Growth opportunities are abounding in Chinese biotech. A confluence of regulatory reforms, industry talent, and the re-opening of the country’s capital markets have helped propel China’s biotech industry.
Global management consulting firm McKinsey & Company delved deeper into China’s rapidly evolving biotech industry. The industry has seen tremendous growth over the last five years.
“Innovation in Chinese biopharma is fast becoming a notable story, underscored by significant value creation on global capital markets,” a McKinsey & Company report notes. “The market value of publicly listed biopharma innovation players from China across the Nasdaq, Hong Kong Stock Exchange (HKEX), and Shanghai Stock Exchange Science and Technology Innovation Board (STAR) has surged from $3 billion in 2016 to more than $380 billion in July 2021.”
“Biotechnology companies originating in China accounted for $180 billion of that total (Exhibit 1),” the report adds further. “Public debuts for Chinese players have also accelerated, with 23 IPOs in 2020 alone. Indeed, Chinese biotechs are leading on IPO fundraising—seven out of the world’s top ten largest biopharma IPOs from 2018 to 2020 originated from China.”
Capitalizing on China's Biotech Innovations
Exchange traded fund (ETF) investors have an opportunity to capitalize on this growth with thematic funds. One worth noting is the Global X China Biotech Innovation ETF (CHB ).
The fund seeks to provide investment results that correspond to the Solactive China Biotech Innovation Index. The fund seeks to invest in companies that are directly involved in China’s biotechnology industry.
CHB offers investors:
- High growth potential: Forecasts suggest that China’s biotech market could grow from nearly $23 billion in 2020 to more than $35 billion by 2025.
- Structural tailwinds: Health care expenditures in China have grown at an annualized rate of 20% since 2003.
- Targeted exposure: In contrast to other funds that offer global or broader healthcare sector exposure, CHB specifically targets the biotech industry in China.
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