SAN FRANCISCO – While many of China's biopharmaceutical company executives flew across the Pacific for the J.P. Morgan Healthcare Conference, they kicked off the week with the Bayhelix 13th Annual Conference, a confab of China's best and brightest. The group's founding members were ambitious China-born scientists and managers working in the U.S. looking for camaraderie. Today, they are leaders in the field, heading up their own well-financed biopharma, med tech, service and investment companies.

As their careers have skyrocketed, so has China's fortunes, resulting in what Steve Yang, a founding member called the "great migration" of Bayhelix members, moving away from the U.S. and back to China to take part in building their country's biotech industry. Starting from 100 percent U.S.-based in 2001, by 2011 about half of the members of the invitation-only group were based in the U.S. This year, it will be 57 percent and that trend is expected to continue.

While many seemed to be on track to rise up the ladder in big pharma or in Western companies, they now find themselves spokespeople not just for their own companies but for the potential of China's entire health care industry. It's a complicated task against the backdrop of China's ongoing stock market madness, not to mention the CFDA's recent rejection of dozens of trial applications for false data.

Fresh from three days of meetings with U.S. executives, Samantha Du, CEO of Zai Labs Ltd. shared her impressions with the audience. "People see China as scary; there are concerns about quality of data, policy concerns. We not only have to speak for our companies, but speak for the Chinese economy. The top message in China is improving. I think China is very underestimated and the power of Chinese people to develop innovative drugs is underestimated," she said.

She went on to add that while some are very hesitant about China, there are also a great many foreign partners and investors that are very interested in working with top Chinese companies, if they show they can deliver truthfully on the quality they promise. It is the small pool of Chinese companies going after best-in-class, and even first-in-class drugs that are now looking to be seen as the credible face of the industry.

Brian H. Gu, J.P. Morgan co-head for Asia Pacific M&A, TMT and Healthcare recalled the first time he introduced a Chinese company to the J.P. Morgan event back in 2006. He was able to fill only a few tables of interested investors. This year, J.P. Morgan will showcase 50 companies in its emerging markets track, 30 of them from China.

While some are smaller biotechs, there are also a surprising number of China's larger pharma players who are participating, such as China Biologics Products Inc., Guangzhou Pharmaceutical Holdings and Sino Biopharmaceutical Ltd.

CROSS-BORDER INVESTMENTS MATURE

China's cash-rich pharma companies may be looking to do even more M&A in the U.S. in the coming years and that the outflow of investment capital will rise. "I see more strategic, early stage investors investing in U.S. biotech companies," said Wendy Pan, partner at Sidley Austin LLP. "Some of them are very early stage, even angel investors. This shows the cross-border investment coming from China is becoming mature."

Bayhelix is at its heart a very optimistic, forward-looking group. A key feature of the annual meetings is breakout discussions to make predictions for the future. And in most every case, across every indicator, China's actual progress has surpassed past predictions.

When looking at the volume of cross-border deals, Bin Lin of Ally Bridge shared the views of his breakout group: "Forecasting future China M&A and cross-border deals in 2020, we were optimistic that the volume of deals could multiply by five or six times, just to give a flavor of the trend we are seeing."

But that doesn't diminish the fact there are plenty of serious challenges facing China's industry that were discussed among members – everything from lack of adequate reimbursement, foreign companies' difficulties in reaping ROI and the reputation China companies have for low or non-existent up-front payments in licensing deals – but the optimism continues.

"Look at China 10 year ago, five years ago. In China, things move three times faster than the U.S., so you have to have the faith," said Du.