Asia-Based Investors Are Increasingly Seeking Global Innovation

5 Feb

By Michael Quigley, Director of Research, LSN

mike-2In tracking life science investors worldwide, LSN’s research team has noticed that there are a growing number of Asia-based investors seeking global opportunities as well as investments in the U.S. and Asia. (See Figure 1.)

 

Figure 1 | Source: LSN Investor Platform, Data as of February 4, 2015

Also worth noting is the number of Asian countries where these investors are based. (See Figure 2.) Although the majority of Asia-based investors are in China, more than half hail from other countries in the region.

A1 F2

Figure 2 | Source: LSN Investor Platform, Data as of February 4, 2015

Factors Affecting the Trend

Having spoken with more than 50 Asia-based investor groups, we’ve pinpointed a number of factors that are contributing to this trend.

A recurring theme is the lack of advanced infrastructure and practical expertise required to develop technologies in Asian countries. And while “many of the Chinese scientists who came out and studied in the U.S. have gone back to their home country and started their own businesses there,”1 this doesn’t seem to be satisfying Asia-based investors’ appetite for innovation.

Other factors include the booming growth of private wealth that many Asian countries have experienced over the past few years.2 This growth in wealth, coupled with the notoriously uncertain regulatory environment (particularly in China), has led many Asia-based investors to seek a more stable investment environment abroad. Diversification and the potentially high-yield returns this sector can generate also is attractive to these newly wealthy investors.

Arguably the most influential factor that we have heard in our discussions, however, is investor interest in early stage and commercial-stage technologies that are capable of addressing healthcare challenges across Asia as well as in specific local markets.  With growing populations and advancing life expectancy in these regions, the demand for medical devices and therapeutics is expected to increase dramatically—particularly in indications such as diabetes and cardiovascular disease. In fact, the vast majority of investors we have spoken with either require or strongly prefer companies that are planning to or capable of entering their local markets. Also, many of these investors have strong local ties to manufacturing and distribution channels, so they can add significant value to companies entering these markets.

Takeaways for Fundraising Executives

It is apparent that life science companies actively fundraising around the globe should take a serious look at Asian markets for capital. The wealth, population, and average age of individuals are all expected to continue rising in many of these countries. Therefore, the opportunity for life science companies to secure capital is likely to rise as well. Given the cultural differences and distance, starting conversations with these investors as early as possible is key, as the time to close a deal can be elongated by these and other hurdles.

If you are interested in learning more about the investor landscape in Asia and the investors we track, feel free to contact us at mandates@lifesciencenation.com.

  1. “Philip Ma: from Scientist to Businessman,” China Daily, January 23, 2015.
  2. “China Now Has the Second-Most Millionaires in the World,” Time, June 10, 2014.

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