The Art of the Biopharma Deal: The China Angle

Over the last years foreign companies have been very active in partnership and cooperation deals with Chinese biopharma companies and healthcare investors. Anybody who wants to raise money from Chinese investors or strike a partnering or cooperation deal with Chinese companies however, needs to understand what investors or Chinese pharma companies are looking for. And because of the vast differences and needs of the Chinese healthcare and pharmaceutical market, the value proposition towards China can be very different than other markets. The most reputable and well-known USD-denominated healthcare funds in China are originally from the US, but have very specific funds to invest in China or ex-US. Then there are the strategic investors who are actively investing in, and in-licensing assets from foreign companies. There are mainly two categories of strategic investors: the newly established, venture capital backed biopharma companies, and the traditional Chinese pharmaceutical companies. It’s important to understand the background of these companies. The traditional pharma companies are not rooted in innovation, and as such are not always that familiar with the process of drug discovery. The newly established biopharma companies on the other hand are well versed in innovation, but of course don’t have the established sales network as the big pharma companies. Just like the US or Europe, Chinese investors have also engaged in incubating or building new biopharma companies. As a matter of fact at the height of the biotech investment boom, almost all Chinese biotechs have been incubated by healthcare venture capitalists, and were not spun out from universities or research institutes, as is often the case in the US or Europe.. As such it’s important to understand that incubation or new venture building in China is fundamentally different than in Europe or the US. Lastly it’s important to understand what diseases are more prevalent in China, or which technologies are more needed than others.