Shanghai launches $7.35b biotech fund
The Shanghai government has launched a biotech sector-focused fund targeting a hard cap of RMB50 billion ($7.35 billion) in partnership with Guotai Junan Securities, China Pacific Insurance and Shanghai Zhangjiang Group.
The fund has raised RMB7 billion from domestic LPs to date and is currently finalizing an additional RMB3 billion in commitments from overseas investors as part of a planned RMB10 billion first close. It will focus on companies based in Shanghai and Hong Kong, as well as overseas, according to a report by government-owned Jiefang Daily.
The aim is to help Shanghai become a leading biotech center, said Xiaochu Shen, chairman of Hong Kong-based Shanghai Industrial Investment, a government entity expected to manage the fund. Portfolio companies will receive support with product R&D, commercial launch, supply chain development, and growth through M&A. The fund is also expected to take LP positions in other China biotech vehicles.
Government support for biotech comes under the “Made in China 2025” policy, which focuses on economic modernization. Rising interest from the private sector has also been underpinned by growing demand for advanced treatments related to widescale lifestyle changes. According to AVCJ Research, PE and VC investment in Chinese pharmaceuticals companies increased from about $568 million in 2014 to $4.2 billion last year.
Shanghai Industrial invests across pharmaceuticals, real estate, infrastructure, and consumer goods. Its portfolio company Shanghai Pharma is listed in China and Hong Kong. Shanghai Zhangjiang participates in the biotech space through its Zhangjiang Hi-Tech Park incubator, which has separately launched a number of technology funds.
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