Hong Kong and Israel are leaders in their respective fields. The west Asian country is a longstanding leader in technological innovation and has evolved into a global pioneer in the emerging field of digital healthcare. The Chinese Special Administrative Region is one of the world’s leading financial centres, with notable strengths in capital raising and China connectivity. By working together, Hong Kong and Israel can realise synergies that are beneficial to both sides.

Israel is realising a convergence of biopharmaceuticals, medical technology and digital health – a trend that is being referred to as the ‘bioconvergence revolution’. This ties into the strategic agenda in Hong Kong, with the recent setup of the Hong Kong investment fund and its focus on life sciences.

Collaborative opportunities were the subject of the latest Hong Kong - Israel Collaboration Workshop: “From ‘start-up nation’ to ‘digital health nation’ – Implications for Asian family offices and investors in developing the Chinese ecosystem”. Organised by the Financial Services Development Council (FSDC), the event focused on development in life sciences and healthcare to present the investment landscape to attendees from both Hong Kong and Israel.

Leading the way in digital healthcare

Israel has a long history of producing game-changing technologies, having developed a range of important solutions that includes the USB memory stick and the original software firewall. In recent years, the country’s scientists and engineers have focused on developing solutions to improve healthcare, with local digital companies working on everything from digital imaging and medical lasers to telemedicine and smart surgical equipment.

Life sciences and the health tech sector now represents a sizeable proportion of Israel’s tech industry, with over 1750 companies operating in digital health, medical devices, biotechnology and pharmaceutical therapeutics.

Despite being a relatively young industry, Israel’s healthcare sector has already attracted significant amounts of venture capital, with investments in digital health increasing five times over the last five years. In 2021, the sector raised USD 1.9 billion over 113 rounds of fundraising, nearly double the previous year¹. In addition to local investment, there is also growing interest from international venture capital firms.

Chinese companies have already made significant investments in Israel. One standout deal is the 2013 acquisition of Alma Lasers by Fosun Pharma – a USD 240 million deal² that resulted in a listing on the Hong Kong stock exchange in 2017, under the target company’s new name, Sisram Medical³.

Hong Kong as a platform for growth

As an international financial centre, Hong Kong presents Israel’s digital healthcare companies with ways to grow their business and explore opportunities in new markets.

For a start, Hong Kong is a world-leading venue for biotechnology companies to raise capital. A new listing regime was introduced in 2018, which allowed initial public offerings of pre-revenue biotech companies with weighted voting rights. As of late 2022, 52 companies have listed under the regime, raising HKD 114.8 billion (USD 14.7 billion)⁴.

These deals are possible due to the large volume of international capital ready to be deployed in Hong Kong’s capital markets. In 2021, the city’s asset and wealth management business had an AUM of HKD 36 trillion (USD 4.6 trillion), of which 65% of assets was sourced from non-Hong Kong investors⁵.

But Hong Kong has more than capital raising to offer innovative healthcare companies, as it is an attractive destination for biotech companies, both large and small, to scale their business in Asia.

Hong Kong has its own medical research capabilities, as well as world-class biotech talents, making the city an ideal platform for biotechnology, medical and healthcare companies to capitalise on the opportunities in the Greater Bay Area (GBA), other Mainland Chinese markets, and the entire Asia-Pacific region.

Hong Kong’s position in the GBA makes it a launchpad into the city cluster, which has a population of 86.7 million people and a USD 2 trillion economy in 2021⁶. Hong Kong’s proximity to Shenzhen, China’s technology hub, is another potential draw for biotechnology companies.

Strong potential for synergies suggests a bright cooperative future for these two highly innovative markets. Going forward, we can expect closer links between Israel’s medical entrepreneurs and Hong Kong’s financial system – a combination that will benefit both sides.

¹ Start-up Nation Central

² FinanceAsia

³ SCMP

⁴ Hong Kong Business

⁵ SFC

⁶ HKTDC