A booming market propels China CRO to a $100M raise. Is an IPO next?
China’s cost advantage and position as the world’s second-largest prescription drug market has fueled its red-hot CRO industry over the last few years. On Thursday, Shanghai-based dMed Biopharmaceutical wrapped up a $100 million Series C round, which it says will blaze the path to an IPO.
Founded in 2016 by Lingshi Tan, Pfizer’s former general manager of China R&D, dMed boasts sites in major cities across China, the US, and one location in Belgium. It hooked a $50 million Series B just last year, and opened a US regulatory affairs office in DC to help Chinese biotechs submit US filings and serve as a conduit for US drugmakers looking to outsource development to China.
“A key goal in the current round is to expand our investor base to include long-term public market-focused institutions and strategic partners in order to prepare for a future IPO,” Tan said in a statement.
Fidelity Management & Research led the Series C, with a helping hand from new investors Sequoia Capital China, Kaiser Foundation Hospitals and E Fund.
China’s CRO market is expected to hit $27.04 billion in 2024, expanding at a compound annual growth rate of 27.06%, according to a Koncept Analytics report published earlier this year. Several factors are contributing to the growth, the report states, including increasing biologics sales, rising geriatric population, growing investment in the healthcare sector, an accelerating number of IND filings, inclining R&D expenditures and unmet need.
“During previous years, the CRO industry has grown from limited clinical trial services provider to a full-service industry characterized by broad relationships with clients and service offerings that encompass the entire drug development process,” the report reads.
In 2017, sweeping regulatory reforms more closely aligned China’s rules with those in the US and Europe, resulting in an influx of applications from Chinese biotechs to register drugs in the US, according to dMed. China joined the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH), an organization that brings together regulators of the biopharmaceutical industry globally to assess the scientific and technical aspects of drug development. IND filings jumped from 11 in 2016 to 20 in 2017, with another 38 in 2018 and the first quarter of this year, dMed announced.
“China is vastly different than two years ago. Government reforms and joining the ICH have helped clear the way for innovative Chinese companies to develop and launch cutting-edge therapies globally,” Tan said last year, upon announcing the DC office. “A key part of dMed’s mission is to support the globalization of drug development and help build world-class clinical, regulatory, biometrics and pharmacovigilance capabilities in China.”