Venture Investments Boost China Biotech Industry

Filed in archive Venture Capital on August 22, 2005

With little or no fanfare, China is assuming an influential role within the global biotech industry. For example, Bio Veda Capital's announced formation of its new Bio Veda China Fund provides another valuable lift to biotech investing despite widely held industry views that the industry is still its infancy.

Most of the Biotech venture critics claim that in comparison with Singapore and Taiwan, mainland China still lacks the trained management, GMP (good manufacturing process), certified plants and more importantly strong and effective intellectual property protection for pharmaceutical innovation.

Dr. Jonathan Wang, general manager for
Burrill Greater China Group (BGCG), a San Francisco based life sciences merchant bank, shared his views in a recent e-mail with ChinaVentureNews. He says, " that U.S. VCs have just started to look at life sciences companies in China. Although the interest is high, very few U.S. VCs have actually invested in life sciences companies in China.... IP issues, lack of management talents, exit difficulties, currency exchange issues, lack of innovation and corporate governance are among the largest difficulties which U.S. VCs have run into when investing in China."

Despite these challenges , the new Bio Veda China Fund expects to raise $30 million from these institutional investors: Singapore-based Temasek Holdings, HBM Bioventures (Cayman) Ltd, and the International Finance Corporation, the world bank's private sector arm.

According to some reports, China has more than 20,000 life-science researchers, and more than 300 public laboratories nationwide. But many observers maintain that the overall research level remains quite low.

The Sino-American Pharmaceutical Professional Association maintains that although numerous overseas researchers and scientists have returned to the Chinese mainland in recent years, the nation still needs more talented people to upgrade its overall level of drug innovation.

With the Chinese government's investment of nearly $1.45 billion between 2001-05 to boost the development of the nation's biotechnology industry, watchful experts and prescient venture capitalists, are predicting that China's pharmaceutical market will experience exponential growth over the next decade.

After all, Eli Lilly & Company, one of the world's leading pharmaceutical companies, expects to double or triple its sales revenues in China in five years by investing more in R&D. China is expected to be among Lilly's top 10 markets according to a recent Asia Times Online article. Lilly's global revenues in 2004 stood at US$13.8 billion.

Stay tuned for more on this China biotech investing series.