‘Immersed in Global Health Care Ecosystem,’ Chinese Execs Descended on J.P. Morgan

The J.P. Morgan Healthcare Conference might be reluctant to change, dedicated to the same (crowded) hotel venue in San Francisco for the past 34 years, but it is open to a rapidly growing group of attendees, inviting a substantial number of people from China.

“This year we have seen close to 1,000 people registered from Greater China – either from the corporate side or the investor side. There are a lot of Chinese venture capitalists, private equity investors and institutional capitalists such as insurance companies now interested in health care,” Brian Gu, J.P. Morgan’s head of Healthcare for Asia Pacific, told BioWorld Today.

To put that into perspective, 10 years ago only one Chinese company was invited to the meeting.

In China, a new wave of generalist capital is now interested in health care, and this could be the start of a new wave of development, much like China’s internet wave a few years ago.

A big change this year are the number of people coming to look and see for the first time, and non-English speakers are also venturing forth in greater numbers than before to see what the JPM fuss is all about.

“This year I have met a lot more first timers than in previous years. And for some presentations, the company chairman only speaks Chinese. It is a reflection of the composition of the kind of companies we invite now; it used to be only the U.S.-listed companies,” said Gu. “There is an interest in early stage companies all the way to the large-cap listed names. We intentionally mix it up with some private up-and-coming companies probably late in their pre-IPO development, but not yet listed.”

This year, those up-and-comers included Innovent Biologics Inc., Zai Labs Ltd. and JHL Biotech Inc. – the last of which is listed on the market in Taiwan, the other two remain private, but with large venture capital investments.

If they are looking to list in the U.S., the IPO window is not as open as it once was and the word on the street from Chinese companies is they are taking a wait-and-see approach. It might still be that the new market expected to open in Shanghai in 2016 for emerging companies will allow pre-revenue companies the better opportunity at the liquidity they seek.

DESPITE RECENT POTHOLES . . .

While the dire news of China’s economic slowdown and the stock market circuit breakers are ubiquitous, China’s growth rates in health care are still relatively strong.

As Greg Scott, president of Chinabio LLC reminded the large crowd gathered at a JPM satellite event, Wuxi Global Forum, China’s overall growth is expected to be 6.8 percent, while slower than previous years, it is still double the growth rates seen in developed economies. In health care specifically, China is projected to triple its health care budget to $1 trillion in spending by 2020 even while industry growth rates might be halving from 20 percent-plus, to just under 10 percent.

Notably, Wuxi Apptec’s Hui Cai, vice president of corporate alliances, said 1,100 people signed up from 750 companies, institutions and VC firms for the China-centric event. The 500-seat auditorium was packed, with a shoulder-to-shoulder reception area brimming when no seats were left inside.

These turnouts help to put into context some of the numbers coming from large Chinese firms that also made presentations as part of JPM’s emerging markets track.

Nasdaq-listed China Biologic Products Inc., of Beijing, with a market cap of $3.8 billion, was keen to share its optimism about the growth opportunity for the market the company focuses on: plasma products in China.

With revenues up 23 percent year over year, China Biologics has a gross profit of $149 million and a gross margin of 65 percent. It has eight types of plasma products but 81 percent of the business is intravenous immunoglobulin and albumin, which attracts a 20 percent markup over U.S. prices due to the regulations regarding blood collection causing supply-side issues. The firm’s focus at JPM was to seek greater investment in its business.

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