Investor Presentaiton

Insights New Market Players Differentiated Area Developments Inflows and Outflows China Life Sciences - 2022 Domestic Pharma Going Abroad The recent surge in interest in the sector has sparked a rush of new players to try to enter the market whether that be developers and traditional real estate investors or private equity and VC firms. While the former traditional real estate firms look to invest, build/convert, lease and eventually dispose of their asset, many local authorities are looking for long-term partners and occupiers. PE and VC firms hit the sweet spot as besides having development capabilities, they may also have invested in a range of life sciences companies as well as down and upstream industries that will be their eventual tenants and meet local authorities' requirements. As companies grow costs rise, businesses diversify and divisions specialise, what once made sense in terms of spatial distribution may not make sense any longer. At the same time, as the industry grows and matures, more local authorities will seek to gain a foothold in the sector, leveraging their unique strengths or comparative advantages to convince firms to set up their shops. Industry clustering and specialised facilities are key to attracting and retaining companies. Life science firms require specialised devices and environments throughout the R&D, clinical trial and manufacturing stages. This, along with a limited supply of available properties, makes life science tenants more likely to extend their lease terms. The flip side of that is that if there is an under-investment supporting amenities and facilities, firms could over time decide to relocate and once they do, it will be hard or impossible to bring them back again. Domestic pharmaceutical companies' R&D capabilities are maturing and are now expanding overseas either through independent development, license-out, patent licensing or joint development. More than 50 companies announced plans to go overseas in 1H/2022, including Jiangsu Hengrui Pharmaceuticals, which has set up a wholly-owned subsidiary engaged in innovative drugs.

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