AstraZeneca Backs $1 Billion Fund for China Biotech Startups

(Bloomberg) -- AstraZeneca Plc is teaming up with one of China’s largest investment banks on a $1 billion biotechnology venture capital fund as the U.K. drugmaker builds presence in the fast-growing market.

AstraZeneca will work with China International Capital Corp. to target support for drug and diagnostics developers along with other startups using artificial intelligence and digital technologies to improve health care, Chief Executive Officer Pascal Soriot said in an interview with Bloomberg TV. Astra is not the majority investor, he said.

The pharma giant has been assembling collaborations throughout the health system in China, which accounts for almost a fifth of the company’s sales. Astra is now taking steps to establish centers for drug research and artificial intelligence innovation in Shanghai, along with an import platform to help commercialize drugs for rival companies.

“We have to invest more in China,” the CEO said on the sidelines of the China International Import Expo in Shanghai. “The needs are enormous -- 1.4 billion people who until recently didn’t have access” to modern medicines.

As the government makes efforts to increase citizens’ access to new, lifesaving therapies, global drugmakers are working to gain share in the China market and forging ties with domestic firms. Novartis AG and partner Tencent Holdings Ltd. said they’re introducing a heart-failure product for patients that relies on artificial intelligence and the Chinese company’s WeChat app, building on a partnership formed last year.

Companies have welcomed faster approvals of new products after an overhaul of the country’s regulator, while feeling the pain of a nationwide bulk-buying program that’s squeezing profit margins on older medicines.

“We will grow more slowly, but we still believe we can grow 15% or more over the next number of years,” Soriot said. “We are going to grow our new products and our innovative products, and of course feel pressure on the older ones.”

Astra is moving swiftly to firm up relationships in this crucial market. Earlier this year, it entered a partnership with Luye Pharma Group Ltd. to market a Chinese traditional therapy, one of President Xi Jinping’s pet projects. The company has also worked with local hospitals, governments and medical device companies to facilitate use of drugs like Pulmicort for asthma.

Now, through the import program, it’s planning to offer the benefit of its expertise and relationships to other companies aiming at China’s $132 billion market, second only to the U.S. in size. Astra will begin by introducing cancer drugs made by India’s Sun Pharmaceutical Industries Ltd. under a licensing agreement.

“We are looking at companies around the world that have products that complement with our portfolio,” Soriot said. “Any company that has good products but doesn’t have the infrastructure to market them in China, we can offer them our infrastructure.”

--With assistance from James Paton.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net;Selina Wang in China at swang533@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, John Lauerman, Marthe Fourcade

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With assistance from Bloomberg