Many US-based biotech companies are receiving funding from Chinese and Hong Kong investors. So far in 2018, $4.2 billion from Asian companies has been invested into US biotech firms, totaling more than 43% of total venture capital invested in the entire biotech sector. In 2016, this figure was only 11%.  As a result, biotech funding rounds have been robust for US biotech companies, with companies able to raise money quickly, especially for biotechs offering licensing deals for China.

Investor companies from China include 6 Dimensions Capital and Hillhouse Capital Group, and Blue Pool Capital from Hong Kong. Extremely high valuations in China’s biotech sector have led investment companies to look for better returns in the US. The skyrocketing biotech valuations have largely been driven by the Made in China 2025 initiative established a few years ago, in which biotech plays a key role as a strategic industry, leading to fast-tracked development and investments in the sector.

Another incentive to invest in US biotech companies is a change in the rules governing the Hong Kong stock exchange that now allows global biotech companies to list on the exchange, even if they do not have revenues or profits. This provides investors the opportunity to exit their investment quickly.

Source: Reuters