The Honourable Mrs. Carrie Lam, Laura, Distinguished Guests, Ladies and Gentlemen,
Good morning. It gives me great pleasure to welcome all of you to our second HKEX Biotech Summit. I’m very pleased to see the tremendous turnout at today’s conference. It is testament to the significant global relevance of the sector and also I hope to the exciting future for Hong Kong as a biotech centre. It is also a great indication that Hong Kong’s biotech ecosystem is taking shape. We have an exciting line up of speeches and panels – including one on new technology adoption in biotech which I am delighted to be moderating. And I am sure that during the course of the summit we are in for some informative and lively discussions.
There are three key themes that frame our summit: Biotech, Investments, and Hong Kong. Each is very important in its own right – but how are they related and why are they relevant?
Just over a year ago, we connected these important elements when HKEX implemented some of the biggest-ever changes to our listing regime, which included the addition of a new listing chapter to welcome pre-revenue biotech companies. We set out to help address the funding challenges experienced by the global biotech industry: the lengthy research and development and approval processes for many biotech products often means that the companies are unable to source sufficient funding in a timely manner before they can generate revenue.
As we celebrate the first anniversary of our reforms, Hong Kong has already become the world’s second-biggest funding hub for biotech for the past 12 months. Thank you all for your support to date. Over the past year we welcomed the listing of 10 biotech companies, raising over HK$33 billion, including seven pre-revenue firms. There are currently over 10 biotech companies that have filed a listing application, while the pipeline is very strong.
Yet we are operating in challenging times. The relative calm we saw in the markets the first few months of 2019 has given way to renewed volatility and uncertainty, on the back of the escalating trade disputes between the US and China. Against this heightened tensions, we are seeing increased risk of a global decoupling, a world polarising between the East and West, as well as creeping nationalism – all developments that could pose a chilling effect on the free flow of global capital investments. We are on the sidelines wishing that this “divorce” does not take hold, hoping that it can be reversed as it is in nobody’s interests.
This is particularly important in the global biotech industry: a sector that has no respect for borders or politics. It is a sector that looks to both capitalise upon and champion our commonalities.
Whether we are Asian, American, European or African, our biology is the same. Far from talking about divorce, decoupling and aggravation, the global biotech industry is about connecting, convergence and marriage. Specifically, we are here because we believe that:
- Biotech should be without borders;
- Investments in biotech help Humanity as a whole and should be without undue restrictions;
- And that Hong Kong has a unique role to play in the future development of the industry.
In a world where the population continues to grow, and in many places, age at an unprecedented pace, how we fund, support and execute our drug development and healthcare provisions will be defining. And Hong Kong – at the confluence of East and West, at the doorstep of the world’s second largest economy – is the natural home for facilitating a biotech community that can help address some of these pressing needs.
Why Should Biotech Be Without Borders?
Different regulations in different countries and inconsistent access to funding for research and development are some of the reasons why the biotech industry is still very fragmented and remains confined within certain national borders. Yet there is no reason why the industry needs to be structured that way: the need for good health transcends race, religious beliefs, and geographical or ideological boundaries.
As humans, we are all pursuing similar ideals: We want our children to be healthy, we want to stay healthy ourselves, we want healthcare that will make us better when we are sick, and most importantly, we want to live pain-free, happier, and longer lives.
Indeed, we are already seeing major breakthroughs today that may soon help us in achieving a large part of this common dream, with advances in areas like DNA sequencing, bioengineering, gene therapy, precision diagnostics and personal healthcare. While these are unlikely to be available universally to all across the globe, we are in touching distance of medical care and biotechnology that is capable of supporting all.
The US’s intellectual leadership in life sciences coupled with China’s rapid progress in medical care delivery present new opportunities for clinical trial partnerships. China’s large, increasingly affluent and yet ageing population offers significant opportunities for clinical trials, as well as being in its own right a large and sustained global market for biotech and medical services and products.
There is also a new optimism for partnership that stems from important milestones reached in recent years by the Chinese and US healthcare regulators. Specifically, China has fundamentally reformed its drug administration policies and regulatory structure by largely adopting US and European standards and processes. This, in turn, paves the way for mutual recognition of clinical trial processes, and has the potential to substantially accelerate new drug discovery and approvals processes.
There are already some prominent recent examples of biotech projects that either have funding from both US and Chinese sources, or are being undertaken as joint US-China efforts. These include the development of CAR-T cancer drugs, therapeutics for superbug infections; treatments for severe inflammation and autoimmune diseases; and medical devices.
The convergence of science and mass delivery will have far reaching potential benefits not only for Americans and Chinese, but more widely. The trade war should not be allowed to force regressive steps here.
Why Should Investment in Biotech Be Without Undue Restriction?
Biotech is unlike investments in manufacturing, natural resources, technology and other core infrastructure, where one could reasonably be concerned about issues such as employment, energy safety and national security. We all stand to benefit from the innovations of biotech development, so I would argue that the industry should be nationality-neutral and politically-neutral. Capital should therefore be deployed without undue restrictions. For sure, the US and China have so much to complement each other within the biotech space, and capital is the most efficient way to connect.
There is an added layer of urgency amid a rapidly ageing population in China and the US. Some estimates put the proportion of the US population over 65 years old at 21 percent by 2030, up from 15 percent in 2014. In China, the estimate is for the population above 65 to grow to 16.8 percent by 2030 from the current 10.6 percent.
US biotech capital tends to concentrate on the development of drugs for major widespread diseases, driven by the fiscal nature of the US medical care industry. The US can gain from the development of smaller scale and less expensive drugs that have a greater chance of success in China given the size of its population; this in turn will benefit US patients and customers. Moreover, the combination of China’s massive savings rate and large and ageing population will provide the world with a long-term sustained flow of capital investment into life sciences and medical industries with long-term benefits for all.
For US biotech companies, the availability of non-US capital could potentially help accelerate their research and development processes, while providing them with greater opportunity to more efficiently introduce their drugs to a major market outside the US and at lower costs.
The complete overhaul and synchronisation of China’s drug regulatory systems modelled after the US Food and Drug Administration and European Medicines Agency provide global investors with the level of transparency and regulatory scrutiny they demand. Data and research in different localities is almost always relevant – we need to create a biotech ecosystem that is not defined by location or borders – it is highly inefficient to conduct the same trials in different parts of the world.
Why Hong Kong?
And so, what is Hong Kong’s role?
Hong Kong has always been the most important bridge between China and the West. The city’s role has never been as important as it is today given China’s growth trajectory. Today, after 40 years of reform and opening-up, China has been brought closer and closer to the rest of the world. At the same time, however, China’s size, its governance models and own challenges have resulted in widening gaps between its market structures and regulatory models compared with those in the West.
That’s where Hong Kong comes in. Hong Kong is the “translator”, a “transformer” and a “bridge” to allow more seamless interaction despite the key structural differences between China and the rest of the world.
With the 30-year-old US-China marriage hitting the rocks, the gloomy prospect of a pending “divorce” makes it even more critical for a bridge to allow these two giant nations to maintain essential channels of connection to pursue mutually beneficial developments even if the wider union is cracking.
Hong Kong’s role will be important but it must maintain the trust of both China and the world. The key to that success: One Country, Two Systems.
One Country means Hong Kong is part of China; Two Systems means that Hong Kong grew up in a Western family with different values rooted in the rule of law, a free capital market economy and an open society; those values remain and I don’t expect it will change anytime soon.
Hong Kong will never be able to maintain a genuine Two Systems unless we are able to harness China’s trust; while Hong Kong’s strategic value to China will disappear if it does not have the trust and recognition of the global community.
Finding the balance between One Country and Two Systems is hard, but it is critical.
In terms of US-China relations, sometimes it may feel like they are crossing a river on a single tree or even a cable with a long stick. This is not sustainable. We must build larger and stronger bridges that allow people to cross safely, allow goods to ship easily, allow capital to flow smoothly. Most important of all, it must allow the US and China, the two global superpowers, to maintain their strong and inseparable ties whether or not their matrimony continues. America deserves that, China deserves that and the world deserves that.
Hong Kong is a perfect bridge and I am certain it will continue to play that pivotal role in the years ahead.
Today, we are here because the biotech industry is a bridge builder:
- Between the US and Chinese biotech communities;
- Between global capital and global biotech;
- Between Chinese capital and US and global capital.
Thank you for coming here today to the HKEX Connect Hall and for helping us build the great Biotech Investment Bridge in Hong Kong. I am confident that this bridge will be an important connector in helping us all lead better, healthier, and happier lives.
Have a great conference and I will see you shortly in our second panel.
Thank you very much.