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The Asia-Pacific (APAC) region is experiencing a significant boom in the volume of private equity and venture capital investments in biotechnology.
The Asia-Pacific (APAC) region is experiencing a significant boom in the volume of private equity and venture capital investments in biotechnology. According to research and consulting firm GlobalData, healthcare private equity investment in APAC increased by 125.8% between 2011 and 2013, whereas deal activities in Europe and North America decreased by 30.5% and 2.5% between 2012 and 2013, respectively.
Within the past five years, APAC has seen pharma deals including Sanofi’s takeover of India-based Shantha Biotechnics, GlaxoSmithKline’s purchase of a stake in South Korea-based Dong-A Socio Holdings, and Novartis’ acquisition of a stake in China-based Zhejiang Tianyuan Bio-Pharmaceutical. “It is therefore not surprising that PE and VC firms have also caught on to this trend, increasing their focus on the region in the hope that future returns will justify their investments and opportunity costs, ” says GlobalData analyst Adefemi Adenuga.
But lax intellectual property protection and regulatory compliance could slow down further investment, adds Adenuga. Two high profile examples are Bayer and Novartis , who have been hurt by India’s weak IP laws recently.
Ultimately, investors “have to decide whether trading reimbursement and other challenges they currently face in developed markets are risks they wish to take in the APAC region,” says Adenuga.