Geopolitical headwinds may have given some foreign life sciences investors pause about investing in China. But for Novo Holdings Asia, it’s a good time to double down.
The group is finding valuations in the country “more palatable” with less competition, according to Amit Kakar, head of Novo Holdings Asia. In particular, his team is looking at pharma services and life sciences tools companies in China — with WuXi XDC’s Hong Kong IPO as a recent example — while staying away from anything related to data or genomics, which could be viewed as sensitive because of tensions with the US.
“We are trying to invest in companies which are in China for China,” Kakar told Endpoints News in May, on the sidelines of the Asia Summit on Global Health in Hong Kong. “We are aware of the geopolitical stress that’s going on. If a company has a lot of exposure outside of China, there is a risk factor.”
Thanks to unrelenting demand for Novo Nordisk’s diabetes and weight loss drugs, Novo Holdings — the investment company managing the Novo Nordisk Foundation’s wealth — has said it will have $5 billion to $7 billion a year to invest through the end of the decade. That global push is giving the Asia group more capital to work with, and the team is expected to grow to around 20 people in 2024.
“When we first started investing in 2021, our average ticket size was between 20 to 30 million US dollars,” Kakar said. “Now that is going to be between 40 and 100 million US dollars.”
The Danish giant is also expanding its ambitions in other areas. On Thursday, the Novo Nordisk Foundation officially added regenerative medicine to its health strategy.
The bulk of Novo Holdings Asia’s investments are split between China and India, where his group will open a new office later this year, Kakar said. The rest goes to selected markets in Southeast Asia.
While Novo Holdings has backed drug developers in the US and Europe, the Asia team doesn’t see itself following suit anytime soon.
“We still don’t see that large sort of bulk or volume that we see in Boston, or West Coast, or Europe, from a venture standpoint,” Kakar said. “But we see more opportunities in the more mature side like life sciences tools, medtech, hospitals in India, digital health, like telehealth and telemedicine.”