Why China: The Value Proposition and Global Opportunities of China's Healthcare Investments from a USD Fund Perspective

Currently, the global healthcare industry landscape is undergoing profound restructuring, with capital accelerating its concentration toward innovative value. Leveraging technological iteration, policy enablement, and market resilience, China is emerging as an indispensable core force in the global medical investment landscape. “Why China”—representing the value density and growth logic of China’s healthcare investments—has become a central question jointly explored by cross-border capital and the industrial sector.

During this critical period of exploration, the 15th session of the “China Innovative Healthcare Asset Living Room” Transaction Roundtable, co-hosted by VCBeat and Wei Jie Yao, with"Value Density and Growth Logic of China's Healthcare Investment"Centered on this theme, a dedicated session for US dollar funds was convened, bringing together numerous seasoned investors to engage in in-depth discussions on the value density and growth logic of healthcare investments in China.

In the global landscape of healthcare investment, what exactly constitutes China’s unique value? At the outset of the roundtable discussion, panelists conducted an in-depth analysis of the irreplaceable core capabilities of China’s healthcare sector, examining them from the perspectives of technological accumulation, policy dividends, and market fundamentals.

Deng Lingquan, Partner at Mifang Health FundSummarized into three pillars:Clinical Translation, Engineering Innovation, and Scale EffectsChina’s vast patient population represents not only a market but also a unique ecosystem that accelerates clinical validation and cultivates world-class researchers. In terms of innovation, China has achieved global leadership in engineered modalities such as bispecific antibodies, antibody-drug conjugates (ADCs), and cell and gene therapies (CGT). The foundation of all this progress lies in scale effects. As the two most prominent countries globally, both China and the United States boast large populations, policy and regulatory frameworks supportive of innovative industry development, as well as self-contained industrial chains and sufficient payment capacity within their respective single markets. These factors provide an irreplaceable, fertile ground for the robust growth of the innovative biopharmaceutical industry.

Qin Kou, Investment Director of Eisai Innovation Fundthen it approaches from a path of differentiated innovation. He pointed out that,China Has Established a Global Advantage in “Micro-Innovation” and Incremental Iteration, excelling in “saturating trial-and-error” and rapid optimization on validated targets or platforms. This process is underpinned by extreme cost efficiency: the cost of contract research organizations (CROs) in China is significantly lower than in Europe and the United States, enabling higher efficiency in trial-and-error and output for the same level of investment, thereby fostering numerous combination innovation products with international competitiveness. This pragmatic and efficient industrial culture inherently equips domestic winners with the capability to compete globally.

Hu Yan, Vice Chairman and Managing Partner of Aoyin CapitalSpecific cases underscore China’s industrial efficiency: a tumor companion diagnostics company completed core clinical validation in just 11 months, whereas the same protocol would take over 18 months in the United States. This advantage stems from China’s pool of more than 300 million patients with chronic diseases and its highly efficient system for coordinating clinical resources. Meanwhile, a high-end medical imaging equipment manufacturer leveraged local supply chains to reduce costs by 30% and shorten delivery lead times by 40%, highlighting the resilience of Chinese manufacturing. She also emphasized that policy-driven initiatives in China, ranging from the green channel for innovative medical devices to support from industry funds, provide clear direction and stable expectations for industrial innovation.

Wang Yueyue, Partner at Tianchao Capital Management and ModeratorA critical market dimension has been added: China’s unique commercialization ecosystem, particularly its booming e-commerce and digital channels, has provided a pathway for explosive growth in consumer healthcare products. This creates a value realization logic distinctly different from overseas markets and offers investors differentiated opportunities that diverge from traditional cross-border business development (BD) strategies.

As the scale of cross-border healthcare transactions between China and foreign countries surpasses the $100 billion mark, how Chinese assets can go global has become a focal point. In this process, early-stage biotech pipelines and mature medical devices are moving toward the global market along two distinctly different tracks.

Wang Yueyue's analysis points out that,Early-Stage Biotech Pipelines Going Global Are Essentially Selling “Innovation Options”, with transaction models predominantly structured as “sales commissions”; buyers primarily prioritize asset value, strategic synergy, and China’s rapid clinical enrollment capabilities to mitigate their own R&D risks. WhereasThe Global Expansion of Mature Medical Devices Is “Ecosystem Export”, empowering overseas partners with China’s proven industrialization and market capabilities through equity partnerships, regional licensing, and supply chain integration. This difference reflectsThe Evolution of Global Healthcare M&A Trends: Shifting from Scale Expansion to Technology Acquisition. In the coming years, against the backdrop of multinational pharmaceutical companies facing the patent cliff, Chinese assets that combine innovation efficiency with supply chain certainty will become increasingly attractive.

Qin Kou takes a cautious view on this. He believes that many transactions are still in the “trial phase,” and Chinese assets have not yet become an unquestionable “essential demand.” The challenges mainly come from three aspects: first,Trust Building, most assets have not yet completed the full FDA approval process, and the international community remains cautious regarding the integrity and quality of their data; secondly,Trading Psychology, some investment decisions are driven by the "fear of missing out" (FOMO) rather than being entirely based on sober valuation; thirdly,Geopolitical Variables, uncertainty in the policy environment has cast a shadow over long-term cooperation. He judges that the ultimate establishment of this trend hinges on a cohort of landmark assets successfully passing the FDA’s comprehensive review.

Deng Lingquan pointed to established real-world examples, such as Johnson & Johnson’s acquisition of Legend Biotech’s BCMA CAR-T product and BeiGene’s BTK inhibitor, both of which have received U.S. approval and achieved commercial success. These cases demonstrate that Chinese innovative drugs can not only secure regulatory approvals from agencies worldwide but also gain recognition from global physicians and patients. Regarding the overseas success rate of assets yet to be validated, he believes that Chinese assets will largely converge with those from developed Western countries in terms of performance. Furthermore, he supplemented the singular narrative that “scale expansion has given way to technology acquisition,” noting that the two often maintain a symbiotic relationship in the real business world.Technological Advancement and Market Expansion Often Go Hand in Hand。

How Should USD Funds Screen for Targets with Both Chinese Technological Moats and Global Potential During the Window Period of Concurrent Valuation Adjustments and Policy Liberalization?

“Investing in innovation in the U.S., investing in speed in China” has become a consensus for cross-market strategic positioning.Qin Kou elaborated on this concept: The United States possesses fertile ground for disruptive innovation, with an investment logic that favors supporting frontier technologies capable of changing the game, even if they involve long development cycles. In China, however, factors such as shorter fund cycles and pressure for investor exits have shaped an investment logic that prioritizes speed—rapidly iterating to develop “best-in-class” products based on already validated platforms or targets.

Deepening our presence in China requires the dual capabilities of “localized execution + global vision.”Deng Lingquan emphasized a “China-centric” investment positioning. Regardless of the fund’s currency denomination, the core strategy is to invest in companies that grow and operate in China but are capable of competing—and ultimately prevailing—in the global marketplace. He shared his “NewCo Formation” investment strategy, which he prioritized during the capital trough of 2022–2024. This approach integrates outstanding Chinese biotech founders with underdeveloped assets, with the fund taking a lead investment role and providing deep post-investment management support to build a new generation of globally competitive Chinese biotechnology enterprises. For example, in 2023, he partnered with Dr. Feng Hui and Junshi Biosciences to establish a “China NewCo,” Anlingke Biopharma. Within just two years, the company has raised over USD 100 million, with two clinical-stage assets poised to initiate Phase II trials. It is currently attracting active interest from numerous international multinational pharmaceutical companies, top-tier VC/PE funds, and leading global investment banks. The company plans to file for an overseas listing by mid-year.

Hu Yan introduced the unique“Dual Fund” Operational Model: The USD-denominated fund of funds invests in established VC firms in Europe and the United States, sharing in their stable returns; the RMB-denominated fund focuses deeply on the Chinese market. While the two share knowledge in investment methodology, they remain independent in terms of capital and operations. This model not only diversifies geopolitical risk but also achieves a fusion of global perspective and local insight.

In the face of global supply chain restructuring and geopolitical volatility, the globalization of Chinese medical assets requires innovative pathways.

Qin Kou spoke candidly,Geopolitical Risks Are the Biggest Obstacle to the Globalization of Chinese AssetsIn response, he proposed several strategies: divesting assets by establishing new overseas entities, leveraging Cayman Islands structures to facilitate transactions, or directly conducting clinical research and development in the United States to comply with local regulatory requirements. He emphasized that healthcare pertains to the shared well-being of humanity, and building a win-win cooperation model within a compliant framework is key to navigating political barriers.

“Foreign and Domestic Capital + Local Operations” Synergy Model Emerges as a Forward-Looking Direction for Exploration. Deng Lingquan outlined the potential for deeper collaboration: partnering with leading large funds in Europe and the United States to establish a USD-denominated fund, adopting a model of “overseas holding structure + R&D execution in China.” The Chinese team would be responsible for early-stage project screening, team establishment, R&D management, and post-investment value creation, fully leveraging China’s R&D advantages—characterized by high volume, speed, quality, and cost-efficiency—from early discovery through Phase II clinical validation. Once projects reach key milestones, they would be seamlessly transitioned to overseas markets for subsequent development and commercialization.

Hu Yan added two cutting-edge pathways: first,Tokenizing Assets Such as Revenue Rights from Medical Equipment via Blockchain Technology (RWA), explore new financing models; secondly, under the premise of strict compliance,Exploring the Cross-Border Circulation and Trading of Clinical Data as a Factor of ProductionShe pointed out that although these two paths still face policy risks, they have opened up new possibilities for the globalization of Chinese medical assets.

How Can USD Funds Deepen Their Long-Term Commitment to China Amid Geopolitical Volatility and Capital Cycles?

Position adjustments reflect long-term confidence.Qin Kou revealed that the Eisai Innovation Fund has increased its allocation to Chinese assets from 10% to 30%, a decision based on its assessment of the long-term growth potential of the Chinese market. He also pointed out that the global pressure on drug prices is driving a structural adjustment in the market, and China’s importance in the global landscape may actually increase due to its cost and efficiency advantages.

Make “impactful investments” rather than following the crowd.Deng Lingquan believes that the key to the success of US-dollar funds in China lies in their commitment to value creation. Investment is a localized business, and local Chinese teams possess irreplaceable advantages in early-stage project sourcing and post-investment management. After establishing and managing US-dollar funds, Chinese professionals should have the courage to lead investments and engage deeply, truly helping Chinese companies build global competitiveness, rather than merely contenting themselves with following leading overseas funds to secure limited financial returns from unsystematic opportunities.

“Localized Teams + Global Knowledge Sharing” Is the Key to Navigating Market Cycles. Drawing on over two decades of experience at AOYIN, Hu Yan explained that an independent dual-fund structure not only adapts to the regulations of different markets, effectively navigates market volatility and policy shifts, and delivers long-term, stable returns, but also ensures the mutual enrichment of cutting-edge investment philosophies, thereby fostering continuously evolving investment capabilities.

At the conclusion of the roundtable, the panelists identified potential breakthrough points for 2026:

● Qin Kou focuses on clinical breakthroughs (such as positive data from head-to-head studies of PD-1/VEGF inhibitors) and advancements in frontier sectors (such as in vivo CAR-T therapy), while hoping that ecosystem mechanisms supporting original innovation will emerge.

● Deng Lingquan looks forward to seeing more top-tier global capital return to China through tangible investment actions, as well as the emergence of successful cases featuring the synergistic model of “Chinese and foreign capital plus local operations,” which will serve as a key signal for confidence restoration and ecosystem integration.

● Hu Yan has set her sights on achieving regulatory breakthroughs in the cross-border flow of medical data, believing that this will significantly unlock the potential of AI-driven drug discovery and real-world studies.

● Wang Yueyue offers pragmatic advice from an entrepreneur’s perspective: The keywords for 2026 are “survival, focus, and a return to clinical value.” Companies need to leverage the expertise of professional institutions to stay true to their core mission of addressing clinical needs amidst an environment filled with uncertainty.

This roundtable discussion reveals that the value of healthcare investment in China is shifting from traditional cost and scale advantages toA Mature Innovation Ecosystem, Efficient Clinical Capabilities, and a Rapid Iteration SystemEvolution. These intrinsic strengths constitute the "certainty" that enables navigation through cyclical fluctuations.

Looking ahead, the emergence of key breakthroughs—such as data-driven strategies, the incubation of original innovations, and the integration of global capital—is poised to usher China’s healthcare market into a new phase of growth. Thus, the answer to “Why China” lies not only in its existing industrial foundation but also in its continuous evolutionary capacity and open collaborative stance. This constitutes the core logic attracting long-term global capital allocation and serves as a vital force driving the advancement of the global healthcare industry.