Dr. Jonathan Wang is Senior Managing Director of OrbiMed Asia, which he co-founded in 2007. He has over 20 years of life science experience, including investment, entrepreneurship and research. He holds a PhD in Molecular Neurobiology from Columbia University and an MBA from Stanford University.

ChinaBio: Tell us about OrbiMed. Where does it fit into the world of VC/PE firms?

Dr. Wang: OrbiMed is a 25 year-old healthcare and life sciences-dedicated investment firm. We believe we are the largest investment firm in the world that is dedicated to healthcare and life sciences, in terms of assets under management. We have five offices around the world, including Shanghai and Mumbai in Asia. OrbiMed has made over 170 private equity investments; in Asia, we have made 19. OrbiMed Asia has close to $500 million in private equity funds. In addition, OrbiMed has invested approximately $200 million in public companies in China.

ChinaBio: And you consider yourself a PE firm rather than VC?

Dr. Wang: OrbiMed’s investment scope is broad. We do all stages of investments, including VC, PE and public equity.

In Asia, we have been heavily focused on the early growth stage, although we sometimes do VC investments as well. OrbiMed Asia’s target investment size averages between $15 and $25 million per company. In most cases, we are larger and later than typical life science VCs.

ChinaBio: What do you look for in a partner? How much of the equation is technology? How much is management?

Dr. Wang: We are an investment firm, so we would use our global network to look for partners for our portfolio companies rather than for ourselves. What we are looking for depends on the portfolio companies.

Often, we are looking for mature pharmaceutical or medical device products from overseas. These products are sometimes in or close to the market in the US or Europe. The therapeutic areas which we are focused on depend on the portfolio company we are helping.  For example, we are looking for anti-infective, GI and bone pharmaceutical products for Waterstone, one of our portfolio companies.

We have medical device portfolio companies as well. Chemclin is a leader in China’s IVD industry and EA in the transparent dental braces industry. We would seek products or partners for them as well.

The structures of the deals vary. Sometimes, it’s a basic licensing. A company would simply pay for the China right to a pharmaceutical product. At other times, the product is at an earlier stage and you need to do co-development so the deal would be more complex. The Chinese company would take care of the local development and registration process in China. A deal would typically involve upfront, milestone and royalty payments, Sometimes JVs are formed.

I would say both technology and management are important in a partner but their “weights” would obviously vary under different circumstances, In a straight licensing deal, the partner’s management may not be as important as in a JV.

ChinaBio: How long do you plan to stay invested before making an exit?

Dr. Wang: We are long-term investors. Typically, we remain with a company somewhere between two and seven years. Our Asia private equity funds are structured with a ten-year life span with the possibility to extend twice, one year each. Most Chinese RMB funds’ life spans are shorter, typically three to five years, and eight years is the longest I directly know. OrbiMed Asia can afford to stay with portfolio companies for a longer period of time.

ChinaBio: How close is the relationship? What kind of contact do you have?

Dr. Wang: We are on the boards of most of our companies. We play active roles to help and support the management but we are not involved in daily operations. We take roles on important sub-committees, such as compensation and audit committees. Occasionally, I have been chairman under special circumstances. Usually, we are minority shareholders, and we generally do not seek majority ownership.

ChinaBio: What does OrbiMed bring to the relationship?

Dr. Wang: First, as mentioned earlier, using our global industry network, we often look for overseas partners and products to help our companies in Asia.

Secondly, using our domain knowledge, we offer strategic support. Entrepreneurs are usually deeply involved in their own business so they sometimes lack a broad view of the industry. We often see many companies in their sector, across different developmental stages, so we can help our portfolio companies with their strategic decision making by better understanding the competitive landscape.

Thirdly, we help our portfolio companies on IPO or M&A exits, OrbiMed has several billion dollars invested in healthcare public equity, across many stock markets. We often use our brand name, knowledge and relationships to help our companies in the IPO process.

Fourthly, we often use our industry network to help recruit talented people to enhance the management team.

We also help our companies on many other issues, such as IP protection, corporate governance and accounting. We may introduce reputable service firms, such as accounting and IP law firms, with which we have long-term relationships, to our portfolio companies.

ChinaBio: What are OrbiMed Asia’s investment focus areas?

Dr. Wang: We are trying to reach a balance among products, such as pharmaceuticals and medical devices, services, such as hospitals and lab services, and cost advantage-based opportunities, such as CROs and CMOs. Out of the 19 portfolio companies in Asia, five of them develop or make drugs.

ChinaBio: How sophisticated is China science? Is it the equal of the west?

Dr. Wang: It’s amazing how fast China science has been improving. China’s basic research and innovation started from a low point but is growing rapidly, According to a recent article in The New England Journal of Medicine, China’s biomedical R&D expenditure more than quadrupled in five years, from $2 billion in 2007 to $8.4 billion in 2012. Many excellent scientists trained at leading Western institutes have returned to China. So the best science in China is very good but the overall quality is still lagging behind the West.

ChinaBio: What brought you back to China?

Dr. Wang: Investment opportunity in China was one of the most important reasons. As an investment firm, we are looking for growth. In China, the healthcare sector has been doubling every four years or so, driven by an aging population, urbanization and economic growth. The country is catching up with Japan to become the number two worldwide in terms of market size. There has been tremendous growth.

I am attracted to good businesses, which depend on good people, and many good people have moved to China, The huge influx of overseas returnees has brought back talented people in both management and research, Let me use BayHelix as an example to show you how many good people have migrated, Twelve years ago, Steve Yang and I co-founded BayHelix, a by-invitation-only nonprofit organization of executives in China’s healthcare and life sciences sector. The largest number of our members was from the San Francisco Bay Area then. But today, the city with the most BayHelix members, approximately 40%, is Shanghai because many of us have moved.

In addition to good people, other success factors important for good businesses have matured rapidly in the recent years. As a result, we are experiencing a strong deal flow in China.

Thank you for your time and insight, Dr. Wang.


Disclosure: none.