On October 5th, 2019, Mark Young, Co-founder and Chief Investment Officer of Bridge Point Capital, was invited to the SAPA (Sino-American Pharmaceutical Professionals Association) Washington DC & Baltimore Chapter Annual Conference and presented on the topic of US/China Cross-border Investments in front of the ~300 selected healthcare/finance professionals.
Participants of this event include industry experts from multinational pharmaceutical and biotech companies such as Pfizer, AstraZeneca, GlaxoSmithKline, Top Alliance; regulators from the FDA and NIH; and finance professionals from PwC, SDIC Innovation Investment Management and etc. Mr. Young shared with the audience his unique insights of cross-border investment opportunities between the US and China under the current political environment, and pointed out several niche markets within the healthcare sector that hold the most risk-adjusted return.
There are signs that the world economy may be about to enter a new round of recession. During a recession, based on historical data of economic cycles, the healthcare sector traditionally outperforms other traditional industries. It is notable however, the US/China cross-border investments declined dramatically from its peak in 2017, despite there were actually plenty of advanced technologies that came to market recently like CAR-T, PD-1 immunotherapy, CRISPER, Single cell sequencing etc. Data from the American Enterprise Institute and The Heritage Foundation and SVB Analysis shows in the year of 2018, the incoming investments from Chinese investors to the North America healthcare companies plunged 88%, and the outgoing investments tumbled 32% from North America to China.
Mr. Mark Young indicated that current trade tensions and diplomatic policies should be primarily responsible for the situation. It is also noteworthy that Chinese investments in the healthcare sector in Europe and Australia surged nearly 300% and 130% respectively from 2017 to 2018, as both the global biopharma and diagnostic industry are growing at an accelerated speed. These numbers are ironclad proof of the potential in the field, and part of the reason why we are so confident about future of US/China deal flows as the tension between the largest two economies in the world will one day subsides.
“The CFIUS (The Committee on Foreign Investment in the United States) imposes a strict process on capital inflows from overseas, especially China. This has deterred the robust development of cross-border investments – true statement.” Said Mark Young during the presentation. “But we could interpret it from a different and reasonable point of view. Though CFIUS did limit some American start-ups from obtaining capital from the other side of the world, it is still an institution designed to secure our homeland and regulate transactions, rather than prohibiting foreign investments utterly. It is proven from my experiences in Bridge Point Capital that successfully going through the process is not hard as many people think it would be. America is still the country filled with state-of-the-art innovations and world-leading talents, hence the preferred place for investors from anywhere in the world. If the capital markets in both the United States and China are not able to support those who possess cutting-edge technology to cure diseases and boost the well-beings of the mankind, it would be a huge loss for not only these two countries but the whole world. Through identifying attractive deals for investors and taking advanced healthcare technologies to China, we can bring hope to desperate patients and their families – this is the mission and vision we always carry while participating in cross-border investments.”