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John Lam: Opportunities and Challenges in Life Sciences Investment in China

Chi Hang John Lam • 09/12/2022

Where are the opportunities for life sciences investment in China? Are there any potential challenges that investors should be aware of?

Interest in China’s life sciences sector has been rising over the past two years, with most first-time investors preferring to start with first-tier markets such as Beijing and Shanghai, which benefit from more transparent local government plans and support mechanisms, as well as greater access to talent pools.

For instance, the Shanghai government has established a clear plan that defines the core locations for life sciences and biomedical industry clusters as “1+5+X” – that is, led by Zhangjiang, and supported by five other areas, which are Lingang, Fengxian, Jinshan, Baoshan and Minhang. Each of these locations has a specific focus, such as R&D or manufacturing of new drugs, or R&D of medical devices. Therefore, with a clear industry development plan and submarket positioning strategies, investors are able to make better decisions in their mid- to long-term planning, such as with rental and capital value forecasts, and in determining the type of Environmental Impact Assessment (EIA) certificate they need to obtain.  

Obtaining an EIA for the site as well as ensuring that prospective tenants also have the required EIAs can be challenging. Therefore, it is essential for investors to have a firm understanding of the land usage of the site and the possibility of gaining the required EIA in advance, as well as the relevant EIA requirements for the target tenants. In Shanghai, for example, it’s usually safer to look for sites with R&D land use (unless a permit that allows life science tenants is already in place), rather than those with traditional manufacturing land use. In addition, when lab space is included in the design, it’s important to plan ahead what the intended use of the lab will be, as different levels of approvals are required depending on the usage. For instance, if the lab will involve work requiring animal testing, a separate approval for animal testing will be required.

In conclusion, investment in life sciences in China does require more comprehensive research on local government policies, required EIAs, and other related approvals. Investors are recommended to have a dedicated inhouse healthcare team in place, or to collaborate with a local healthcare partner to ensure that all government requirements are correctly met.

These opinions are the author’s own and do not necessarily reflect the views of Cushman & Wakefield. To find out more about how John Lam views opportunities in Greater China, click his profile and get in touch

For more on investment opportunities across Asia Pacific, visit our Real Estate Investment Hub here.


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