Shanghai's Pudong New Area recently held a matchmaking conference to strengthen financial support for biomedical innovation and development and provide a vital platform for biomedical companies to seek financing.

During the conference, 10 biomedical companies signed cooperation intentions worth more than 2 billion yuan ($289 million) with financial institutions.

Financial support

The development of the hardcore technology industry is a long-term process that cannot be achieved without financial support. In recent years, Pudong has formed a sci-tech finance ecosystem that mainly includes credit, venture capital and multi-level capital markets as well as various financial formats such as insurance funds, policy-related finance and wealth management funds of banks.

Continuous investment is necessary for pharmaceutical companies to advance research and development. Innovative pharmaceutical companies in the startup phase often do not have sales and profit support, making it difficult to raise funds.

In 2006, Zheng Baofu, who graduated from the University of Hong Kong with a doctoral degree, raised 1.5 million yuan through self-financing and angel investment and founded Shanghai Haoyuan Chemexpress Co Ltd, a high-tech enterprise focusing on small molecule drug research and development R&D services and industrial applications, in Zhangjiang, a biomedical industry innovation hub in Shanghai.

When Chemexpress needed a large amount of capital to purchase high-end equipment and seek other investments during its industrialization phase, bank and equity financing put the company on the fast development track with the help of government-backed guiding funds, which participated in the company's operations and management by introducing external directors and providing services such as financial consulting, strategic guidance and long-term talent support in capital market operations.

"Through guiding funds and the expansion of funding, enterprises can quickly promote strategies," said Zheng.  

Chemexpress has set up a comprehensive industrial layout for globalization, branding and industrialization, and formed three independent brands: Chemexpress, MCE and Leyan. It has synthesized AR-318, which was approved by the US FDA for the treatment of metastatic breast cancer in 2010. Currently, AR-318 is approved for the treatment of breast cancer in more than 65 countries and regions.

In terms of bank financing, Chemexpress has since 2014 obtained loan-interest subsidies for “little giants” (SMEs that are engaged in manufacturing, specialize in niche markets and boast cutting-edge technologies), loan-interest subsidies for micro and small enterprises and loan-interest subsidies for high-tech enterprises.

As of the end of 2021, the company had accumulated loan-interest subsidies of more than 2 million yuan. In 2021, Chemexpress was listed and traded on the sci-tech innovation board of the Shanghai Stock Exchange.

Focusing on industrial demand

The biopharmaceutical industry is one of the six core sectors in Pudong. In recent years, Pudong has focused on the development needs of the industry, strived to solve enterprises' pain points and issued policies regarding talent, industry, finance and capital to bolster the innovation and development of companies.

Licensed financial institutions, financing leasing enterprises, commercial factoring enterprises and private equity investment enterprises are rewarded with grants for setting up operations in Pudong. Talents from such companies are also offered allowances to help them settle in the area.

Financing has always been a core issue in the development of biopharmaceutical enterprises. Pudong has established a fund of funds (FOF) on science and technology and other funds to promote market investments. The area is currently optimizing the linkage mechanism for venture capital, investment and operation. With regard to the key financing stages of the biopharmaceutical industry, Pudong has established government-led angel funds and acquisition funds to support investments in cutting-edge projects at the initial stage.

Pudong has also formulated a "1+1+N" talent policy to attract high-level professionals and strengthen the introduction and cultivation of leading personnel in the biopharmaceutical industry. Talent teams are also encouraged to carry out various R&D and industrial projects.

The area has supported industrial development in a holistic manner. To encourage R&D and innovation, support is provided for the clinical research of original new drugs that are in Phase II and III, the approval and industrialization of innovative drugs and medical devices, and the application of contract development manufacture organization (CDMO) mode for R&D and industrialization of innovative drugs and medical devices.

Thanks to favorable policies, several high-tech enterprises including Chemexpress have thrived in Pudong. Today, Zhangjiang has gathered more than 2,700 upstream and downstream enterprises in the biopharmaceutical industrial chain, with more than 1,400 drugs in the research pipeline and more than 700 Class 1 new drugs entering the clinical stage. Pudong now has one of the highest concentration of domestic pharmaceutical enterprises in China.

In 2022, eight biopharmaceutical companies in Pudong, including OPM Biosciences, MicuRx, Shanghai MicroPort EP MedTech Co Ltd and OBiO, were listed on the sci-tech innovation board of the Shanghai Stock Exchange. Last year, 96 life science enterprises in Zhangjiang raised over 13 billion yuan in financing.

Pudong's boasts advanced research and innovation capabilities in terms of biopharmaceuticals. Last year, four Class 1 innovative drugs in Shanghai were approved, among which three were from Pudong. In the first quarter of this year, three Class 1 innovative drugs in Pudong were approved.

Three key initiatives

Pudong will undertake three key initiatives to drive the growth of the biopharmaceutical industry.

The first is the expansion of the development space for the biopharmaceutical industry by approximately 34 square kilometers. Authorities have built a batch of characteristic industrial parks such as Zhangjiang Innovative Drugs Industry Base, Shanghai Zhangjiang Medical Device Industry Base, Zhangjiang Headquarters Park and Zhangjiang Cell and Gene Industrial Park. They have also accelerated the planning and construction of other parks such as the Zhangjiang Private Economy Headquarters Park and the Zhangjiang Pharmaceutical Valley manufacturing base. Two measures for upgrading existing industrial land and developing characteristic industrial parks have also been issued. In the next three years, authorities will allocate 3,000 mu (200 hectares) of industrial land and more than 2 million square meters of property space.

Another measure is the continuous innovation in policies. In recent years, Pudong has launched a slew of innovative measures, such as implementing a pilot plan for medical devices, facilitating customs clearance for special R&D items and issuing the Regulations on Promoting the Construction of An Innovative Highland for the Biopharmaceutical Industry in Zhangjiang of Pudong New Area in Shanghai. Next, Pudong will undergo reform in areas such as diversified cell and gene subjects, expand the types of special items for the customs clearance of biopharmaceutical goods, deepen industrial integration and advance the authorization of imported medical equipment.

Pudong has also formed several industrial clusters of Contract Research Organization (CRO) and Contract Manufacturing Organization (CMO), with nearly 300 public platforms providing high-quality and efficient services to innovators and entrepreneurs.

It has cultivated a batch of innovative drug companies with lightweight asset operation such as Zai Lab, Junshi Biosciences and Hua Medicine. In addition, the State Drug Administration's drug review and inspection center and the medical device technology review and inspection center for the Yangtze River Delta region have been established here. Pudong has also set up a human genetic resource management service station.

Pudong will adhere to the development strategy of talent-led growth, gather more  investment institutions and carry out policies in areas such as talent and sci-tech to offer tailored services for enterprises.