CHINA’S health-care and biotech firms are capitalizing on a surge of interest in the sector due to the coronavirus pandemic by raising a record US$6.8 billion in fresh equity-linked transactions this year.

While health-care and related sectors have long been popular, with investors betting that China’s aging population and growing middle class would boost spending, the virus has raised expectations that China will funnel even more funds into them.

“Because of the epidemic outbreak, the biotech, health-care industry has been valued more by everyone. People realize that no matter what the economy looks like, patients always need to see the doctor,” said Xia Yu, co-founder and CEO of Chinese biotech firm Akeso Inc.

China’s health-care expenditure accounted for just 6.6 percent of its GDP in 2018, compared with 17.7 percent in the United States, according to official data from the two countries.

“After the virus outbreak, government and society will greatly increase spending on health-care systems, which will benefit the industry,” said Andy Lin, founding partner of Chinese private equity firm Loyal Valley Capital.

Loyal Valley has been looking into investment in vaccine- and testing-related companies and encouraged portfolio firms like Shanghai Junshi Biosciences to expand into businesses related to tackling the coronavirus, he said.

Chinese biotech and health-care firms have raised US$2.1 billion from IPOs on the mainland, Hong Kong and the United States this year, nearly double the rate this time last year, according to Refinitiv data.

Health-care-related companies have been a driving force in Hong Kong in particular this year, accounting for 30 percent of the total US$2.78 billion raised via IPOs in the city, Refinitiv data showed.

(SD-Agencies)