Betting on Bio

Data InsightDealspeak 22 March

Betting on Bio

Investors swoops for Chinese biotech innovators

Investors are piling into Chinese biotech and biopharm start-ups, as the world’s second-largest economy strives to transform itself into an innovation hub on the back of government support.

Fundraising deals in China’s biotech sector bubbled up to USD 9.1bn from 136 transactions in 2021, marking a 56.4% year-on-year (YoY) increase in value, an all-time high, according to Dealogic data.

China accounted for nearly 94% of the value and 86.6% of the number of biotech deals in Asia-Pacific last year. The country was second only behind the US in terms of value and deal count, with the latter manufacturing 226 deals worth USD 18.4bn in 2021.

Engineering growth

Chinese mRNA technology firm Suzhou Abogen Biosciences was the big winner last year, scoring the largest biotech fundraising deal in China. The company raked in USD 700m in August via a Series C round, drawing several investors including Singapore’s state holding company, Temasek.

In November, Abogen was boosted by an extra USD 300m from SoftBank’s [TYO:9984] Vision Fund and other investors to support the development of a potential COVID-19 shot and its drugs pipeline.

Other major deals include:

  • Hillhouse Capital pouring hundreds of millions of US dollars into Probio Technology, a unit of Genscript Biotech [HKG:1548], in August.
  • A USD 230m Series C round completed by Clover Biopharmaceuticals, which listed on the Hong Kong Stock Exchange in late November.
  • A CNY 1.275bn (USD 200.2m) Series A round held by Juntuo Biotech, a producer of vaccines and anti-infective drugs, owned by Shanghai Junshi Biosciences [SHA:688180].

A strategic investment of more than USD 200m in clinical-stage biotech firm AvistonePharmaceuticals. The round was led by Vivo Capital.

Plan of action

Government policy and regulatory support is playing a key role in channeling private investment into the biotech sector, which is among the emerging strategic industries highlighted in the Chinese Communist Party’s 14th five-year plan (2021-25).

Authorities’ plans to turn the Greater Bay Area – a cluster of 11 cities, including the special administrative regions of Hong Kong and Macau, as well as the mainland metropolises of Shenzhen and Guangzhou – into a global technology and innovation powerhouse are gaining momentum.

Similarly, the Hong Kong government recently unveiled a series of bio-themed initiatives, including construction of a biomedicine hub in an area bordering Shenzhen, and generous funding for start-ups.

A reform of IPO rules on the city’s bourse in 2018 has produced a robust pipeline of biotech company listings, and this is expected to gain further momentum if proposed changes to IPO regulations are realized.

IPO reforms are giving earlier-stage investors another avenue to exit their investments, increasing the attractiveness of the sector. And it is not just a financial game. The creation of an innovation-focused ecosystem is paving the way to real scientific advancements.

Several large US pharma groups, including Johnson & Johnson [NYSE:JNJ], Eli Lilly [NYSE:LLY], AbbVie [NYSE:ABBV] and Amgen [NASDAQ:AMGN], have clinched partnership deals to license high-potential therapies from Chinese partners to sell into other markets. This trend shows no sign of slowing despite geopolitical tensions, logistical hurdles arising from COVID-19, and a belligerent approach from US regulators.

According to Dealogic data, at least four fundraisings – Leadsynbio, Suzhou Cure Genetic Biotechnology, GluBio Pharmaceutical and InxMed – have reached or exceeded USD 50m since January, heightening expectations of another year of intense activity.

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