAN FRANCISCO/ HONG KONG: For three whirlwind days in June, US scientist Zhi Hong went shopping at the Boston Bio Conference to find drugs to fill the pipeline of his two-week- old drug company.
Crammed in tight, four-person booths executives use for private conversations, the former GlaxoSmithKline PLC executive pitched dozens of US biotech companies to partner with his start-up, Brii Biosciences.
Months earlier, Hong had raised US$ 260 million – much of it from Chinese and Asian investors – with a strategy to bring US biotechnology drugs to China, the world’s second-largest prescription drug market and home to a rapidly growing biotech sector.
Brii is now discussing partnerships with about a dozen drugmakers, which it aims to help by conducting clinical trials in China, applying for governmental approval and eventually negotiating reimbursement in a bid to capitalize on China’s stated plan to become the next global player in biopharma.
“I didn’t see this coming,” Hong told Reuters.
“Theysaid,‘Ifyoustartacompany, you won’t have any problem raising money.’ I didn’t quite believe that at the beginning.
“But as we went through the process, it was incredible.”
Brii is one of many biotech startups riding a wave of money from Asia that so far this year has poured US$ 4.2 billion into private US-based biotech companies.
That is over 43 per cent of the total amount of venture funding invested in the biotech sector, according to PitchBook, up from just 11 per cent in 2016.
These investors range from China’s 6 Dimensions Capital and Hillhouse Capital Group to Hong Kong-based Blue Pool Capital, the investment arm of Alibaba’s executives. They are in search of better returns across the Pacific after China’s recent homegrown biotech push has driven sky-high valuations.
“There are companies in China that haven’t even started clinical trials, and they have received term sheets for US$ 400 million,” said Nisa Leung, managing partner and leader of healthcare sector at China-based Qiming Venture Partners, referring to the agreements that describe the terms of an investment. “I think that’s crazy.” China’s biotech craze stems in part from a government plan launched a few years ago as part of the Made In China 2025 campaign.
The goal is to promote biotech as a strategic emerging industry, spawning rapid development and investment into the burgeoning sector. — Reuters