A couple weeks ago, I told you a bit about a major story that got nowhere near the attention it deserved. It’s further evidence of the massive opportunity I’ve been talking about.
BeiGene was China’s first company to discover a novel therapy that won FDA breakthrough designation. The lucky winner was its BTK inhibitor, zanubrutinib, which may be used to treat various types of B cell cancers.
Amgen’s move sent BeiGene’s stock soaring over 30% the day the news broke. Even the acquirer, Amgen, has been able to gain roughly 10% this month — not bad for a behemoth with a market cap of $132 billion.
But too many people looked past the news … or they don’t know its significance and how it points to the massive opportunity in Chinese biotech stocks that we’ve been talking about. I’ve shown you how the government is targeting 116X growth in the next couple of years … and how fortunes have been made when the government backs an industry.
Big pharma wants in, too.
Amgen has been searching for a solid foothold in China’s huge market for years. It established a Chinese affiliate in 2012 and opened a research and development center at ShanghaiTech University in 2014. That center is now located in a permanent lab at Zhangjiang Hi-Tech Park. The stake in BeiGene ramps things up to the next level.
Of course, Amgen isn’t the only Big Pharma juggernaut to look longingly at China and its rising biotech sector. And for good reason …
I like to think of Amgen’s play here as part of the absolutely huge story unfolding right under the media’s radar. This has the potential to turn into one of the best early stage investment opportunities you’ll see in your lifetime … one that could see at least 100X growth.
An Exploding Market
Over the past few months, and despite trade tensions with the United States, China has increasingly approved foreign drugs for its $137 billion domestic pharmaceutical market.
That’s a big number. It makes China the second largest domestic market for pharmaceuticals in the world, and the only nation outside the U.S. that sees more than $100 billion in annual revenue within the sector.
By 2022, health analytics firm IQVIA expects China’s pharmaceuticals market will soar to $175 billion.
The nation’s leaders are targeting eye-popping growth in biotech because they are dealing with heightened domestic discontent over very high drug prices and shortages of critical drugs. China’s aging and growingly affluent people have also become more worried about the safety of products made by some local manufacturers.
And that’s the heart of why the world’s largest pharma firms are eager to get in early on this developing market.
Addressing Massive Medical Needs
Clearly, the pharmaceutical market in China is already massive and growing like gangbusters. Let me explain why.
Here’s a glaring fact I uncovered in my research about the Chinese population — it’s one of the oldest in the world right now.
Today, the median age in China is 37. By 2040, that number will have increased to 47. Monaco is the only other country in the world with a higher median age.
There are a lot of ramifications of a rapidly aging population, and one of the most obvious correlations is healthcare. As people age, the need for healthcare services rises exponentially.
Take cancer. In 2015, over 10,000 Chinese people were diagnosed with cancer every day, with lung cancer ranking highest in terms of incidence. That amounted to 3.9 million diagnosed with cancer in 2015, while 2.3 million died from the disease, according to China’s National Cancer Center.
Over the past decade, the incidence rate of cancer in China has risen on average 3.9% per year, while the mortality rate from cancer has grown 2.5% per year. Cancer treatment and mortality is most prevalent among its rapidly aging population. What’s more, the five-year survival rates of all cancers in China is 30.9%, less than half the 66% in the United States.
In addition, chronic conditions like high blood pressure, stroke and diabetes impact 209 million people in China today. In less than 10 years, that figure is expected to climb 50% to 336 million. That’s more than the entire U.S. population.
The unfortunate rise in health issues will result in a massive healthcare spending boost by both the government and private sector. Healthcare spending is predicted to account for 17.1% of China’s GDP by 2028, up from 11.3% in 2018.
When you’re dealing with the kind of numbers China has, that’s a lot of people … and a lot of money. Based on the sheer number of Chinese who will require medical attention in the coming decades, there is huge upside for biotech companies.
Catching the Opportunity
I hope you’re starting to see the massive forces at work behind China’s push into the biotech sector. The combination of demographics, disease prevalence, and the urgent need to find a solution to Chinese citizens’ health woes is a force too great to stop. The government’s backing pretty much seals the deal.
I view investing in the Chinese biotech sector today as similar to getting into U.S. biotech back in the 1990s. I am confident that the sector will grow at least 100-fold in size over the next five to 10 years.
It’s time to get in on some of those mouth-watering profits.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.