21 Healthcare IPOs in 2023, Nearly One-Third Backed by Universities, Raising Nearly RMB 7 Billion

The winter of 2023 was exceptionally cold, yet it felt far milder compared to the capital winter that persisted throughout the year. Most data indicate that investment levels in 2023 have fallen back to those seen in 2019. The same trend applies to initial public offerings (IPOs), a key indicator: after several years of brilliance, only 21 medical and healthcare companies in China successfully completed IPOs in 2023, merely matching the figure for 2019.

Certainly, the fact that these companies have managed to succeed even after the hype has subsided somewhat indicates that they do possess unique qualities. An interesting topic is: How closely are these successfully IPO-ed companies actually affiliated with universities? What roles have these institutions played in the course of corporate development? And what benefits has corporate growth brought back to these universities?

How Can a Close Tie with Universities Be Defined? A relatively simple approach is to consider whether the core team graduated from a particular university. However, such a connection is often tenuous; the knowledge base or professional network required for the core team’s entrepreneurial ventures may not necessarily originate from their alma mater. The relationship between the two parties is frequently limited to that of educators and students. Moreover, it is not uncommon for company founders to work in industries entirely unrelated to their academic majors.

Perhaps it is precisely for this reason that the majority of these 21 prospectuses from healthcare companies have discreetly omitted the alma maters of their founders or core teams.

We believe that,To be considered relevant, it should be a mandatory requirement that universities have played a significant role in the development history of enterprises., whether directly incubated by universities, involving university investment and equity participation, supporting R&D during development, or serving as major purchasers or suppliers, with many such examples too numerous to list.

Based on this criterion, VCBeat reviewed the prospectuses and stock exchange inquiry letters of 21 domestic healthcare companies that successfully completed their initial public offerings (IPOs) in 2023. Combined with an analysis of publicly available information, we believe that at least six of these companies maintain close ties with universities, accounting for nearly 30% of the total 21 companies. The cumulative IPO proceeds of these companies amounted to RMB 6.9899 billion.

Established in 2002,Hongyuan Pharmaceutical(Hubei Hongyuan Pharmaceutical Technology Co., Ltd.) is primarily engaged in the research and development, production, and sales of organic chemical raw materials, pharmaceutical intermediates, active pharmaceutical ingredients (APIs), and pharmaceutical formulations. It has currently secured the largest market share in multiple niche segments. According to its prospectus, Hongyuan Pharmaceutical is the world’s largest producer of 2-methyl-5-nitroimidazole, glyoxal, guanine, and glyoxylic acid, as well as the largest domestic producer of metronidazole API. In 2021, Hongyuan Pharmaceutical’s metronidazole API accounted for over 62% of the domestic market share in China.

Notably, Hubei Hongyuan Pharmaceutical Technology Co., Ltd., which started out in the pharmaceutical business, is also venturing into the new energy sector. Its product, lithium hexafluorophosphate (LiPF6), is one of the key materials used in lithium-ion battery electrolytes. Driven by the rapid growth of the new energy vehicle market, sales revenue from this segment has risen significantly in recent years, generating substantial profits for the company.

Its prospectus explicitly states, “The Company is a high-tech enterprise, an innovative enterprise of Hubei Province, and an intellectual property-advantaged enterprise (patent category) of Hubei Province. It maintains close communication and strong collaborative R&D relationships with renowned universities such as Fudan University, Wuhan University, Sichuan University, Wuhan Institute of Technology, and Hubei University of Chinese Medicine. The Company has established a provincial-level enterprise technology center and formed a relatively comprehensive technological innovation system.”

Among its 57 invention patents, a total of 14 are co-owned with universities. Of these, nine involve Fudan University, indicating that the university holds a significant position in the R&D system of Hubei Hongyuan Pharmaceutical Technology Co., Ltd.

Sanbo Brain(The core team and key technical personnel of Sanbo Hospital Management Group Limited all hail from Capital Medical University. In 2004, three fellow disciples—Luan Guoming, Yu Chunjiang, and Shi Xiang’en—together with Zhang Yang, the current Chairman of Sanbo Brain, leased 100 beds at Fuxing Hospital affiliated with Capital Medical University and registered Sanbo Brain Hospital, embarking on their entrepreneurial journey. With business expansion, Sanbo Brain has gradually evolved into an academic hospital integrating medical care, education, and research.)

From ChongqingXishan Technology(Chongqing Xishan Science&Technology Co.,Ltd.) Its core business is surgical power systems. Public information indicates that it maintains close ties with Chongqing University of Posts and Telecommunications, a prestigious institution in the field of information technology.

Suzhou Highfine Biotech Co.,ltd.(Suzhou Highfine Biotech Co.,ltd.) is an enterprise that provides specialized raw materials to global pharmaceutical R&D and active pharmaceutical ingredient (API) manufacturers, with its products mainly applied in fields such as peptide synthesis, nucleotide synthesis, and pharmaceutical synthesis. Luo Yu, one of its core technical members, currently serves as a Director and R&D Director; meanwhile, he previously held the position of Associate Professor at East China Normal University from July 2007 to September 2020.

According to the prospectus, Suzhou Highfine Biotech Co., Ltd. filed two invention patents in 2015 and 2017, respectively, which are jointly owned with East China Normal University. Meanwhile, Suzhou Highfine Biotech has entered into collaborative commissioned development agreements with multiple universities, among which East China Normal University ranks at the top in terms of both the significance and quantity of cooperative projects.

In addition, Haofan Biotech has two independent directors who are currently academic leaders and hold positions at universities. Independent Director Zhang Zhaoguo is currently a Professor at the School of Chemistry and Chemical Engineering, Shanghai Jiao Tong University, while Independent Director Xu Xiaoping is an Associate Professor at the Faculty of Materials, Chemistry and Chemical Engineering, Soochow University.

Jinbo(Shanxi Jinbo Biomedical Co., Ltd.) Its main business involves the research and development, production, and sales of various medical devices and functional skincare products, with recombinant collagen products and anti-HPV biological protein products as its core offerings. Its core product series—multiple types of recombinant humanized collagen (Type I, Type II, and Type III)—was jointly developed over eight years in collaboration with a scientific research team from Fudan University. Building on this close partnership, Jinbo Biomedical has also established the Fudan-Jinbo Joint Research Center for Functional Proteins in cooperation with Fudan University.

The Last Healthcare Company to Go Public in 2023Wuxi Jinghai(Wuxi Jinghai Amino Acid Co., Ltd.) is one of the leading enterprises in China’s amino acid industry and currently serves as a primary supplier of amino acid active pharmaceutical ingredients (APIs) to domestic market leaders in the fields of pharmaceutical formulations and culture media. According to data from the China Biological Fermentation Industry Association, its market share of amino acid APIs in China exceeds 30%. Jiangnan University has played an indelible role in the growth and development of Wuxi Jinghai.

Based on our statistics, these universities primarily play several roles. The most common one is none other thanLeveraging universities’ strengths in basic R&D to empower enterprises, especially during their startup phase; successful collaboration with universities can even determine a company’s core competitiveness.。

The most typical example is Jinbo Bio. Its collaboration with Fudan University was so extensive that the National Equities Exchange and Quotations (NEEQ) issued an inquiry letter in 2020 regarding Jinbo Bio’s 2019 annual report (at which time Jinbo Bio was still listed on the NEEQ), requiring the company to clarify “the contribution of patents and technologies involved in outsourced services to its core competitiveness and sustainable operations, the term of outsourcing, R&D outcomes, ownership of intellectual property rights, and benefit-sharing arrangements with the outsourcing parties, and to explain whether the company has significant reliance on outsourced services.”

The prospectus reveals that Jinbo Bio’s core products—recombinant humanized collagen (Types I, II, and III)—were jointly developed with a research team from Fudan University over an eight-year period. In particular, the Class III medical device “Recombinant Humanized Type III Collagen Lyophilized Fiber,” developed based on recombinant humanized Type III collagen, is the only injection-grade recombinant humanized Type III collagen biomaterial in China. Featuring originality, international technological leadership, and broad application prospects, this product has positioned Jinbo Bio at the forefront of global technology in the field of recombinant humanized collagen. In January 2022, this product was selected by the Chinese Society of Biopharmaceutical Technology as one of the “Top Ten Advances in Chinese Biopharmaceutical Technology in 2021.”

Undoubtedly, without this product, the company’s core competitiveness would be significantly diminished, and Jinbo Bio’s path to its initial public offering (IPO) would likely have taken a markedly different course.

Fudan University has also reaped substantial benefits from this collaboration. In 2018, Jinbo announced the joint establishment of the “Fudan-Jinbo Joint Research Center for Functional Proteins” with Fudan University, with a contract value reaching RMB 10 million. Professor Jiang Shibo of Fudan University, a renowned expert in international research on anti-HIV drugs and microbicides, was also appointed by Jinbo as its Chief Scientific Officer.

Furthermore, Fudan University has generated substantial revenue through patent transfers. Specifically, the transfer of the patent titled “Peptides, Their Preparation Methods and Uses” involved a fee of RMB 20 million, plus a 1% royalty on sales for ten years following the product’s market launch; the international patent titled “Peptides, Their Preparation Methods and Uses” commanded a milestone-based transfer fee of RMB 20 million; and the patent titled “Peptides for Broad-Spectrum Inhibition of Human Coronavirus Infection and Applications Thereof” was transferred for RMB 10 million.

In addition to Jinbo Bio, similar R&D empowerment relationships exist between Hubei Hongyuan Pharmaceutical and Fudan University, as well as between Suzhou Highfine Biotech and East China Normal University. According to their prospectuses, these companies have acquired multiple invention patents through transfers from universities.

This R&D empowerment has had a significant impact on these enterprises, particularly given that Jinbo Bio and Hongyuan Pharmaceutical are not located in economically developed regions—the former is based in Taiyuan, Shanxi Province, while the latter is situated in Luotian County, Huanggang, Hubei Province. Attracting high-caliber technical talent is no easy feat for them. In its prospectus, Hongyuan Pharmaceutical frankly acknowledged, “As the Company is located in Luotian County at the southern foothills of the Dabie Mountains, where the level of economic development is relatively backward, the Company is at a disadvantage in terms of talent attraction.”

For regions with a strong foundation in higher education, such empowerment of enterprises by universities can even incubate corresponding industrial clusters, thereby driving the local economy.. Wuxi Jinghai and Xishan Technology are typical examples.

Jiangnan University’s predecessor, Wuxi Institute of Light Industry, was one of the eight universities directly administered by the former Ministry of Light Industry and has earned a distinguished reputation in fields such as light industry technology and engineering, as well as food science and engineering. This robust foundation in basic research and development has provided significant advantages to Wuxi Jinghai, also based in Wuxi, facilitating its emergence as a national-level “Little Giant” enterprise specializing in refined, specialized, and innovative practices within the amino acid sector.

According to the prospectus and public information, the core technical personnel of Wuxi Jinghai are Cai Liming, Hou Yiming, and Ning Jianfei. In particular, Cai Liming and Ning Jianfei have the most academic achievements in collaboration with Jiangnan University—Hou Yiming has collaborated with Jiangnan University 22 times, while Ning Jianfei has done so 19 times.

Regarding core invention patents, the engineered strains and shake-flask fermentation technologies—two of Wuxi Jinghai’s five core technologies under its “L-Histidine Preparation Technology”—were assigned to the company from Jiangnan University during the tenure of Chen Jian, an independent director, as President of Jiangnan University. As an academic leader and a renowned expert in China’s fields of fermentation engineering and food biotechnology, Chen Jian also transferred his patented inventions, namely “A Method for Increasing Acetic Acid Yield from Waste Biomass Conversion Using Fed-Batch Fermentation” and “A Method for Producing α-Ketoisocaproic Acid via Whole-Cell Biocatalysis,” to Wuxi Jinghai in 2011 and 2019, respectively.

As Wuxi Jinghai continues to expand, Wuxi has naturally gained a “Little Giant” enterprise and its associated industrial cluster. According to the prospectus, in response to current capacity constraints, Wuxi Jinghai plans to invest nearly RMB 310 million in Wuxi to expand amino acid production. In turn, the growth of this cluster will provide support to Jiangnan University in the future.

Chongqing Xishan Science&Technology Co.,Ltd. maintains close ties with Chongqing University of Posts and Telecommunications. Guo Yijun, the Chairman and actual controller of Xishan Technology, is also the company’s core technical expert. According to the prospectus, Xishan Technology has obtained a total of 67 invention patents, among which the seven invention patents acquired through early assignment were all transferred from Guo Yijun.

According to public information, Guo Yijun served as a professor at the School of Bioinformatics, Chongqing University of Posts and Telecommunications, after obtaining his Ph.D., and collaborated with the university to develop surgical power systems. This marked the beginning of Chongqing Xishan Science&Technology Co.,Ltd.’s journey to becoming a leading enterprise in China’s surgical power system sector. Subsequently, Xishan Technology deepened its collaboration with Chongqing University of Posts and Telecommunications, with research topics covering joint debridement surgical power systems, breast biopsy and vacuum-assisted excision systems, and ultrasonic aspiration dissection systems.

On the official website of Chongqing University of Posts and Telecommunications, Xishan Technology’s IPO was also highly praised, described as “the first STAR Market-listed company incubated from scientific and technological achievements of Chongqing universities,” and regarded as “a typical representative of the transformation and incubation of scientific and technological achievements in Chongqing universities.” It was further stated that this IPO represents “a significant achievement of the university’s support for faculty innovation and entrepreneurship and the promotion of the transformation of scientific and technological achievements.” Among the Top Ten News Stories of Chongqing University of Posts and Telecommunications in 2023, Xishan Technology’s IPO was also selected as one of them.

The IPO of Chongqing Xishan Science&Technology Co.,Ltd. is also a result of Chongqing’s vigorous support for the medical and health sector in recent years. Over the past year, three medical and health enterprises in Chongqing have successfully completed their IPOs (four if Dengkang Oral Care, which is categorized under daily chemical consumer goods, is included). Following these companies, several other Chongqing-based medical and health enterprises are actively preparing for their listings.

As a long-standing hub for manufacturing, Chongqing has accumulated substantial expertise in precision instruments and equipment as well as high-end manufacturing, which has led many of its medical and health enterprises to focus on these sectors. For instance, Chongqing is home to the renowned “Three Mountains and One Sea” in the field of high-end medical devices: Shanwaishan, Xishan Technology, Jinshan Technology, and Haifu Medical. The first two have already completed their initial public offerings, and it is believed that the latter two will follow suit in the near future.

In October 2023, the Western (Chongqing) Science City Industrial Development Fund of Funds was officially established, with a total scale of RMB 30 billion. The fund will focus on sectors such as biopharmaceuticals, integrated circuits, and new energy storage. Earlier, in May 2023, Chongqing announced the official establishment of the Chongqing Industrial Investment Fund of Funds, totaling RMB 200 billion, which also designates the pharmaceutical sector as a key area of coverage.

According to statistics, as of June 1, 2023, 12 of the 72 listed companies in Chongqing were medical and health enterprises, accounting for 23.04% of the total market capitalization of Chongqing’s A-share listed companies at that time. This has significantly contributed to Chongqing’s efforts to build a medical and health industry cluster. Local universities in Chongqing are also expected to play their part by fostering two-way collaboration with these enterprises.

Unlike the aforementioned companies, Sanbo Brain is a medical services group, whose characteristics inherently entail deep-rooted ties with medical universities. Its three founders—Luan Guoming, Yu Chunjiang, and Shi Xiang’en—are all alumni of Capital Medical University and renowned neurology experts in China.

Since its inception, Sanbo Brain has adhered to a technology-driven approach. Its flagship campus, Beijing Sanbo, has evolved over the years into an academic hospital integrating medical care, education, and research. In 2010, the Eleventh Clinical Medical College of Capital Medical University was officially established at Sanbo Brain, formally incorporating it into Capital Medical University’s scientific research and teaching system. This set a precedent in China for private hospitals being integrated into the research and teaching frameworks of key universities. As is well known, physicians constitute the core competitiveness of any hospital; Sanbo Brain’s close affiliation with Capital Medical University has provided it with a continuous stream of talent.

Conversely, Sanbo Brain has also played a significant role in the scientific research and education at Capital Medical University. According to the prospectus, Beijing Sanbo has undertaken or participated in more than 160 scientific research projects, published over 390 papers in internationally renowned neurology journals indexed by SCI, and achieved remarkable scientific research outcomes. It has cumulatively trained more than 200 master’s students, doctoral candidates, and postdoctoral fellows, cultivating a large number of outstanding talents for China’s neurology specialty.

This also establishes universities as a talent pipeline for enterprises, while enterprises in turn become an integral part of the universities’ research and teaching systems, creating a virtuous cycle of mutual empowerment.。

Among the 21 IPOs in the healthcare sector in 2023, universities played a significant role in nearly one-third of them. It is evident that industrial innovation is always built upon a strong foundation of scientific research, and universities are precisely where robust original innovative capabilities reside. In recent years, with the gradual implementation of a series of policies and regulations in China to promote the commercialization of scientific and technological achievements, universities and research institutes have made rapid progress in this area.

According to the “2022 Annual Report on the Transformation of Scientific and Technological Achievements in China (Higher Education Institutions and Research Institutes),” in 2021, a total of 3,649 universities and research institutes reported a total contract value of RMB 158.18 billion for achievements transformed through assignment, licensing, equity investment based on valuation, as well as technology development, consulting, and services, representing an increase of 25.9% from RMB 125.61 billion in 2020.

Given that this rapid growth has been achieved against a backdrop of numerous mechanisms still in need of improvement—such as an immature industry for evaluating scientific and technological achievements, low efficiency in achievement transactions, obstacles in the implementation of policies for scientific and technological transfer, poor alignment between research outcomes and corporate needs, and a high dependence on fiscal appropriations for achievement commercialization—the immense potential is evident.

With the further refinement of these mechanisms, the commercialization of academic research in universities will become more efficient and targeted. We believe that the goal of achieving global innovation leadership in healthcare will draw ever closer.

References:

CQUPT News Network: “[Chongqing Science and Technology Innovation Network] Chongqing Universities Incubate First STAR Market-Listed Company”

CQUPT News Network: Top 10 News Stories of Chongqing University of Posts and Telecommunications in 2023

Advances in University Science and Technology: “Over 560,000 Contracts Signed by Universities and Research Institutes! 2022 Annual Report on the Transformation of Scientific and Technological Achievements in China Released”