Prospecting Australia-China Bioinnovation Opportunities

In 2024, the role of China as a force in biotechnology supply chain and and its rise in drug development innovation was a key theme in the life science industry. While only a few Chinese developed drugs have received approval by the US FDA, almost a third of pharma in-licensed molecules were sourced from Chinese biotechs in 2023 and 2024, where there were 0 just 5 years prior. Global innovation competition is accelerating as the geopolitical landscape is evolving - what does this mean for middle powers like Australia?

For Australia, the tension between our long-term ally the United States and largest trade partner China is spilling over into the biotechnology and biopharmaceuticals industries. In partnership with the Australia China Business Council, Boson Ventures hosted the Australia-China Bioinnovation Roundtable, a closed-door event gathering of experts from the biotech industry, academia, and policy to discuss the evolving landscape of biotech innovation, with a particular focus on the opportunities and challenges for Australia in the context of global trends.

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Home to world-class research institutions and a history of developing breakthrough technologies, Australia has a tremendous opportunity to drive economic growth and diversification through biotechnology innovation. With an optimistic outlook and awareness of challenges and opportunities, the discussions revolved around the rapid growth of China's biotech sector, Australia's position in the global biotech ecosystem, intellectual property (IP) concerns, and the need for collaboration, innovation, and execution to drive the industry forward.

1. China's rapid biotech development and business innovation

China's biotech sector has undergone significant transformation in recent years, particularly in the post-COVID era. Marina, an expert on China-Australia innovation policy, highlighted a significant change in the landscape of Chinese biotech in just the last two years. This rapid development has been fueled by strong policy support and a rapidly growing innovation ecosystem post COVID.

Marina identified five major regions in China that are emerging as biotech hubs: Beijing, Shanghai, Shenzhen, Guangzhou, and Suzhou, each of which has its own focus areas. For example, Shanghai is a leader in biopharmaceutical sciences, hosting over 1,400 startup firms. This regional specialisation has allowed China to build a diverse and robust biotech ecosystem.

Chinese biotech companies are increasingly looking to expand globally. Hover, Healthcare partner at Boson Ventures noted a trend "in the past 3-4 years, Chinese biotechs are seeking markets overseas." This trend reflects China's ambition to become a global leader in biotech innovation as companies explore new ways to commercialise their innovations and “government-led funds are promoting new industries.”

2. Australia’s biotech holds immense potential for growth

As China's biotech sector has rapidly advanced in terms of innovation, Australia faces challenges in commercialising its scientific outputs. Whilst Australia is a leader in high impact research publications, we rank near the bottom of the OECD for commercialisation. Roundtable participants noted the strengths of Australia in “small-scale, high-IP projects" but difficulties in scaling due to lack of local industrial supply chain. Whilst biotech companies from Australia have historically prioritised business development and industry engagement with US and Europe, China presents exciting opportunities and unique advantages in terms of cost-competitive service providers (i.e. CROs, CDMOs) and clinical stage assets.

While CDMOs like WuXi AppTec and WuXi Biologics have been targeted by the US BIOSECURE Act, aiming to reduce US pharma reliance on Chinese supply chain players, outsourcing to experienced service providers can speed up the execution of early-stage biotechs, especially university spin-outs which often struggle in speed of execution.

Further, participants identified exciting opportunities in out-licensing and forming NewCo (new companies) from clinical stage Chinese assets. This would combine strengths in Chinese pre-clinical research that have yielded novel pharmaceutical assets and Australia’s world-class first-in-human clinical research industry. However, applying a NewCo strategy for China-originated assets would require participation from deep-pocketed investors in Australia to be competitive with global players like Atlas Ventures and Bain Capital.

Before Australia can capitalise on these opportunities as a globally competitive player, we need to foster a stronger innovation ecosystem, improving commercialisation capabilities, and support a culture of entrepreneurship. It was also noted agreement that stronger alliances between biotechnology industries, such as agribusiness and life sciences would build a stronger innovation ecosystem.

3. More knowledge sharing and upskilling required to embrace Australia-China opportunities

Biotech founders participating in the roundtable stressed the importance of greater "education of the Chinese industry and market - noting that current newsflow is "very US-centric." A lack of awareness and understanding of the Chinese market was identified as a significant barrier to collaboration.

The protection of IP was a recurring theme throughout the roundtable, particularly in the context of collaboration with China. While this was emphasised as a "very real concern" for companies operating in the biotech space, Boson Ventures investor Alan Cui countered that "there’s no perfect solution for IP. While IP is important, effective execution and building efficient processes were core to establish a robust moat.

Biotechnology is an industry that requires long term investment and patient capital, as well as being highly technical. Roundtable participants aligned on the importance of more sector-wide consultation and collaboration in order to put forward recommendations for policymakers to seize the immense opportunity in Australian biotech.

The global biotech landscape is rapidly evolving and meaningful two-way engagement with the Chinese industry will support Australian innovators in remaining agile, informed, and proactive.

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As an Australian deep tech and healthcare venture fund with deep China market expertise, Boson Ventures looks forward to playing a proactive role in aligning Australian innovation with Asian resources to supercharge the growth of ambitious startups with global impact.

This event marked the first event convened by our team and we are grateful for the support of the Australia China Business Council led by Tom Parker, contribution from academic leaders Dr. Marina Zhang (University of Technology Sydney) and Dr. Dirk van der Kley (Australia National University) as well as additional partners ACASE and ACAA. We also extend thanks to all participants who engaged in a lively and collaborative discussion.

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