Shenzhen has teamed up with one of the country’s largest pharmaceutical producers to launch a 5-billion-yuan (US$691 million) health care fund to invest in startups and innovations in cellular biology, genetics and other fields related to biomedicine. 

The Shenzhen Pengfu Biopharmaceutical Industry Private Equity Investment Fund was registered March 21 in Pingshan District. The business scope of the fund includes activities such as equity investment, investment management, and asset management conducted through private equity funds, the fund’s registration information shows.

The 5-billion-yuan fund is jointly funded by Shenzhen’s government-run guidance funds and social capital, with 70% of the money contributed by the guidance funds of the Shenzhen city government and the city’s six district governments and the rest coming from Fuxin Shenyao, a subsidiary indirectly controlled by pharmaceutical giant Shanghai Fosun Pharmaceutical Co. (Fosun Pharma), Fosun Pharma (Shenzhen) and Fujian Fund Management, two wholly owned subsidiaries of Fosun Pharma.

In China, government guidance funds are an important funding source for the country’s private equity market, directing capital to the emerging strategic industries like semiconductors, health care and high-end manufacturing.

The Shenzhen Pengfu fund will have a duration of 10 years and at least 70% of the fund will be allocated to the biomedical industry, aligning with Shenzhen’s plan to develop the city into a health care manufacturing hub, according to an announcement by Fosun Pharma in March. Fuxin Shenyao will serve as the general partner of the fund and will oversee its day-to-day operations. 

The fund will aim to attract non-local enterprises to invest in biomedical firms in Shenzhen and provide support to small and medium-sized enterprises in the city. It will also strive to obtain the relevant approvals needed for clinical drug trials and registration certificates.

Shenzhen has introduced a series of measures over the past two years to promote the development of the biomedicine and general health industries and the southern China city is expected to roll out more industrial policies to support the sector. Official data unveiled by the Shenzhen government in December showed that the biopharmaceutical industry contributed 14 billion yuan to the city’s economy in the first three quarters of 2023 and the city is home to 140 large biopharmaceutical firms, of which 11 are publicly listed, eight have revenues exceeding 1 billion yuan and four claim turnover of above 10 billion yuan.

As of July 2023, the number of innovative entities in Shenzhen’s biopharmaceutical industry had expanded to more than 500 and the city has one national-level clinical medical research center, four provincial-level centers and 14 municipal-level centers.

Guo Guangchang, chairman of Fosun International, the parent of Fosun Pharma,  announced during the 2023 Shenzhen Global Investment Promotion Conference in December last year that the Shanghai-based conglomerate will establish its Guangdong-Hong Kong-Macao Greater Bay Area headquarters in Pingshan, making it the company’s second global bio-health headquarters and one of the firm’s hubs for innovative drugs. 

“As a participant, witness and beneficiary of Shenzhen’s reform and opening-up, Fosun will continue to increase its investment in the city,” Guo said, adding that Fosun will leverage the support from Shenzhen, a city of innovation, to bolster its investments in biomedicine, precision medicine and related fields.

In June 2022, Shenzhen introduced the “20+8” industrial policy to cultivate and develop industries with huge growth potentials, in a bid to improve the city’s industrial landscape and help local manufacturers climb up the value chain. According to the blueprint, the city will focus on fostering 20 strategic emerging industry sectors led by advanced manufacturing, and at the same time, strategically investing in eight emerging but promising industries.

In December last year, Shenzhen launched the first batch of funds dedicated to the “20+8” industrial initiative, covering four key industrial sectors: synthetic biology, intelligent sensors, new energy vehicles and biopharmaceuticals. With a target fund size of 16.5 billion yuan, the first five funds have already been invested in industrial projects in Pingshan, Longgang and Guangming districts.