Asia ushered in a biotech revolution
The aging population has continuously increased medical expenditures in countries around the world. In Asia, factors such as rapid urbanization have caused the incidence of non-communicable diseases (such as hypertension, cancer, etc.) to rise rapidly, further pushing up medical costs.
Providing a competitive and high-quality healthcare system with appropriate government subsidies is becoming an urgent political and economic mission for Asian governments.
We believe that the key lies in how technology can help achieve this goal in Asia. For stakeholders and investors, the coordinated development of technology, healthcare and biotechnology will bring huge benefits. However, investing in biotechnology is a game for the brave, especially for start-ups with extremely high risks. Currently, Asia’s expenditure on health care only accounts for 5.1% of GDP, which is lower than the emerging market’s average of 5.5%, and is even a fraction of the 17% in developed countries. A trip to a public hospital shows the shortage of funds at a glance: China and India have less than two beds per thousand people, while the average number of beds in developed countries is 9.5. At the same time, the burden of seeing a doctor is increasing. China has 120 million type 2 diabetes patients, ranking first in the world; India has the highest number of deaths from infectious diseases in the world. By 2040, there will be more elderly people aged 65 and over in Asia than in any other region. All of this means that the Asian healthcare system will face severe tests in the next decade.
This environment makes long-term investment in biotechnology promising, especially in China, where drastic regulatory reforms, aggressively funded venture capital and private equity funds and other favorable factors have promoted the vigorous development of China's biotechnology industry.
The rise of China's biotechnology wave
China’s healthcare industry is at a critical juncture: by 2020, China’s population of 60 years old will reach 200 million, and new cancer cases will account for a quarter of the global total. According to World Health Organization (WHO) expectations, between 2012 and 2012 In 2035, the number of new cancer cases in China will almost double. However, China currently only accounts for 4% of the global oncology drug market. Take biological agents (biological drugs) that can effectively treat non-communicable diseases of the elderly as an example. In China, the world’s second largest drug market (including conventional drugs), biological drugs account for only 12%, while similar drugs are The global market accounted for 25%.
Faced with these challenges, the Chinese government has formulated an ambitious plan in a multi-pronged manner-while absorbing knowledge and nutrients from the outside, it also creates a suitable environment at home. In the past three years, major reforms of the State Food and Drug Administration have effectively narrowed the gap in China's pharmaceutical regulatory system. For example, clearing the backlog of drug registration applications, greatly shortening the review time, and accepting global clinical trial data on new drug applications. The effects of these measures are obvious to all, and foreign drugmakers can even obtain clinical and commercial marketing approval in China before listing in their home country. At the same time, attracted by the favorable treatment, attractive salary and career development opportunities, Chinese scientists who have received training in the West ("returnees") have returned to China one after another and devoted themselves to the field of life sciences. A large number of top talents, as well as China's unique competitive advantages in digital diagnosis and genomics, big data, and artificial intelligence, have proven to be crucial to the advancement of local technology.
A typical example is that a quarter of innovative biologics in China that have entered Phase II or Phase III clinical trials (relatively mature) are also undergoing clinical trials overseas at the same time, which was almost unheard of 10 years ago. It is estimated that the compound annual growth rate of China's biotechnology market from 2016 to 2021 will reach 16.4%, the fastest growth rate in the world. The scale of the genome industry will also become the world's largest in 2020. The rapid rise of China's biomedical field proves the importance of regulatory reforms and policy support in promoting industry transformation and pooling funds needed for industry development.
Invest in China's biotechnology industry
Investing in listed companies in China’s medical biotechnology industry is a way to directly benefit from China’s medical biotechnology boom. Such companies include traditional chemical generics companies that are entering the field of biologics, as well as new drugs and drugs in the field of biomedicine. The manufacturer of the device, etc. These companies are usually listed in mainland China, Hong Kong and the United States. In addition, private equity funds and sustainable "impact investment" projects in specific areas of China's biotechnology (such as oncology) also provide opportunities for early investment in China's innovative industries. Judging from the current momentum, the growth rate of China's oncology industry is bound to exceed the global average. If you want to participate more widely or passively participate in investment in this industry, you can consider the MSCI Emerging Markets Healthcare Index, because Asia has a weight of 86% in the index.
After the Hong Kong Securities Regulatory Commission recently revised the listing rules, many Chinese biotech companies that have not yet achieved profit or even revenue are actively seeking to list in Hong Kong. Although their stories are fascinating, individual investors must be aware that the failure rate of investing in the biotechnology industry is high, and long investment periods need to be endured. Weak safety standards (such as the recent substandard vaccine incident in China) and intellectual property protection issues are also risks in the medical and healthcare sector in the entire Asian region.
Therefore, experts suggest that investors with a strong interest in the field of biotechnology must have a long-term and diversified layout. In view of its huge growth potential, participating in biotechnology investment through optimized targets should become an integral part of investors' mid- to long-term strategic asset allocation.