The sense of optimism was palpable at the recent “ChinaBio Investor Forum” held at the Zhongguancun Life Science Park in the heart of Beijing’s biotech industry, where a cluster of domestic and overseas life science companies are hosted.
The conference showcased 20 early- and mid-stage drug development services, diagnostics, medical device, and drug delivery companies. Those companies are currentlyseeking investment from Chinese investors and U.S. or European venture capital (VC) funds, many of which have established China offices to look for promising deals in the emerging Chinese life science scene.
The event attracted about 200 attendees from China, North America, and Europe, including big pharma looking for early-stage drug-licensing opportunities, investors, emerging companies, law firms, and other life science executives.
The prevailing enthusiasm about China’s life science industry is backed by solid statistics presented by conference organizer Greg Scott, CEO of ChinaBio Accelerator. While the U.S. public market did not have a single IPO for VC-backed biopharma companies in 2008, there were five IPOs of Chinese life science companies on the Shenzhen Stock Exchange and Hong Kong Stock Exchange, with a total of $178 million raised.
In addition, by the end of October, 48 merger and acquisition deals were closed with a total transaction value at $1.2 billion. “I think it is China’s time to leapfrog ahead,” commented Scott. Interestingly, the top two deals have Chinese companies as the acquirers of U.S. companies, signaling the changing of tide.
One is the $151 million acquisition of St. Paul, Minnesota-based AppTec by WuXi PharmaTech in Shanghai (now renamed WuXi AppTech); and the other is China’s Mindray Medical, a medical device and diagnostic concern, which purchased New Jersey-based Datascope’s patient-monitoring business at a price tag of $202 million.
As the Chinese CRO outsourcing service industry continues to grow and consolidate, more M&A deals are bound to happen between Chinese domestic companies, as well as between Chinese and overseas companies, yielding a number of truly dominant players across the Pacific.
The global economic downturn did have a negative impact on China’s fledgling life science industry. The stocks of most of the NYSE- and Nasdaq-traded Chinese life science companies have dropped dramatically in the past few months, in line with the overall bleak global stock markets. In addition, the valuation of many Chinese start-ups seeking funding has come down substantially. VCs are becoming more cautious and it takes a longer time to get deals closed, according to panelists discussing the challenging investment climate.