A biochemistry PhD, Bin Li started out in Merck’s research labs before transitioning to Wall Street, where he was one of the few figures with the scientific, financial, and linguistic knowledge needed to fully understand the early rise of Chinese biotech in the mid-2000s. Today, as chief investment officer at the specialist firm he founded in 2015 – Lake Bleu Capital – Li is uniquely positioned to validate Chinese innovation against rigorous global benchmarks rather than local metrics. He explains how Chinese biotechs are internationalising, how the country’s serial biotech entrepreneurs understand clinical trial design and global commercial needs better than ever, why capital is gravitating toward China’s top-tier companies, and how Chinese-originated therapies are already setting the standard of care and saving lives globally.
What was your motivation to move from banking to starting your own fund? And does the investment thesis you established at the outset of Lake Bleu remain consistent today?
Having spent my early career across scientific R&D, Wall Street equity research, and regional China healthcare coverage, I have been a first-hand witness to the transformative evolution of China’s healthcare sector over the past two decades. In the mid-2000s, the first wave of Chinese biotech and healthcare companies like 3SBio, Mindray, Simcere and WuXi Pharmatech debuted on global capital markets, marking a pivotal turning point for the industry.
During my years in sell-side research at Merrill Lynch and Morgan Stanley, I tracked China’s gradual pivot from generic drug manufacturing toward genuine biomedical innovation. My team at Morgan Stanley published a research report, titled “China Healthcare Has R&D”, in 2012, introducing China’s emerging innovative biopharma companies to Western institutional investors, helping global markets recognise the development of a credible R&D pipeline.
By 2015, a clear market gap had emerged: while leading VC firms focused on private-stage biotech, there was no dedicated, specialist public equity fund focused exclusively on China and Asian healthcare and cross-border comparative analysis. Lake Bleu’s team was formed to fill that void, focusing on public markets and late-stage crossovers. Our core advantage lies in our ability to scientifically “compare and contrast.” Because our team understands the science and the standards of care in both the US and China, we maintain a global benchmark. If a Chinese company claims to be “world-leading,” we can verify that against their US peers with the same rigour. This thesis has remained remarkably consistent. Since our inception, we have been early investors in major players like WuXi Biologics, Innovent, Akeso, Remegen and GenFleet. When the Hong Kong Stock Exchange introduced Chapter 18A in 2018, we leveraged our early-mover advantage to become the go-to specialist fund for crossover and public healthcare equity in the region.
There is a prevailing perception that the Chinese healthcare ecosystem, dictated by central planning and the National Reimbursement Drug List (NRDL), creates a lower ceiling for returns than the US model. How would you define the core fundamentals of the Chinese market in 2026, and how should global investors recalibrate their expectations compared to the West?
The metrics have shifted significantly since the early days of the Chinese industry. If we look back 20 years, Chinese healthcare industry was overwhelmingly marketing-driven. Domestic firms relied on massive sales forces because there was very little true innovation to speak of, and no real biotech companies existed by global standards. Success was largely predicated on government relationships and the ability to navigate a regulatory landscape that, under the former CFDA (now the NMPA), was rudimentary, understaffed, and bureaucratic. Without those relationships, the regulatory process was essentially a “black box.” “Returnees” coming back to China with the intent to build innovative companies found themselves clueless on how to navigate the local system, while domestic companies that “knew the ropes” were able to clear regulatory hurdles and build expansive marketing networks.
20 years ago, there were perhaps four or five bellwether companies in the sector. Today, only one is still standing strong: Hengrui Medicine. The others have disappeared – either through acquisition, bankruptcy, or by being proven fraudulent. Hengrui survived because it successfully managed the transition from a generics-based model to true innovation. If you look at their innovative pipeline now, it is a testament to how far the fundamentals of the industry have evolved. Success today is no longer just about marketing or guanxi; it is about the transition toward global R&D standards.
Today, the investment standard in China is not significantly different from how a US investor evaluates US companies. The industry has undergone fundamental changes driven by regulatory reform and capital market maturity. When looking at the current landscape, Hengrui Medicine has essentially become the “Big Pharma” of China, while firms like Innovent or BeiGene [now BeOne Medicines – Ed.] or Akeso are the “Big Biotech” equivalents – effectively the Amgen, Genentech, or Gilead of the region. Even smaller-scale companies such as GenFleet, DualityBio and Harbour BioMed, are now backed by major global institutional capital.
These global investors have not lowered their standards. Chinese companies are not merely trying to “fit” a specific appetite; they are actively modelling themselves after their global peers. They evaluate innovation through the same lens of First-in-Class (FIC), Best-in-Class (BIC), or “Me-better” molecules and modalities. The shift is evident in the deal flow; five years ago, cross-border out-licensing deals were rare, but today, almost every global Big Pharma has a local search-and-evaluation team in China scouting for assets.
How has the revenue outlook underlying the investment thesis for Chinese biotechs shifted over the last decade, and what impact has this had on the strategic direction of these companies?
The revenue outlook has changed completely. Ten years ago, if you asked any investor – whether in venture capital or public markets – about revenue forecasts for a biotech company, they would typically label China as the second-largest market and provide very optimistic projections. That picture has shifted fundamentally, particularly following the first wave of pre-revenue biotech listings in Hong Kong under Chapter 18A between 2018 and 2020. At that time, we saw a surge of PD-1 immunotherapy players whose business models were forecasting RMB 10 billion (around USD 1.5 billion) China revenue for a single product. Today, that 10 billion forecast has shrunk by approximately 40-60 percent. Domestic prices have essentially collapsed due to intense pricing pressure and the NRDL price negotiations.
This shrinking domestic ceiling is forcing innovative companies to look abroad; they simply cannot justify their R&D investment or their valuations if they remain focused solely on China. Currently, the US remains the primary commercial market that can truly reward innovation. While the US has its own challenges – the Inflation Reduction Act (IRA), for instance, is creating its own pricing pressures – it is still the most vital ecosystem for commercial returns. The reality is that China biopharma industry no longer enjoys the optimistic domestic outlook it had seven or eight years ago, which is driving a necessary and rapid externalisation of the industry, alongside real progress in innovation
Compared to Western biotechs, where development is centred around patient need and the disease, many Chinese biotechs operate more like “CRO+” entities – focusing on platform technologies, fast clinical trials for out-licensing rather than putting medicines in the hands of patients. Do you agree that the patient or real clinical need is sometimes missing from the centre of the Chinese biotech model?
I agree, and there is a clear structural reason for that. The vast majority of Chinese biotech founders are scientists by training – biologists, or medicinal chemists – rather than clinicians. They are not practitioners seeing patients on a daily basis. In the US, you often see serial entrepreneurs or C-suite veterans from multinationals who have navigated the entire drug development lifecycle. In China, many biotech start-ups today are less than ten years old, led by first-time entrepreneurs who are excellent at making drugs, but whose understanding of “unmet medical need” is often second-hand. Even if they have experience at MNCs, they were typically in the laboratories rather than on the front lines with Key Opinion Leaders (KOLs).
Consequently, their platforms can feel somewhat removed from actual medical needs, and their strategic ideas may not be as robust as those of the veterans we see in the US. However, the ecosystem is maturing. In the last two years, we have begun to see the first batch of serial entrepreneurs – individuals who have successfully exited their first business and are now launching their second.
Experience is the great equaliser. Currently, the talent mix in China is heavily weighted toward early-stage discovery, whereas the US and Europe have a more even split of scientists, clinicians, and sophisticated marketers. China still faces a shortage of talent in clinical trial design and commercialisation within the global market. The current solution for many is to hand the asset to a US partner who knows how to design a trial for the FDA and commercialise the product. To date, BeiGene is perhaps the only company attempting to manage the entire global value chain independently – to the point where they have transitioned into a truly global entity rather than a purely Chinese company. These out-licensing deals with MNCs will be essential in helping the rest of the industry learn what the global market and the patient actually require.
Seeing the massive surge of out-licensing deals from Chinese firms, one may debate whether the pricing of these assets is fair or if they are being undervalued because they are “Chinese assets”. What is your perspective as an investor?
From an investment standpoint, I believe the pricing is fair; there is a distinct logic to it. While some might argue that an MNC has overpaid, the true value remains speculative until a drug successfully clears clinical trials and achieves regulatory approval. However, a lateral comparison with the US market reveals a significant valuation gap. For instance, Revolution Medicines is currently a USD 30 billion company. We are investors in a Chinese firm called GenFleet, which is developing a KRAS inhibitor G12D that is advancing right after Revolution’s in global development, yet GenFleet’s valuation in Hong Kong remains a mere fraction of its peers’.
A similar narrative played out with Akeso. When they first partnered with Summit Therapeutics for ivonescimab, there was widespread scepticism regarding Summit’s capacity and whether they had overpaid. Today, those concerns have been largely dismissed. Shortly after that, we saw the PD-1/VEGF deal between Pfizer and 3SBio for USD 1.25 billion upfront – the largest upfront payment in any China-US biotech licensing deal to date – which surpassed the scale of the Akeso/Summit deal. While some companies that out-licensed assets early might feel underpaid in hindsight, both sides of these transactions are sophisticated actors. Ultimately, these deal terms represent the best value available at that specific moment in time.
While companies like Akeso maintain significant market caps, many tradable ones in Hong Kong face a disconnect with valuations that appear “below the floor.” To what extent might this affect their bargaining power in deal-making? Is there some lack of liquidity for 18A companies on the Hong Kong Stock Exchange?
There are several distinct aspects to consider here. Regarding liquidity, Hong Kong has actually seen a strong resurgence; Hong Kong has recorded the highest amount of IPO proceeds raised globally so far in 2026, building on its #1 spot in 2025. Following a major hype cycle from 2018 to 2021, the market experienced a significant drought from late 2022 through 2024. While the market has certainly returned, liquidity is still far from optimal. If you compare a Chapter 18A company in Hong Kong to a similar market cap biotech in the US, the US usually possess greater liquidity, but that level of liquidity is unique to the US market. This was an issue for the overall Hong Kong market during the recent slump, not just the biotech sector.
Since the start of 2025, two pivotal shifts have occurred. First, we have seen the return of global capital. International investors increasingly realised they were underweight in the China component of their portfolios. At its trough in 2024, China’s weight in the MSCI Emerging Markets Index fell to approximately 24 percent – but it has since rebounded to the high 20s.
Second, and perhaps more significantly, has been the influx of Southbound capital. The Stock Connect mechanism has facilitated a steady flow of Mainland China money into Hong Kong. The HKEX has worked diligently to optimise these channels and solve the liquidity problem. Consequently, liquidity is in a much better position today than it was two years ago. While I am uncertain if we will return to the peak levels of 2021 – and candidly, I believe a more balanced market is healthier for price discovery than excessive liquidity – the current environment is far more conducive to fair valuations.
Does the depressed valuation of these biotechs hamper their ability to strike deals with multinationals, or are the market valuation and the deal-making environment essentially detached?
Low valuations do not necessarily prevent deals. In fact, prior to the recent market rally, many companies felt an even greater urgency to enter into partnerships because they were unable to raise capital from venture capital or the public markets. They were essentially compelled to sell assets to multinationals to sustain their R&D burn.
Today, as valuations improve, we are seeing a shift where companies are successfully returning to the public market. For instance, Cstone Pharmaceuticals recently completed a placement, raising approximately 135 million USD. Their stock surged on the back of strong data for their tri-specific antibody, and the offering was well-received by institutional investors with solid post-market performance. We have not seen this kind of environment since 2022; the turnaround really began in April 2025, with DualityBio being one of the first to lead that wave. We were a cornerstone investor in that IPO, which priced on April 14, 2025, and it proved to be an excellent entry point for investors. This suggests that while low valuations might force an earlier exit or partnership, a healthier capital market allows these firms more flexibility in how they fund their innovation.
There is currently a long tail of biotechs waiting to go public. Do you believe the quality of these candidates needs to improve before they reach the public stage, and can the market even accommodate this volume?
The short answer is yes to the first question, and no to the second. We are currently evaluating over 100 IPO candidates; as a specialist fund in Hong Kong, we review these opportunities daily. While the quality varies immensely, I would argue that the current 2025–2026 cohort is generally superior to the first wave we saw in 2018. Their technological capabilities have grown substantially, and these newer companies are better capitalised. It is a testament to this progress that it is now common for multinationals like Pfizer to in-license Chinese assets – something that was unimaginable only five years ago.
However, even if all 100 companies were to receive approval from the CSRC in Beijing and the HKEX, the market simply cannot absorb them all. Healthcare represents only about one-third of the pending IPOs; these firms are competing for the same capital as massive AI and semiconductor companies. The sentiment among my peers – generalist CIOs and portfolio managers – is that we can only realistically target the top 10 to 20 percent of the market. Consequently, we are going to see a significant concentration of capital into only the highest-quality names. I suspect the remaining 70 or 80 percent may find themselves stuck in the regulatory process or forced to seek alternative funding and exits, such as government funding or M&A.
The Chinese biotech industry has grown from nearly non-existent to a global contender in just 20 years, leading some in the US to describe it as a threat to American dominance. Looking at the mid-term, what do you believe the impact of China’s rise in drug discovery will be on the global stage?
From an American perspective, there is an understandable strategic concern regarding any technology where China begins to catch up with traditional US leadership. However, from a patient’s point of view, the rise of Chinese biotech is an undeniable blessing. Consider the current state of CAR-T therapy; one of the most effective technologies today, Carvykti, originated from Legend Biotech. While it partnered with Johnson & Johnson for co-development and commercialisation, Legend originally discovered and developed the drug in China. This therapy is saving thousands of American lives. Similarly, BeiGene’s Brukinsa is widely considered the best-in-class BTK inhibitor globally. These are life-saving treatments, and their origin does not diminish their value to the patients who rely on them.
While some focus on “technological dominance,” the real question is what this competition brings to the global industry. Leading pharmaceutical companies have already recognised the value of this rising Chinese biotech sector. Firms like Abbvie, Eli Lily, Merck, and Pfizer have embraced Chinese innovation through significant partnerships and capital infusions.
When US biotechs in-license these drugs, the market recognises the value, and their stocks typically rise. A prime example is Summit Therapeutics; its market cap was below USD 100 million before it in-licensed ivonescimab from Akeso. Today, it is a multi-billion-dollar company with a potential first-in-class PD-1/VEGF bispecific antibody that could revolutionise lung cancer treatment. This reciprocity is vital; just as Zai Lab in-licensed Western technologies a decade ago to benefit Chinese patients, the flow of innovation is now moving in both directions. Ultimately, the industry and companies should be permitted to let the science lead. Regulators and governments only need to facilitate healthy, patient-centric collaboration on these life-saving matters.
