Eyes on China as untapped biotech partner for Aust

China has the potential to be a lucrative market for biotechnology, with opportunities in biopharmaceuticals, agricultural biotechnology and industrial biotechnology applications, according to speakers at this morning's BioMelbourne Network breakfast.

"Biotechnology will be increasingly important [for China]," said Alan Carroll, executive chairman of the Pacific Rim Forum. "Strategies are moving toward China plus one [other Asia-Pacific region country], or China plus two. Australia and New Zealand are making the case for being the plus one or plus two."

Carroll said that annual GDP growth of around 8 per cent, coupled with the emergence of mass markets as the country becomes more urbanised, meant that China was rapidly becoming an important driver for growth in the region, attracting US$60 billion in foreign direct investment. "No other country uses foreign direct investment as well as China except the US -- it's an interesting parallel," he said.

According to Carroll, China's expected core competencies in the biotechnology arena include agribusiness, bioinformatics, traditional Chinese medicine and environmental biotechnology, with a focus more on agricultural applications and industrial biotechnology than on health-related applications.

He said he expected the country to rapidly develop its biotechnology industry. "They're going to learn very quickly, they've got that diaspora [of expatriates] to tap," he said. "China is actively bringing people back."

Austrade biotechnology and emerging industries manager Dr Doug Anderson said that there was an increasing awareness and demand for modern medicines and technologies in China, with Australia's exports to the country significantly increasing over recent years. "It could be our second most important export market in a short time," he said.

But Anderson said that navigating the industry in China was quite difficult due to its fragmented and regionalised nature and tight regulatory environment, and companies hoping to break into the Chinese market needed to be both efficient and flexible in its approaches.

Success story

One Australian company that has made big strides in tapping into the Chinese market is Vital Biotech, which is based in Australia but listed on the Hong Kong stock exchange.

"We went to China to take the market by stealth," said executive chairman Dr Tom Ko. "We chose Hong Kong as it was close to mainland China -- it's part of China but its legal and financial systems are based on British systems."

With three products on the market in China, the company had an annual turnover in 2003 of around HK$270 million (around AUD$45 million) with a HK$61 million profit, and paid investors two dividends. The company recently raised AUD$18 million in a mere 90 minutes through a public offering.

Vital Biotech, according to Ko, has two platform technologies -- a protein stabilisation and delivery (PSD) platform, and a skin drug delivery system (SDDS), which it applies both to its own product pipeline and to others through joint development and distribution arrangements, joint ventures and licensing agreements.

The company has both R&D and manufacturing facilities in China, as well as a large sales and marketing capability, in addition to its Melbourne-based Vitapharm Research Centre.