Burrill & Company, together with BIOCOM, hosted the Burrill India-China Life Sciences Meeting on June 16, 2008, immediately in advance of the BIO International Conference. Approximately 200 people attended the event, evenly split between the two countries.

After G. Steven Burrill presented the keynote address, which predicatively described the changed landscape of healthcare in 2020, the meeting broke up with participants able to choose their country of interest, India or China. A closing session brought everyone back together with predictions of how the two countries will look in 2020.

On the China side, an informal show of hands indicated that attendees included about fifteen China biomedical companies that were seeking funding and approximately an equal number of venture capitalists who were looking for investing opportunities.

In the initial China session, industry veterans discussed their experiences in bringing biomedical companies forward. Most of their companies had completed IPOs, and the session was titled, appropriately, “From Idea to IPO: Pathfinders in China Life Sciences.”

For the most part, the theme of their histories was similar: their companies had started with a focused initial area of expertise. As time went on, their companies expanded into nearby areas to attract a bigger client base and increase revenues. All of them (except one) enjoyed the favorable economic advantage of China. WuXi PharmaTech (NYSE: WX) and Hutchison MediPharma (AIM: HCM) have advanced from transactional relationships to partnerships with their customers.

Dr. Jinn Han, who founded a diagnostics company in China in 1996, did not have an easy time of it. His company made a product to diagnose Down’s Syndrome. The product was quickly copied by others, including the marketing, at a lower price. He eventually sold the company to Qiagen. According to Dr. Han, IP protection has improved since then, and he would stand a better chance of fending off copycat products now.

Because China biomedical enterprises are doing well, hiring has become a problem – it is difficult to find experienced people for top-level positions, though certainly new graduates are available. International big pharma has compounded the problem by moving into China and offering salaries that local companies can not match. Top positions must be filled with people brought in from the US, Europe or Japan, at high cost.

The second session centered on the theme of “Partnering in China.” Two participants emphasized the need for western companies to understand the importance of distributors in China. Because a distributor is licensed only for a specific area, and because the relationship between distributor and hospital (where most drugs are sold) is crucial, a western company must investigate its prospective partner’s relationship with distributors. Science is important, said one panel member succinctly, but so are distributors.

Other participants emphasized the need for communication, and in China, the relationship comes first, before the financial relationship. Also, investors in China also are not always aware of the long development times for drugs, and western partners must provide education on that score. Otherwise, they could face a revolt from their China investors.

A third session explored the topic of “Bringing China to the US.” The differences between China and the US in the practice of law were a theme in the session. Participants pointed out that transfer of technology is not as clear in China as it is in the US. Also, because patent law is a relatively young field in China – it began in 1991 – China has relatively few lawyers with bioscience PhDs, so the intricacies of biomedical patent law have not been worked out. Enforcement is still an issue and financial punishments for breaches of patent law are too low.

“Financing China Life Science Companies” was the last China-specific topic of the conference. Representatives of various venture capital firms spoke about their criteria for investing in a company. Another speaker noted that deal closing remains difficult in China. At that stage, he said, “You’re just starting.”

Greg Scott, Publisher of ChinaBio® Today and head of ChinaBio® Accelerator, pointed out that local governments are a large source of funds for new enterprises. These grants are less dilutive than venture capital, and they exist in addition to the large amounts of money the China state government has earmarked to push innovative science in China. Most startups take advantage of government support.


Disclosure: none.