We have just concluded our 4th ChinaBio® Investor Forum - our first in Beijing - and I'm on my way back to the US thinking about the event (it was a great success) and what the speakers said about the economic turmoil and how it may - or may not - affect China. 

Some of the speakers and attendees had just come from the Zero2IPO Annual China Venture Capital Forum, also held in Beijing last week.  Much more focused on IT and technology than life science, the mood there was generally described as "doom and gloom." But at our event, the energy level seemed quite high and the general mood was very upbeat.  The attendance exceeded our expectations by 30%, reaching nearly 200 - our best first-time event thus far.  Investors were actively chasing the presenting companies, and all of the CEOs I spoke to had been approached by multiple VCs during the event, and most already were scurrying off to follow-on meetings.  The pharma and CRO execs on the partnering panel were equally optimistic.  Some on the VC investment panel even felt that this was "China's time" to break out and improve its stature on the world stage of the life science industry.  (See www.CBIF2008-BJ.com for more information on the event.)

But we can't ignore that the economy is slowing in China - general predictions are that GDP will grow at "only" 8% next year.  As a centralized government, China has taken swift action to shore up the economy, and the life science industry in particular.  It launched the Mega New Drug Development Program two months ago, which should inject $10 billion US into our industry over the next five years (see story).   And it is accelerating its plans to make additional funding available for healthcare, especially in the rural areas where 70% of China's population lives.   

So, all-in-all, peering out from our insular view from China's life science and healthcare industry, it would seem that things are pretty rosy, especially considering the turmoil elsewhere.  But is it? 

While sitting on the plane, I was reading in BusinessWeek about the hoards of people coming out of retirement in the US because their nest eggs have been wiped out, and I saw a statistic on CNBC last week that 46% of all ARMs (adjustable rate mortgages) in California were in default....  46%...  That is a staggering number. 

While there has been little or no news in China of people losing their homes or their life savings in the stock market, I know it's happening.  I know of two cases where people lost significant amounts in the stock market, and, in one case, the family was forced to move from Beijing to lower cost housing in a remote city.  Given the huge surge of individuals who had entered the market near the top, I'm sure that there are thousands, if not hundreds of thousands, of similar stories in China.

Yet, as I struggled to make my way through the throngs at Superbrand Mall - most of whom were carrying bags stuffed with trendy clothes, makeup, and other non-essentials - I was amazed at the vitality here in the consumer market, while my friends say the malls in the US are nearly deserted.  And when I visited a hospital just this weekend, it was very crowded.  I was told that you must be there as early as 4:00 AM to get a number so that you would be served the same day.  Given the preponderance of self-pay in China, this means that people still have the funds to pay for healthcare services.  While the costs are only about 5% to 10% of what they are in the US, a $100 MRI or a $30 x-ray is still a significant spend for many Chinese.  Yet there they were, lining up to speak to the doctors and get their prescriptions.  In fact, the longest lines I saw were the cashier lines.  After all, healthcare is mostly a cash business in China.

I'm rambling a bit, but let me try to tie it together...

Interest in early stage life science in China seems to be increasing in intensity, although the number of VC deals has slowed steadily this year.  But the slowdown is being supplanted by government funding and big pharma's newfound interest in early stage technology.  The economic turmoil is actually driving Western companies to seek out China's lower-cost services - the CEO of a major China-based CRO said that over 700 people had visited his company in the last six months.  And China's need for healthcare services will only increase with the continued economic growth and government funding injections.

While nothing is ever certain, I'm very glad to be part of China's life science industry, as I agree that it is "China's time" to leapfrog ahead of less well positioned countries.  As one attendee at our Beijing Investor Forum put it: "The US had better watch its back."

Disclosure: None.