Chinese funds flow into US biomedical enterprises in large quantities

Source: Pharmaceutical Times reported on April 18, 2018-5-2 that as China seeks to become a global leader in new drug development, Chinese investors are spending heavily on US pharmaceutical start-ups In the first quarter of this year, China's investment in the industry exceeded 10 times that of the same period last year According to the report, on the one hand, China's policies now restrict the flow of "going global" funds into foreign real estate, gambling and other industries, and encourage the entry of innovative industries that will help "made in China 2025"; on the other hand, some US biotech companies have more choices as a strategic opportunity to enter the vast Chinese medical market For the long-standing surplus of US venture capital, this makes "investing in prey", a potential start-up biomedical enterprise, even scarcer Under the background of Sino US trade frictions, what will happen to the capital feast? Bloomberg News screenshot: in the first three months of 2018, venture capital funds in China invested US $1.4 billion in private biotechnology companies in the United States, accounting for 40% of the total funds raised by these companies in the same period (US $3.7 billion), according to pitchbook, a global data research institution in Silicon Valley In the first three months of a year ago, Chinese funds invested only $125.5 million in this industry, accounting for only 7% of the total funds obtained by these companies in the same period Chinese policymakers want to encourage more innovation in the country's manufacturing led economy By allowing more investment in U.S biotech companies, China will be able to access new medical technologies earlier and more easily, and share the high returns that these companies may receive In the past, new medical technology has always been listed in the West first Chinese investors have become a new driver of the gold rush, which has brought billions of dollars in valuations to a range of small biotech companies Wang Jian, co-founder of OrbiMed advisors LLC, an investment company focused on biomedicine, said in a telephone interview that Chinese capital has become a "major phenomenon" If you can cure cancer in New York, why can't you cure cancer in Shanghai? There's no reason Cooperation is the general trend and our goal " Obo capital is headquartered in Shanghai It's unclear whether the trade friction between China and the United States will deepen, but it could slow the flow of Chinese money to Silicon Valley, Cambridge, Massachusetts and other medical innovation centers The U.S trump administration is discussing tariffs on Chinese medical equipment companies and pharmaceutical companies, saying it wants to crack down on China's "abuse of U.S intellectual property rights." Congress is trying to influence China's influence in the technology industry But as the Chinese government encourages Chinese companies to move away from low-cost generic models, the wave of Chinese investment may be on the rise "China has a huge appetite for entering the biotechnology sector," said Joel Marcus, CEO of Alexandria real estate equities "I don't think there will be a shortage of capital in China." (the company is a real estate investment trust company headquartered in California The investment object is life science research and laboratory property Bloomberg News screenshot: start-ups in the U.S biology sector are absorbing funds at a very fast pace, reaching the highest level since at least 2008 in the first quarter of 2018, and the average quarterly financing level in the previous 10 years was only $44 million This quarter, five companies raised more than $200 million in a round, compared with only five in the previous 10 years Among the winners was Moderna therapeutics, a Cambridge, Massachusetts based biopharmaceutical company focused on RNA therapy, which now has a market capitalization of $7 billion after receiving another $500 million in financing in February The company declined to comment Harmony Biosciences, headquartered in Pennsylvania, specializes in the treatment of central nervous system diseases such as narcolepsy The company raised $295 million from investors including Nan Fung life, a unit of Hong Kong's Nan Fung Group "From the growth curve, biotechnology is still at an early stage," said Peter bisgaard, general manager of Nanfeng life Harmony biology also declined to comment The ambitious "made in China 2025 plan" was launched in 2015, and biotechnology and other innovative enterprises received greater government support China's policies no longer support the participation of "going global" funds in industries such as foreign real estate and gambling Now, they encourage industry investment that can help achieve the national strategic goals China seems to be trying to exclude advanced medical technology from trade frictions with the United States The Chinese government will lift tariffs on foreign cancer drugs from May 1 this year, which is a good thing for Western pharmaceutical companies Brad Carl, CEO of Loncar Investments, a well-known investment institution in the biotechnology industry, commented that the timing of China's announcement of tariff exemption "may not be accidental." "Anything that could affect human health is, or should be, the last option," Lonkar said in a telephone interview I think both sides have enough reason to look at this issue " Despite its large population, China once lagged behind other countries in drug spending In the past 10 years, China's drug expenditure has expanded In 2012, China surpassed Japan as the world's second largest pharmaceutical market after the United States According to a report prepared by iqvia, an industry consultancy, which was formed in November 2017 by the merger of Hermes and Kuntai, the size of the biomedical industry is likely to reach US $170 billion by 2021, compared with us $116.7 billion in 2016 It is also becoming easier to sell drugs in China The lengthy approval procedures for foreign drugs have now been streamlined and relaxed American companies have seen China as an important market, allowing Chinese investors to share the rewards of new medical technologies Hummer Mars, a banker at New York international capital, often works with Chinese investors to look for U.S investment targets "The approval process has been greatly shortened, which is one of the main reasons why venture capital companies are searching for a large number of investors in the United States, and even start-ups have been brought into view," he said However, observer.com noted that despite the large amount of Chinese capital flowing into US biomedicine this year, the overall foreign investment has decreased significantly compared with the previous two years: the comparison of overseas M & A amount between China and Japan in recent years (as of early April 2018) "Chinese partner" For the United States, ample cash supply from China makes the already hot start-up biotech companies scarcer and gives them more choice for investors "Many of our rounds of financing are currently oversubscribed, which allows us to choose partners," said Elizabeth Stoner, executive director of semma therapeutics, based in Cambridge, Massachusetts The company, which specializes in stem cell therapy for type 1 diabetes, raised $114 million in December This investment is mainly led by the venture capital company of Fidelity International Limited Headquartered in Boston, the company has operations in Beijing, Shanghai, Hong Kong and Mumbai Given the fund's influence in Asia, Mr Stoner said the decision to work with Chinese companies was both a financial decision and a strategic one Astepping stone to success is the incidence rate of type 1 diabetes in Asia and China, "she said