BeiGene’s share price has fallen 28% since its IPO.
Giles Sabrie—Bloomberg via Getty Images
By Sy Mukherjee
September 30, 2018

RECENT REGULATORY changes in China have led to an outpouring of enthusiasm from investors and biopharmaceutical companies looking to gain a foothold in one of the world’s major markets—a market that was, until recently, stymied by restrictions that barred pre-revenue biotech firms from listing on the Hong Kong stock exchange.

That all changed earlier this year. “They didn’t have a mechanism for a true publicly traded biotech sector, and that changed overnight,” says Brad Loncar, a veteran biotech investor who recently launched an index fund for Chinese biopharma companies. “This is the beginning of a new era of biotech in China.”

But Loncar also noted that despite evolving regulations—including moves to specifically prop up the local Chinese biotech sector and speed drug approvals for companies around the globe—there are still some strong headwinds against the industry’s growth.

For instance, a recent vaccine-manufacturing scandal involving falsified data and ineffective drugs led to arrests in China and probably made health care investors skittish.

A version of this article appears in the October 1, 2018 issue of Fortune with the headline “A Tough First Crop for Chinese Pharmas.”

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