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Exclusive Interview with Jonathan Wang of OrbiMed Asia: China's Market is a "Once-in-a-Lifetime Opportunity"
Dr. Jonathan Wang, founding partner and Senior Managing Director of OrbiMed Asia, recently talked with ChinaBio® Today about OrbiMed Asia and its place in
ChinaBio® Today: Tell us a little about OrbiMed.
Dr. Wang: OrbiMed is a healthcare-dedicated investment firm with 29 years of history. With approximately $13 billion under management, we believe we are one of the largest healthcare-dedicated investment firms in the world. In
ChinaBio® Today: How many PE/VC investments have you done?
Dr. Wang: Over the last ten years, OrbiMed Asia has invested in about 50 companies in
ChinaBio® Today: Last year, in September, you closed a $551 million private equity fund.
Dr. Wang: That's our third
ChinaBio® Today: Can you give a typical example of a VC/PE situation that would interest OrbiMed Asia?
Dr. Wang: We are generally interested in two types of companies: One is innovation-driven, with drug development as a focus, and the other is growth-driven.
For the first type, we usually look for companies with near-IND or clinical-stage drug candidates that address large unmet medical needs. We have invested in a number of such companies, including Zai, CBT, InventisBio, Laekna, and, indirectly, EOC, and we are looking for more. We often seek in-licensing opportunities for these companies from our Western portfolio companies and network.
The second type includes companies with revenues and, in most cases, earnings. We look for sub-sector leaders with highly differentiated and competitive products or services. The management team should have demonstrated a solid track record, including strong revenue and/or earnings growth.
We invest about 80% of our money in growth and the rest in biopharma innovation. Since the per deal size in innovation is smaller, the total number of innovation deals is significant. We are increasing the innovation content in our funds.
ChinaBio® Today: What about exits? How has OrbiMed Asia being doing lately?
Dr. Wang: Years of great teamwork is delivering good results. Over the past ten months or so, OrbiMed Asia has had a total of 10 IPOs and/or exits, with a total value of close to $400 million. These include Zai, which went IPO on NASDAQ, AmoyDX on A-shares, AK Medical on HKEX, and CrowneBio, which IPO'd in
ChinaBio® Today: How would you assess the current landscape for
Dr. Wang: I see a big bubble forming right now. The market is very heated. For example, a few companies have raised financings or are planning IPOs at overly high valuations, compared to their counterparts in other markets, such as the
On the other hand, I see a very real, unprecedented boom in
I sit on HKEX’s Biotech Advisory Panel for the new “pre-revenue” IPO channel. Many people have mixed feelings about the channel--excitement mixed with worry. Some worry that the initial excitement could be met with market corrections due to the gap between high valuations and less than satisfactory drug development results. I believe the new channel is a great thing. It’s like a new baby--no one can make sure a baby will always be happy and healthy, but you do not stop giving birth due to the worry.
ChinaBio® Today: How does the bubble affect VC/PE investment? Are prices too high for investors like OrbiMed?
Dr. Wang: Yes, the valuations have increased significantly and the overall pricing is generally much higher than three to four years ago. OrbiMed has been dedicated to healthcare investment for 29 years, and I for over 20 years, so, bubble or not, we are kind of “stuck” in the industry for the long run.
To deal with the bubble, we try to be highly differentiated so that we can enjoy relatively fair valuations. Our global platform and resources have given us significant advantages. Worldwide, OrbiMed has invested in about 500 companies, from which we can introduce products and technology to Chinese companies. OrbiMed is one of the top brand names in the industry and stock markets, which has made us attractive to many successful companies which are planning to go IPO. Frankly, entrepreneurs like to work with investors like us who are “stuck” in the industry for the long run. They prefer investments from investors like OrbiMed who understand their businesses and can add real value.
We try to add value in unique ways. Last week, I invested in a Shanghai-based company called Laekna, which have three clinical-stage oncology compounds in-licensed from a big pharma. Even prior to the investment, we had been helping them scout for drug assets to in-incense. Moving forward, we will certainly continue to use our global resources and network to support Laekna.
Occasionally, we also incubate companies. My venture partner Guoliang Yu and I have incubated CBT Pharmaceuticals from scratch over the past two years. The company is focused on immuno-oncology combos and has about six clinical stage programs underway. It's doing well, and enjoying investors’ interest.
ChinaBio® Today: Is it a good time to be a healthcare investor in
Dr. Wang: It's a once in a lifetime opportunity. I've been investing in the
The industry is booming. Over the recent years, there have been a large number of returnees from MNCs and top Western research institutes, who have formed a significant managerial talent pool. The regulatory environment has been dramatically improved as well. The exit channels are open, both NASDAQ and HKEX in the near future. Many local governments are providing support to biotech start-ups in the forms of inexpensive lands/facilities, grants and tax cuts. A lot of money is being pumped into the industry.
ChinaBio® Today: Should we be worried about the future?
Dr. Wang: The bubble thing is on people's minds, not just mine. Some corrections are likely but the questions are "How soon?" and "How severe?" Some ups and downs are natural for stock markets. The worst case scenario would be a major crash followed by a long-time depression. I would guess this worst case scenario won't happen in
Also, the returnees are a big factor. Many Chinese American biopharma executives who used to live in the
Moreover, the financing industry supporting
With all of these factors combined, there is support for the long-term growth of
ChinaBio® Today: You have been investing for a long time. Do you have any personal goals in investing?
Dr. Wang: About two years ago, I set a personal goal for myself: I want to invest in at least 10 China-created drug candidates that will be approved in worldwide markets within 10 years. “Created in
Ten years, ten drugs, I am really serious about this goal. The companies I have invested in, such as Zai, CBT, InventisBio and Laekna, have drug candidates, but not all of them are going to work out. On average, it takes 10-15 years for a drug to go from discovery to market approval so I am running short on time. Considering all of the factors, I believe I've completed over 70% of my goal. I still have about 20-30% to go.
Thanks for your time and insights, Dr. Wang.