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Mergers afoot for China’s biotechnology industry as suppliers become attractive targets for Big Pharma

  • Outsourced drug discovery services providers stand to benefit from industry boom, regardless of whether drug development efforts succeed or not
  • Industry is benefiting from abundant funding from private equity firms and stock market offerings, Advent International says

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Outsourced services providers stand to benefit in the pharmaceutical value chain as China’s drug development sector is awash with funding. Photo: AFP
Eric Ng

China’s fragmented outsourced drug discovery services market will see further consolidation as companies seek to grab market share amid a biotechnology boom.

The market, dotted with companies with specialty expertise, are becoming attractive targets for suitors seeking a foothold in the world’s second largest pharmaceutical market, according to private equity firm Advent International.

“The industry is growing at around 20 per cent a year in the last few years, benefiting from the biotech boom,” Andrew Li, head of Greater China, said in an interview. Such outsourced providers stand to benefit from their position in the value chain, regardless of whether drug development efforts come to fruition or not, he added.

The preclinical outsourced drug discovery services market in mainland China is forecast to grow at a compound average annual rate of 18.2 per cent to US$4.1 billion (HK$31.8 billion) in 2024 from US$1.8 billion last year, according to market research firm Frost & Sullivan. Drug developers are increasingly using outsourcing partners to help them conduct preclinical laboratory tests and clinical trials to take advantage of cost savings, especially China, Li added.

Andrew Li, the Shanghai-based head of Greater China of global private equity investment firm Advent International. Photo: Handout
Andrew Li, the Shanghai-based head of Greater China of global private equity investment firm Advent International. Photo: Handout

Advent, which focuses on five broad sectors including health care, last week took control of Shanghai-based Sundia MediTech, and plans to merge it with its San Diego-based BioDuro. No financial detail was disclosed. Both companies have been in business for the past 15 years and most of their research operations are located in China serving global clients, mainly in the United States, Europe and increasingly Asia-Pacific.

The combined entity BioDuro-Sundia has over 2,000 employees, making it the third largest player among China’s contract drugs research organisations focusing on preclinical work, according to Li.

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