As part of my MBA thesis I performed an extensive analysis of pharmaceutical biotech financing deals during the last 12 years and identified several interesting tendencies regarding financing types, recently emerging technologies, and deal structures in the US and China. Furthermore, a comparison of the two giant biotech markets deciphered key differences in financing routes and patterns. In the US, a robust ecosystem and substantial financial support drive a large market, while China's innovative landscape is bolstered by government support and strategic expansion.
The US dominates the global biotech market with a massive annual deal volume of $240.3 billion on average. In contrast, China's biotech deal volumes have grown at a remarkable +16% compound annual growth rate between 2021 and 2022, outpacing the US significantly (+6%). However, the average deal size in China during the same period was 90% lower compared to the US counterparts. Both markets experienced a significant drop in total deal values from 2021 to 2022, mostly influenced by macroeconomic challenges.
Divergent trends in investor types further distinguish the two markets. In the US, public companies increasingly invest, while private investments decline. In China, private investments surge, contrasting with a drop in public investor participation.
The average number of assets included in deals increases in both countries, with Chinese companies typically including 5% more assets. Additionally, risk appetite differs, with the US favoring early-stage deals, while China leans towards later-stage, de-risked projects.
Notable variations in molecule types and technologies also emerge. The US invests more in antibody technologies, particularly in oncology, while China directs more funds towards cell therapies, driven by regulatory changes since 2017.
Financing structures exhibit diverse trends, with the US emphasizing strategic alliances, and China witnessing an increase in capital raisings. Mergers and acquisitions decline in both markets.
This comprehensive analysis highlights the evolving dynamics of biopharma financing in the US and China, emphasizing the impact of economic, regulatory, and cultural factors. Understanding these distinctions is crucial for stakeholders navigating the nuanced biotech landscapes of these global leaders.
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