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Domain’s portfolio companies. While the firm’s initiatives in China and Russia evolved independently, Halak said “the common thread is that these emerging markets are in dire need of innovation.”
In assessing China’s emerging healthcare market, Halak said he was struck by the country’s enormous need for medical technology of all kinds. “There is not as much innovation as people there would like, whether they are patients, doctors, or other constituencies,” he said. “Another thing we noticed was that the VC industry [in China] was very competitive, and it wasn’t that attractive to us. Things just get bid up very quickly, and we needed to find an alternative way to do things.”
As he thought about the problem, Halak said he recognized that Domain’s ability to access new life sciences technologies through its network of portfolio companies, entrepreneurs, and other venture investors represented a unique resource.
For its part, Elite Consulting has gained extensive knowledge of healthcare in China in the 16 years since the firm was founded. The Beijing firm provides a range of executive management, clinical development, and other services to some 1,200 pharmaceutical and medical product companies throughout China. Halak said he also knew Micah Zimmerman, a partner at Elite Consulting who will be leading the Domain Elite partnership in China, when the worked together in the early 1990s at the Wilkerson Group, a pharmaceutical and medical products consulting firm.
In developing the business model for Domain Elite, Halak acknowledged that U.S. drug developers and biomedical innovators might not see many incentives to license their technologies for an emerging healthcare market like China’s. “One of the big challenges is going to be structuring these deals in a way that these companies are willing to license these assets,” he said.