Capital + Innovation — China’s Pharma Sector’s New Development Model

  • Introduction of policies to promote industry standardisation and efficiency. Since China’s health system reform in 2015, the state has issued a number of policies on pharmaceutical production and commercialisation. While the quality of drug production has been strictly controlled, new drugs’ time to market has been shortened, the number of circulation links has been reduced and retail prices of drugs have been controlled, helping increase market scale of scarce drugs such as those for serious diseases. After innovative drugs were approved for medical insurance cover, more anticancer medicines have been covered than chronic illness medicines. Innovative drugs are an emerging trend in the domestic market and present significant growth potential for biotech companies.
  • The cost of medical research and development is high, and biotech companies need continued financing. A significant amount of time and money is required from the time a drug is discovered to the time it is listed. Startup companies that have good projects but no capital can only resort to seeking external venture capital. With the success of Zanubrutinib, China’s first innovative drug that was developed completely independently and listed overseas, prospects seem to be bright for injecting capital into pharmaceutical innovation.
  • IPO listing conditions have been relaxed, and capital exit is guaranteed. The Hong Kong Stock Exchange and Shanghai Stock Exchange have relaxed listing conditions for biotech companies that have not made profits but whose valuations exceed the entry threshold. With this relaxation, the listing time for biotech companies is shortened, exit risk for investors is reduced and investor enthusiasm is heightened.

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/