Biotech investors get coached in Silicon Valley

When it comes to investing in biotech, it's best to look before you leap. 

The US Department of Commerce organized a SelectUSA Investment Seminar on June 6 to educate international investors, including those from China, on how to make smart and informed decisions when diving into the US biotech industry. 

A prelude to the ongoing Biotechnology Innovation Organization (BIO)'s 2016 conference - one of the world leading biotech industry galas which kicked off the same day in San Francisco and drew 15,000 attendees - the seminar guided would be international investors through government regulatory regimes for the life sciences, as well as offering practical advice on investing. 

According to Rhodium Group China Investment Monitor, Chinese direct investment in the US biotech and health sector has seen a dramatic increase recently. Last year, 23 deals were reached with a total value of $900 million, compared with only six deals worth $28 million in 2012. 

"We welcome investment from China through so many Chinese participants here today at BIO," said Holly Vineyard, deputy assistant secretary for Global Markets at the Commerce Department. 

James Greenwood, BIO president and CEO, said China will play an increasingly important role in the future of biotechnology.
The Chinese government announced increases in expenditures on healthcare by 16.3 percent to around $26 billion, which demonstrates a significant commitment to addressing healthcare disparities between rural and urban China, he said. 

In addition, the government has vowed to prolong life expectancy of its citizens by one year and reduce the infant mortality rate by 12 percent. 

"Biotech is one of China's strategic pillars for meeting its ambitious goals for healthcare access and delivery," said Greenwood.
"For the biotech industry, China represents a massive market with potential for profit even at low margins," he said. 

Wang Weigang, a director of business development with China's Chia Tai Tianqing Pharmaceutical Group, said his company is now seeking co-operation with American biotech companies using diversified methods. "I'm hoping that we can reach concrete deals with American companies through the BIO one-on-one partnering system," Wang said. 

According to Wang, investment could be injected into early-, middle- or late-phase products or services, depending on how potential American companies are inclined to cooperate. "Currently, we Chinese companies are abundant in funding which might interest small- or medium-sized biotech startups in the US," he added. 

The Chinese government has started upgrading its infrastructure and intellectual capital base to support biotech innovation, and bringing greater transparency and consistency to its regulatory and legal framework. 

As a result, the State Food and Drug Administration announced rules to speed up the investigational process for innovative new drugs in China. China's intellectual property rights system has also been improved in recent years, and most of the critical policy frameworks are in place. 

"China could augment these advances by working with other nations to harmonize approaches on clinical trials and the data packages that are needed to gain regulatory approval," Greenwood said. 

California drew the most Chinese investment in the biotech industry which totaled $879 million in 2015, followed by the State of Wisconsin at $338 million, according to Rhodium. 

Chinese investors were cautioned about hidden risks and business hurdles in the US market. Lured by the promise of high returns, some Chinese investors, who are not familiar with state of the US biotech industry and its regulatory system, still have a strong interest in doing M&As, said Stephanie Xu, president of US-Asia Innovation Gateway. 

Since its inception in 2011, SelectUSA has facilitated more than $19 billion in investment, creating and retaining thousands of US jobs.