China Life Science Innovation Occuring Via Investments in Early Stage Companies & M&A

China investing in obesity, diabetes, orthopedics, cardiovasular and generic pharmaceutical and medical device technologies. More Chinese VCs are taking advantage of US based startups in the medical device & pharmacutical startups.

US based VCs are now raising new funds, in the past 3 years they have not raised funds (2009-2011) and are unable to invest in companies that are early stage. China is taking full advantage of novel medtech companies focused on chronic diseases like cardiovascular, diabetes, and newer unmet needs like obesity.
Even countries like India, Taiwan are exploring the opportunity to fund US based start ups. Taiwan just created a Supra Incubation Project to promote life sciences. This effort is an indicator that the life science sector is going to boom in Asia and the effects will trickle to the west and result in a worldwide boom in the life science industry.
 

The potential for China’s medical device, pharmaceutical industry stands out among emerging market peers as pharmaceutical companies contrast the fast growing China market with slightly slow growth in Europe and North America. Unique among the BRIC markets, the Chinese govt announced a US$124 Billion in healthcare stimulus to offer health insurance to over 90% of the Chinese population by 2011, fueling China’s pharmaceutical and medical device market to become the 3^rd largest in the world by 2012.

China has some unmet clinical needs. For example, China represents nearly 50% of liver cancer cases in the world.  China’s one child policy has led to children who are now overweight and fighting obesity. The new prosperity along with the western diet is making the children and adults obese. China is seeing the fastest obesity rates. With obesity come problems like diabetes, spine and joint problems. India and China will be the capital of diabetes in the world. 

China lacks: Innovation

The infrastructure is starting to get in place, but to start innovating will take many years. US is already ahead due to investments in the education and R&D infrastructure and experience. However, China can invest and buy innovative companies and compete with US based companies. 

 

Life Science industry poised for a boom in China and the other BRIC countries. US investors may lose the opportunity to invest in early stage companies in the US. Chinese investors may invest in these companies all the way to exit or IPO (which could be listed in the US or China). Recently, Boston based GI Dynamics went public on the Australian stock exchange. The world is indeed flat. Life Science Innovators have more choices now than ever.