By Ken Yanagihara
On Oct. 26, Japan Investment Corporation (JIC) announced it will set up its first approved fund. It will make investments totaling up to $2 billion through venture capital (VC) in overseas biotech and drug discovery startups centered on the United States. JIC aims to foster new businesses by linking up the startups with Japanese pharma firms. Drug companies are moving to develop overseas startups themselves, however, so it will likely be questioned why a Japanese public-private fund is engaging in a similar initiative overseas.
JIC was established through the revamping of the Innovation Network Corp. of Japan.
The new fund, “JIC-US,” plans to start making investments from January 2019. The investment structure will generally be as follows: As a “limited partner” (LP) contributing funds, JIC-US will invest in VCs and public executive funds (PEFs), and the VCs and PEFs will invest in startups.
The new fund will be headquartered in California, and JIC Deputy President Yasunori Kaneko, who has about 40 years of experience in investment in the United States, will serve as fund representative. JIC has reportedly decided to appoint as fund managers and advisers investors with strong track records in the U.S.
“The United States is the world hub of biotech and drug development. JIC will act as a bridge between Japan and the world so that Japanese drug manufacturers can regain the international competitiveness they used to enjoy,” JIC President Masaaki Tanaka told a press conference on Oct. 26, as he described the aim of setting up the fund. JIC also plans to set up funds targeting non-biotech fields and domestic companies.
There is a global trend to set up biotech funds in the United States. A major Chinese pharmaceutical company and the Singapore government are also setting up funds. Some Japanese drug makers have also made large-scale acquisitions through contact with overseas startups.
“We cannot create ties with U.S. startups if we are not in their inner circle. This is why we have assigned experienced people to the fund,” said Tanaka in his description of the unique features of the fund.
Risk money from around the world flows into the U.S. biotech industry, and it is not easy to find promising startups. If JIC’s work does not result in cases that contribute to the advancement of the Japanese pharmaceutical industry, there is a chance that the public-private fund will be subject to strong criticism and be asked why it is investing overseas.