China’s rise in biotech innovation offers the world a potentially cheaper alternative to costly healthcare products from Western suppliers, but geopolitical tensions remain a major challenge for the country’s globalisation efforts, according to a local investor in the sector.
“We can lower the cost of healthcare and benefit more people through technological innovation and efficiency improvement,” Da Liu, managing director of CR-CP Life Science Fund, said in an interview with the Post earlier this week. “China’s recent achievements in biotech show that it’s possible.”
The CR-CP Life Science Fund was launched in 2019 by the state-run China Resources Group and Thai conglomerate Charoen Pokphand Group, with US$170 million under management. Companies the fund has backed include Legend Biotech, which went public in New York in 2020, and Singapore-based Mirxes, which listed its shares in Hong Kong in May this year.
Innovative drugs coming out of China’s biotech firms have become increasingly popular licensing targets among multinational corporations (MNCs) in recent years, leading to what some are calling a “DeepSeek moment” for the local industry.
Multinationals have turned their attention to Chinese biotech companies and assets because of their “cost efficiencies, accelerated timelines and promising quality”, US investment bank Jefferies said in a report last month.
Of the top 10 global drug deals by transaction volume in the first half of the year, seven involved licensing from Chinese firms, according to a July report by data provider PharmCube.
However, China was still in the early stages of innovative life sciences, and domestic companies faced “a torturous pathway ahead” in becoming global leaders, Liu wrote in his book, Life Sciences Unicorns: From a China Investment Perspective, published in 2023.
“China won’t be able to produce [biopharmaceutical] MNCs for [another] 10 to 20 years,” Liu said on Tuesday.
Western biopharmaceutical MNCs came about mostly through mergers and acquisitions, benefiting from increased globalisation in recent decades, according to Liu. The current geopolitical environment has hampered cross-border merger efforts for Chinese companies, he said.
For Chinese biotech firms to become large multinational players in the industry, they would need to have a dominant position in at least one or two fields, which has become increasingly difficult amid intensifying competition, according to Liu.
As his next project after the eight-year CR-CP Life Science Fund matures, Liu wants to set up an investment fund in Hong Kong that would also focus on life sciences.
“Hong Kong serves as a connecting point between China and Southeast Asia, and many from the US and Europe still choose Hong Kong as their first stop for business,” Liu said. “It still holds an advantage. I hope to leverage Hong Kong to build this two-way bridge.” - SOUTH CHINA MORNING POST
