4 Aspects of The Biotech Investment in China (1)

4 Aspects of The Biotech Investment in China (1)

In the past 20 to 30 years, information technology (IT) has been the driving force of reforms in people’s lives in China. This phenomenon is very likely to be changed. It is predicted that life science technology will dominate the theme in the next decade, and we have already begun to see it emerge in a rapid speed. A slew of investment firms has directed their efforts and doubled down their investments in the biotech and pharmaceutical industry, swinging the pendulum away from IT to life science.

In this article, I am going to take you on a tour to understand the investment scenery of Chinese life science field, particularly focusing on 4 aspects, including its current investment situation, major investment firms, healthcare segmentations, and key factors to consider when investing in Chinese life science start-ups.

1. The Current Investment Situation in China
The investment in Chinese life science sector has been thriving in the past five years, largely thanks to the international huge success in developing monoclonal antibody drugs treating cancers and a variety of other hard to handle diseases. In addition, the supportiveness of the Chinese government towards the industry and innovative drug developments has also played a very important role in this process, along with the improvement of living standards and income and people’s growing demand for health.

In 2016 alone, Chinese VC and PE firms have raised $200 Billion, an increase of nearly 100% compared to last year. Among them, about 350 funds are specifically designed for medical care or medical-themed projects, contributing to close to $30 billion. Meanwhile, a total of 39 healthcare related venture capital funds was set up, including 19 funds initiated directly by the pharmaceutical industry.

Since 2015, China has been stepping up its efforts in the innovative drug investment. When it came to 2016, the number of investment firms in this realm has skyrocketed, amounting to a total of 209 VCs. The tide is also turning in the life science sector’s favor, as the Chinese government has introduced a series of new policies to drive innovations in this field, along with an increasing influx of large number international and domestic capitals.

“China is entering the golden age of life science investment.” noted by Neil Shen, the founding managing partner of Sequoia Capital China at last year’s Chinese Future Prize conference. “The current market is primarily centered on supporting innovation and investments in the incubation stage. But the future will lay largely on mergers and acquisitions.” He continued.

2. Major Investment Firms in the Life Science Industry in China

  • Ombrimed:
    Ombrimed, founded in 1989 in New York, is the world largest investment firm in the biomedicine sector, with a total net worth of approximately $14 billion. Its investment projects cover a number of areas, including biopharmaceuticals, medical devices, medical services and diagnostics, etc, ranging multiple phases from start-up, growth, maturity to post-IPO.

Ombrimed is committed to introducing overseas medical products and technologies into China. Currently, it has invested in about 40 biopharmas and biotechs in Asia, with $2 billion capital in listed companies. Its star projects include Luye Pharma Group, Zai Lab, Sichuan Credit Pharmaceutical, etc.

  • Sequoia Capital China:
    Sequoia Capital China, established in 2005, is currently managing $10 billion assets. Healthcare sector is ranked as its second largest investment field with a total of $70 million capitals.

Up to date, it has chipped in more than 300 companies, with 50 of them completed an IPO. Some of its most famous investments include JHL biotech, Zai Lab, Wuxi App Tec, Betta Pharmaceuticals, etc. Its investment stage ranges from A round all the way to PIPE.

  • Oriza Ventures:
    Oriza Ventures, with a strong focus in the seed and growth phase business, has raised about $7 billion funds in hand. Different from the majority of VCs, it practices a number of business models: equity investment, debt financing, and investment and financing.

By the end of March 2017, the group has backed a total of 333 seed stage projects, 98 growth projects, and 49 mature projects, along with 7 completed M&A.

In the innovative drugs investment sector, Oriza Ventures has led the A round financing of InnoventBio, funneling in $ 25 million, and Cstone Pharmaceutical’s series A with $ 22 million.

  • Legend Capital:
    Legend Capital, managing more than $4 Billion assets, is the independent professional venture capital firm of Legend Holdings. In the end of 2010, it founded a medical investment branch, marking its entry into the life science industry.

Up to date, Legend Capital has funded more than 30 projects in the healthcare sector, topped to $400 Million in total. Some of its successful investments include Wuxi Biologics, Innovent Bio, Peg Bio, Suzhou Ribo Life Science Co, etc.

  • Qiming Venture Partners:
    Qiming Venture Partners, established in 2006, has offices in Shanghai, Beijing, Suzhou, and Hong Kong. Currently, it holds five US dollar funds and four RMB funds, total assets reaching $2.7 Billion.

Qiming has led the A round financing of dMed with $9 million and Suzhou Connect Pharmaceuticals with $4 million. Some of its other successful backings include Tellgen Life Science Co, Amoydx, and Ganlee Pharmaceutical, all of which are on the track to file for an IPO.

  • Eight Roads Ventures:
    Eight Road Ventures, formerly known as Fidelity Asia Ventures, is currently managing $1 Billion funds. It is one of the early venture firms, which have entered in the China back in 1995, and has offices located in Hong Kong, Shanghai, and Beijing. Some of its famous investments include WuXi App Tec, Innovent Bio, Shanghai Hile Biotechnology Co, etc.
  • Highlight Capital:
    Highlight Capital, founded in 2014, manages $1 Billion funds. It primarily focuses on investment in early and growing stage projects and has tapped into multiple fields in the life science sector, ranging from pharmaceuticals to medical devices and others. Some of its honorable backings include Chengdu Kang Hong Pharmaceutical Group Co, Wuxi App Tec, Kintor, Shanghai Hehuang Pharmaceutical Industry Limited Company, etc.
  • 6Dimensions Capital:
    6Dimensions Capital, founded in May 2017, is the end result of the merger between Eight Roads Ventures and Frontline BioVentures. It currently manages $800 million and is committed to raising more funds in the near future. Its competitive edge includes the combining experience of Frontline BioVentures in the Chinese market and Eight Roads Ventures in the US. To date, it has successfully invested in a host of ventures, including BeiGene, CStone Pharmaceuticals, Juno (IPO), etc.
  • Lilly Asia Ventures:
    Lilly Asia Ventures, founded in 2008, largely focuses on biomedicine, biotechnology, medical devices, and animal health. At present, it manages three US dollar funds and two RMB funds. Some of its successful investments include InnoventBio (more than $1 Billion), Just Biotherapeutics, 3SBio, Betta Pharmaceutical Co, Tianjin CanSinoBio, Crown BioScience, Impact Therapeutics, etc.

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