Capturing China’s Biotech Opportunity: Why and How

As the threshold in to China’s biotech market lowers due to regulatory support and increased investment, LvS discusses the incentives available to overseas innovators and ways to gain foothold in the market.

Since President Xi Jinping named an innovative biotech sector as a goal in the “Made in China 2025” strategy in 2011, a wave of policy reforms, deregulation and significant investment have transformed the Chinese biotech sector. Social pressures, including an aging population, looming obesity crisis and high rates of noncommunicable diseases (NCDs) are also driving market demand for healthcare solutions and system reform. China’s biopharmaceutical market reached USD 140 billion in sales in 2019, growing at 9% CAGR [1]. All these factors combined have lifted the lid for innovators and investors to target China’s unmet needs.

Private and public incentives for biotech innovation

Due to China’s policy support, regulatory easing and availability of funds, we have tapped in to the following opportunities:

  • Benefits and tax incentives for our portfolio companies discussed with biotech park administrators, municipal authorities and government investors in Sichuan, Chongqing, and Jiangsu. Since the Made in China 2025 strategy was announced, 110 bioscience research parks had been set up around the country by 2019 [2]. Incentives for eligible foreign companies include free or subsidized lab and manufacturing space, as well as corporate income reductions.
  • Shorter lead times to market and stronger control over IP and production. In China, the “CFDA Big Bang” in 2015 overhauled drug approval processes and created fast track approval for new drugs by streamlining clinical trial procedures [3]. Now a drug undergoing US FDA trials can theoretically undergo simultaneous regulatory approvals in China. LvS works with Chinese industry experts to navigate the process and fast-track biotech innovations, as well as share technical insights with global investors through virtual scientific panels.
  • More government and private funding. Over 1,000 government-sponsored VC firms with USD 800 billion in capital have been formed, while VC and PE life science funds raised USD 43 billion in 2018. Investors are buoyed by strong exit options; the total value of Chinese biotech IPOs rose to USD 6.9 billion in 2018 [4]. LvS works directly with global headquarters to maximize the China market value-add at the top-holding level.


We are seeing high valuations for biotech in China at increasingly earlier phases. Chinese drug developer I-MAB’s Phase I trials on protein CD47 in cancer cells recently received an investment of USD 418 million from a Hillhouse Capital-led consortium. With investor appetite on the rise, firms should now be timing expansion in to China alongside research progress.

Taking steps in to China

In our experience working with biotech companies expanding to China, the firms often juggled 3 options: going it alone, finding a Chinese licensing partner, and working with a trusted partner to undertake the China expansion.

  • Jointly-invested partnerships. Working with a Chinese partner either in JV structure. A successful example of this is the global launch of first-in-class drug molecule Roxadustat in China [5]. The drug was jointly developed by FibroGen China, AstraZeneca and Astellas. Finding the right partner with complementary capabilities requires strong local network and knowledge.
  • Licensing. With new regulations allowing foreign firms to manufacture in addition to holding IP, decisions still need to be made regarding distribution in to China’s healthcare sales maze. LvS has helped to build launch timeframes and find compatible licensing partners to access cash in the short term while optimizing valuations in the longer term. Having a trusted, on-the-ground partner is essential in this process as many firms sign suboptimal licensing deals to an unproven distributor while giving away future valuations.
  • Market expansion of Asian entity. This model engages a long-term execution partner who can balance headquarter interests with third-parties in China. Previously very expensive, setting up a China headquarter can now be executed with lower upfront cost through strategic partnerships. LvS specializes in this model with access to government investment funds and biotech park management.


In expanding our portfolio companies in to China, we start by asking board directors: Where does China lie in global priorities? If IP protection is a concern, are you open to joint investment in a Chinese entity? How can we best capture this timely opportunity with minimal resources spent?

Reach out to us at:


  1. Daxue Consulting. ‘China’s Pharmaceutical Industry.’ April 2020
  2. ‘Healthy Funding: The Critical Role of Investing in NIH to Boost Health and Lower Costs.’ March 2019
  3. ‘China’s Biotech Revolution’. August 2018
  4. ChinaBio Group. ‘State of China Life Science.’ January 2019
  5. AstraZeneca press release. ‘China becomes the first country to approve Roxadustat.’ August 2019


More Posts

Why we focus on Energy Storage

Europe faces the difficult task of achieving its energy independence and security. The Union is juggling soaring energy prices and price volatility while trying to