Flush with cash and eager to gain earlier and easier access to innovative drug technologies, Chinese investors have been pumping money into Western biotech startups over the past two years. But despite this recent trend, U.S. President Donald Trump’s plan to limit Chinese investment could hurt Western biotech companies looking to the Asian giant for cash.
Healthcare investments in fledgling biotech and medical technology firms in the U.S. and Europe by Chinese venture capital and private equity firms surged in the first three months of 2018 to more than $1.6 billion (or annualized about $6.4 billion). Last year such investments totaled more than $3.6 billion, up from just $500 million four years earlier.
Chinese policymakers have fueled the trend by encouraging more innovation in the country’s pharmaceutical sector. The industry is eager to move beyond its reputation for low-cost generic medications and share the potential for high returns that can come with cutting-edge medical breakthroughs.
But even as Beijing attempts to drive innovation in the industry, a deepening trade rift with the U.S. could put the brakes on the stream of cash from China to U.S. biotech startups. The determining factor is likely to be whether or not the Trump administration heeds Beijing’s call to keep advanced medical technology out of the trade fight.