Guangdong’s Life Sciences Scene: The Startups to Keep Tabs on in 2020
Chinese biotech is alive, and Guangdong has long generated the mainland’s most assertive firms. We dug deep and explored the promising startups in the Southern Cantonese-speaking province.
Guangdong – the Chinese province where the entire opening-up fête started – has always played a crucial role in the mainland’s economic fate. Yet its dexterities go beyond its traditional industries; the Cantonese mega-province is now a hub for life science companies thanks to its ties with Hong Kong and Greater China’s most prominent Life Sciences schools.
What is peculiar about this mega province?
Together with Shanghai, Beijing, and Jiangsu, Guangdong is home to over 100 startups that were founded in the last 10 years. Shanghai topped the life science startup list in the mainland with over 147 firms founded, followed by Beijing and Jiangsu with 127 and 109 firms. These centers will push multiple growth areas in the near future.
Almost all startups in the south were created in the cities of Guangzhou and Shenzhen, the most prosperous metropolises of Guangdong province.
Behind this scene is a gigantic province, the size of the Turkish and Swiss economies combined in nominal terms and home to over 130 million citizens.
The province has been welcoming Greater China’s best talents from schools like The University of Hong Kong, The Chinese University of Hong Kong and Sun Yat-sen University. It is also where BGI (BGI: NYSE) is headquartered.
Another factor is the province’s geographic and organic ties with Hong Kong, the special administrative region. Tens of biotech firms have forayed into the fragrant harbor’s bourse thanks to its updated listing criteria, which created the possibility of securing new funds from the public for private companies that would not be eligible for this otherwise.
Who are the eye-catching ones?
Venture capital interest was drawn into four major fields in Guangdong’s life science scene. biologicals, therapeutics, diagnostics and other IT services that serve for the life sciences companies.
Therapeutics attracted the largest volume of VC money thanks to the country’s flag-carrying advancements in immunotherapy stem cell therapy and gene editing techniques. The largest amount was raised by a Guangzhou-based Next Generation Sequencing (NGS) firm Burning Rock Biotech (燃石医学). The company raised over CNY 1.3 billion (the equivalent of around USD 360 million). The second-largest fundraising was an immune-oncology project Akesobio.
China is one of the flag-carriers of cancer immunotherapy and the number of active drugs in development grew 91% between 2017-2019. Akesobio has raised over half a billion yuan from numerous investors. Recently，Chinese immuno-oncology has once again attracted investor attention with I-Mab Biopharma‘s (IMAB: Nasdaq) initial public offering on January 16.
Venture capital has also flown into biologics: mainly into vaccines, innovative drugs, and biosimilars. Livzon Mabpharm (丽珠单抗) – a biologics maker raised the most generous amount with CNY 900 million.
Diagnostics provided the other popular destination where private equity has been landing in Guangdong. Creative Biosciences (康立明生物), a company is known for its colon cancer diagnosis kit, has raised over CNY 400 million. China’s In vitro diagnostics markets are expected to be CNY 60 billion as of 2018, a market research report found.
Last, but in no way least, money plowed into supportive IT services in biosciences, led by the nascent phenomenon known as “artificial intelligence and drug development.” Guangdong has particular advantages in this since it is home to Shenzhen – China’s software & hardware hub. XtalPi, for instance, a Shenzhen based biotech firm aiming to accelerate the drug developing process by applying deep learning-based solutions, has raised over CNY 400 million from investors including Google and Tencent.
Breaking down the primary market activities in Guangdong’s life sciences
Zhangjiang, a Hi-Tech Park in Shanghai’s Pudong district, is the nation’s largest pharmaceutical cluster and home of hundreds of life science companies – including GsK, Roche, and AstraZeneca – who have initiated a USD 1 billion fund to back Chinese biotech startups. Shanghai is the leader by far of the primary market activities in Life sciences.
Yet Guangdong may be catching up in the long term, with its newly rising biotech ecosystem.
Biological therapeutics have led the primary market funding activities in the mainland, with an emphasis on targeting yet-to-be-cured diseases with newer techniques and the country’s chronic problems with affordable solutions.
China is the world’s leading country in cancer fatalities and immunotherapy has long been arising excitement amongst the investors. BGI-backed Yuce Bio (裕策生物) – a BGI-backed startup – raised over CNY 100 million and is our pick. The company is an assertive PD-1 inhibitor developer that will well be buttressed by BGI's technical dexterities.
Drug development supported by deep-learning-based techniques is yet another nascent field that needs to be followed carefully. China has been lagging behind in these sophisticated techniques since there was no feasible ground to apply the technique due to the immature novel-drug developing industry. But the wind has been changing direction in the last couple of years.
Insilico Medicine from Hong Kong is an attractive case, an AI company that was backed by Wuxi AppTech and Qiming Ventures.
Setting up in Shenzhen or Guangzhou might be a wise decision for new foreign and domestic players who set out to impact the mainland. EqualOcean will be closely reporting the developments from the province.