(Yicai) Sept. 15 -- Foreign pharmaceutical giants are not fooled by the sluggish stock markets as their investment appetite in China is increasing, according to industry insiders.

"Despite a downturn in the capital market, overseas companies’ demand for China’s innovative drugs has not declined, and the investment has shown a spurt of growth," David Chen, managing director of BFC Group which focuses on the healthcare sector, said to Yicai recently in an interview, talking on the sidelines of the BFC-Sinolink Healthcare Conference.

Chen proved his claim. In the first half, four Shanghai-based pharmaceutical companies made the list of the world’s top 10 biomedical collaborations, earning down payments worth close to USD1 billion in total, marking the largest sum ever in the first six months of the year.

From January to June, several well-known multinational drugmakers inked agreements with Chinese biomedical companies to authorize the use of innovative medicines, Chen said, listing some names such as Japan's Takeda, New Jersey-based Johnson & Johnson, Germany’s BioNTech, as well as Basel-based Roche.

Zhu Zhongyuan, founder and chief executive of Duality Biologics, said to Yicai in an interview during the conference that the Shanghai-based developer of treatments for cancer and autoimmune diseases penned an agreement with BioNTech, a firm known for its mRNA technology for Covid-19 vaccines, only two months after starting talks in January. Consequently, Duality accepted a down payment worth almost USD200 million, and very recently, the pair also inked a new authorization contract for further drug collaboration.

The market is about to get more active with new opportunities. Patents of around USD200 billion worth of drugs are about to expire in the next five years and global markets, including China, need to fill the gap with new products, per David Preston, a biomedicine investor who once was the CEO of Sanofi and Boehringer Ingelheim in China. In the next five to 10 years, an increasing number of innovative drugs will originate from China, he added.

After the recent market pullback, the valuations of Chinese biomedical companies have returned close to reasonable levels by now, which should prompt multinational companies to purchase more high-quality biomedical assets from China, Preston said. The sector is expected to witness more activity probably by mid-2024, including acquisitions and new product authorizations, he predicted.

One of the great advantages of Chinese biotech startups is the international background of their management teams, according to both Chen and Preston. Thankfully, senior executives of many China-based biomedical companies boast quite rich experiences in multinational corporations, they added.

Moreover, Chinese biomedical enterprises’ research and development systems are maturing and China’s clinical data have also gradually gained recognition internationally, Chen added.

Editors: Tang Shihua, Emmi Laine