Hidden licensing hurdles affecting Hong Kong’s biotech ambitions

Hong Kong's approach remains fragmented, with each university applying its own policies and risk tolerance.

Over the past decade, Hong Kong has made strong progress in positioning itself as a regional hub for biotechnology and life sciences. The government has committed over $10b to supporting the sector, investing in research infrastructure, technology development, and talent recruitment. 

Universities are producing high-quality science, and government programmes aim to move discoveries from the lab to market.

Yet many biotech startups struggle to commercialise their innovations. The issue is not a lack of science—but a structural bottleneck in university licensing practices.

Intellectual property: A startup’s foundation
In biotech, intellectual property (IP) forms the foundation of any venture. Investors evaluate not only the underlying science but also the clarity, strength, exclusivity, and enforceability of the associated IP rights.

Much of Hong Kong’s biotech innovation originates in public universities, which typically retain ownership of the underlying IP. Startups formed to commercialise university research must negotiate licences with their institutions—often as a prerequisite to attracting investment or forming strategic partnerships.

Whilst this model theoretically balances public and commercial interests, licensing frameworks in practice are often rigid, fragmented, and misaligned with the operational realities of early-stage startups.

Common licensing challenges: Exclusivity, delays, and financial terms
A major hurdle is securing exclusive licences. For venture-backed startups, exclusivity is essential—without it, investors perceive heightened risk and diminished strategic value.

In Hong Kong, securing exclusive licences can take months—sometimes over a year—due to complex review processes and government oversight. For startups operating with limited cash runways, such delays can prove commercially damaging.

Even when exclusivity is granted, financial terms can be burdensome. Universities may require significant equity interests, upfront fees, milestone payments, or fixed royalties—often before companies have secured revenue or funding. In some cases, founders personally shoulder these costs.

Sublicensing restrictions present another challenge. Global pharmaceutical companies often expect flexibility to sublicense IP as part of broader collaboration agreements. Restrictive terms can limit deal opportunities and undermine the international competitiveness of Hong Kong-based startups.

A broader Impact on Hong Kong’s innovation ecosystem
These licensing hurdles create barriers to commercialisation of university-originated research projects. Streamlining university licensing practices offers a clear opportunity to strengthen Hong Kong’s biotech ambitions. More predictable and startup-friendly frameworks would enable companies to remain and scale locally whilst providing investors with greater confidence. 

Addressing these structural inefficiencies would enable Hong Kong to better translate its strong research capabilities and public investment into a more dynamic and competitive innovation ecosystem.

Learning from global models
International models provide instructive contrasts. In the US, university licensing practices have evolved alongside the venture capital ecosystem. 

Whilst universities retain IP ownership, licensing fees are typically modest, with value captured through downstream royalties or equity stakes. Standardised model term sheets often reduce negotiation friction and accelerate deal completion.

By contrast, Hong Kong's approach remains fragmented, with each university applying its own policies and risk tolerance. This lack of consistency creates uncertainty for both founders and investors, hampering ecosystem development.

Reforming licensing frameworks for sustainable growth
These licensing bottlenecks go beyond individual startups, directly affecting investment decisions, talent retention, and the long-term health of Hong Kong’s innovation ecosystem.

Meaningful reform requires coordinated action amongst universities, supported by a government-led framework tailored to Hong Kong’s legal and institutional environment. 

University licensing terms must adapt to early-stage venture realities, with greater flexibility around exclusivity, royalties, upfront fees, and sublicensing arrangements. Approval processes also need to be faster and more transparent to match investor timelines.

Such reforms need not compromise standards. Rather, they demand recognition that sustainable commercialisation requires aligned incentives across universities, founders, investors, and industry partners.

Licensing as a strategic factor
Hong Kong has the talent, research capabilities, and government funding necessary to compete globally in biotechnology.

However, translating this potential into sustainable industry growth depends significantly on reforming the licensing structures that currently impede the path from discovery to commercial deployment.

For executives and investors evaluating opportunities in the life sciences sector, licensing policy has evolved from a technical consideration to a strategic imperative—one that fundamentally influences where innovation occurs, where capital is deployed, and where the next generation of biotech leaders will emerge.