China-Based Investors are Looking West for New Products in Diabetes Care

8 Mar

By Jessica Yang, Investor Research Analyst, LSN

Diabetes mellitus is a global epidemic, with the metabolic syndrome and cardiovascular risk factors believed to underlie the disease on the increase worldwide. Among this large diabetes market, China has a higher number of diabetics than any other country. According to a World Health Organization estimate, of all adults with diabetes, one in three is from China.

This attracts a large number of Chinese investors to investments in diabetes care. For example, in 2017, when Johnson & Johnson began evaluating whether to sell its diabetes units, including glucose meters, insulin pumps and other equipment used in diabetes care, multiple Chinese investors expressed interest in buying some or all of these business units. However, many Chinese investors are looking at early stage products in this space. LSN is in touch with nearly a hundred China-based firms that are open to considering pre-approval products in the diabetes and metabolic disease field.

Chinese investors have invested, in-licensed, acquired or formed joint ventures with multiple Western diabetes care companies in recent years – the investors are expecting to extract extra value from the diabetes market in China. According to Franck Le Deu, Hong Kong-based senior partner at McKinsey, it is possible that a Chinese company could extract more value from these technologies than a multinational since they have different expectations of profitability. Even with lower margins, a tremendous growing diabetes population makes the Chinese diabetes market very significant. In addition, Chinese investors could leverage its local capabilities and knowledge to help these companies’ growth in the country.

As Chinese investors are seeking Western technologies and startups to address the diabetes market in China, it is a great time for diabetes startups to consider building connections and working with these investors.

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