Amid Breakthroughs and Rebuilding: Key Strategic Decisions by Matrix Partners China in the Medical Sector

Looking back at 2023, although the market remained objectively rational, new opportunities were quietly emerging beneath the surface.

For instance, in specific niche areas,“Chinese-style healthcare innovation” remains a future investment direction, and “investing early, investing small, and investing in innovation” has become an industry consensus; in terms of commercialization,Waves of Global Expansion, M&A, and Business Development Surge One After Another, especially BD. According to data from PharmaCube,In 2023, the total upfront payments received by Chinese innovative drug companies through project business development (BD) reached RMB 21.021 billion, surpassing for the first time the total funds raised via initial public offerings (IPOs), and amounting to nearly twice that figure.。

Therefore, despite facing multiple challenges over the past year, many institutions have still achieved growth against the trend. This includes MPCi, a key player in the capital market and the entire healthcare ecosystem. With years of deep engagement in the healthcare sector, MPCi has successfully invested in and incubated several star projects, includingPeijia Medical, Yifang Biopharma, Kemdiagnostics, Arno Therapeutics, Quanxin Biologics, Shouhui Technology, Taimei Medical, Huahao Zhongtian, Triastek, Inscinstech, CytoNiche Biosciences, Gravel Bioetc., among which are companies developing drugs for autoimmune diseasesQuanxin Biologics- Internet Medical Insurance Service ProviderDepartment of Hand SurgeryTech, Provider of Digital Solutions for Life Sciences R&DTaiMed Medicaland Innovative Oncology Drug DevelopersHuahao Zhongtianhave all recently launched bids for listing on the Hong Kong Stock Exchange.

In 2023, a year fraught with uncertainties, MPCi maintained a cautiously optimistic investment pace in the healthcare sector, completing multiple investments throughout the year.Moreover, 100% of the fund is dedicated to supporting innovation in hard technologies.. Additionally, MPCi has demonstrated outstanding performance in exit strategies, with multiple portfolio healthcare projects successfully exiting through initial public offerings or mergers and acquisitions.

So, as we take a closer look, what exactly did MPCi get right in the ever-changing year of 2023? As we step into the brand-new year of 2024, what new expectations does MPCi hold? To uncover the key answers, VCBeat engaged in an in-depth dialogue with MPCi on the eve of the Lunar New Year.

VCBeat: From MPCi’s industry perspective, what significant changes occurred in the healthcare sector in 2023?

MPCi: 2023, the first year of the post-pandemic era, was also a year marked by significant changes. On one hand, the state launched a stringent crackdown on corruption in pharmaceutical distribution and sales; on the other, centralized drug procurement accelerated, national medical insurance negotiations became more efficient, and supporting innovation emerged as the central theme of healthcare reform. Amid this rapidly evolving regulatory landscape, the entire healthcare industry has placed high priority on achieving breakthroughs and enhancing efficiency across every stage from R&D to commercialization.

Thus, we have also used the phrase “Amidst Deconstruction and Reconstruction, Achieving Speed Without Haste” to summarize this year. On one hand, we have certainly felt the chill of the overall market and the fluctuations within specific sub-sectors; on the other hand,We also believe that now is the optimal time for strategic positioning, as systemic global opportunities are emerging in product innovation and industrial chain upgrading within the healthcare sector.Therefore, we continue to invest rhythmically in high-quality early- and growth-stage companies within domains where we have established expertise and cognitive advantage, guided by our own research across various sectors.

VCBeat: In 2023, what was MPCi’s core focus in the healthcare sector?

MPCi: In the healthcare sector, our core focus in 2023 was:What Are the Globally Leading Breakthrough Technologies?。

First, in the field of biotechnology,We focus on four key areas: next-generation cell and gene therapies, AI-driven drug discovery, peptide-based therapeutics, and conjugation systems.. Among these areas, we have made strategic investments and laid out our portfolioAmbrx, Belief BioMed, AnorMed, Quanxin Biotech, Qingpu Biologicsetc. Among them, Ambrx, leveraging next-generation site-specific conjugation technology based on non-natural amino acids, has demonstrated outstanding clinical efficacy across multiple products and was acquired by Johnson & Johnson this January; AnorMed’s core product, AN2025, successfully completed enrollment of all 483 patients in its Phase III clinical trial in November 2023, and the company successfully completed its initial public offering (IPO) on the NASDAQ in September 2023.

Secondly, as numerous biopharmaceutical innovations and medical devices transition from the laboratory to industrialization, the demand for manufacturing processes and scientific research services continues to grow,Our investment portfolio has also expanded into the upstream segments of the healthcare industry, focusing on leading enterprises that provide critical equipment, consumables, and high-end raw materials for product research and development and manufacturing.. In 2023, our portfolio companiesMegaRobo, Inscinstech, CytoNicheSignificant progress has been made in these areas, with MegaRobots successively launching its automated large-scale plasmid purification system for medical applications, LC-MS sample preparation solutions, and liquid handling workstations.

Finally, in the field of medical devices,We pay special attention to new “players” in traditional major sectors, which have opportunities for generational leapfrogging in commercialization.. Therefore, we have invested and laid outRuilong Nuofu, Weiguang Medical, Xin GuangweiOver the past year, they have all achieved rapid development. For instance, Haishan Yi®, China’s first modular surgical robot developed by Ruilong Nuofu, completed its first-in-human clinical trial, and the company has swiftly completed registrational clinical trials across multiple medical departments.

VCBeat: It is undeniable that the healthcare market remained sluggish in 2023. Nevertheless, Matrix Partners China still delivered many standout performances. In your view, what did Matrix Partners China do right?

MPCi: In 2023, the global economy underwent a series of profound macro-level transformations. These changes not only reshaped markets but also necessitated a strategic realignment for enterprises. During this process, we identified three core strategies that proved effective throughout the year:First, consolidate the industry to optimize resource allocation; second, platformize technology to expand coverage; and third, integrate artificial intelligence into business processes.。

For instance, by building a platform-based technology strategy. Take MEGA as an example: as an upstream equipment supplier, facing the dual pressures of slowing growth and market contraction in its originally focused life sciences and broader healthcare sectors, it rapidly adjusted its strategy. Leveraging its laboratory automation and machine vision technologies from the life sciences sector, combined with an AI technology platform, MEGA swiftly entered new tracks, successfully applying these technologies to the semiconductor industry. It developed products such as wafer dicing, laser processing, packaging inspection, and wafer metrology and inspection systems.

In terms of AI integration, it is well known that AI was undoubtedly the focal point of the market in 2023, with numerous enterprises actively exploring large-scale applications capable of profoundly transforming workflows. Taking DP Technology as an example, the company has demonstrated the potential of AI in scientific research and development, particularly in the fields of new drug discovery and new materials. By leveraging pre-trained models, DP Technology enables AI to learn the interaction laws among microscopic particles and predict phenomena arising from these interactions, thereby facilitating the R&D of molecular and material microstructures.

Certainly, looking toward the future,AI applications in the healthcare sector will continue to evolve in diverse ways, bringing new opportunities and challenges to the entire industry over the next three to five years.。

VCBeat: In recent years, influenced by market conditions, discussions around “post-investment capabilities” have become increasingly prevalent within the industry, and this has gradually come to be regarded as a critical metric for investment firms today. How does Matrix Partners China view this trend? What unique strengths does Matrix Partners China possess in terms of post-investment capabilities?

MPCi: We fully understand the challenges of entrepreneurship. At the same time, we recognize that initiative should remain in the hands of founders. Therefore, as startups strive to grow at breakneck speed, we have always adhered to“Support without disruption, providing safeguards beyond core business operations for the company”Philosophy: Empower in every possible way, and provide steadfast support at critical moments.

In 2023, we continued“Post-Investment 3.0”Guided by the philosophy of “teaching a man to fish,” we aim to provide long-term, in-depth, and systematic empowerment. Leveraging MPCi’s annual deal flow, its established investment ecosystem, and its structured expertise in addressing common startup challenges—such as legal affairs, recruitment, government relations (GR), public relations (PR), and equity structure—we offer proactive support to our portfolio companies. Specifically, this approach can be summarized in five key areas:Strategy & Competition, Organization & Management, Business Growth, In-Depth Financing, Healthy Living。

For instance, regarding business growth, the definition of “growth” varies across industries and company types; accordingly, MPCi’s “post-investment services” are tailored to these differences. Taking an innovative drug company as an example, our healthcare investment team facilitated connections with key departments at top-tier hospitals in China that had previously been difficult to access, thereby enabling a milestone collaboration in foundational research. In another case involving a synthetic biology company, as the entire industry shifted toward commercial implementation in 2023, securing benchmark customers became a top priority. We helped connect the company with the world’s largest food conglomerate and one of the top three global raw material suppliers, paving the way for direct cooperation at the scale of tens of thousands of tons.

In terms of mutual collaboration within the MPCi portfolio ecosystem, numerous cases have emerged over the past year. Gravel Bio has achieved significant advanced research outcomes in TIL advanced manufacturing processes, while CytoNiche Bioscience holds technological advantages in cell processing tools and automated equipment. The two companies have established a strategic partnership to jointly build the “Joint Laboratory for Advanced TIL Cell Therapy Manufacturing Technologies.” Through deep integration and innovation of their respective processes and tools, this collaboration aims to enhance the production and testing efficiency of TIL products, shorten preparation time, and substantially reduce costs.

VCBeat: Starting in 2023, the Chinese healthcare industry has seen successive waves of overseas expansion, M&A, and business development (BD) activities, and these trends have continued into 2024. In light of this, what further changes does MPCi anticipate for this year?

MPCi：We believe that global expansion will be a significant trend this year.On one hand, after years of accumulation, certain innovative products from Chinese medical enterprises have become globally competitive; on the other hand, a cohort of professionals with overseas business experience has joined domestic companies, playing an increasingly important role. This global expansion entails not only the internationalization of business operations but also integration into the global capital market system.

In fact, in 2023, our core team traveled to Europe, the United States, and other regions, visiting numerous large enterprises and startups to help our portfolio companies seek opportunities for overseas business collaborations, investments, and mergers and acquisitions. In 2024, we will continue to adhere to this strategy, aiming to empower a cohort of leading Chinese companies in niche sectors to truly lead industry development in the broader global market.

VCBeat: In 2024, which specific sectors within the healthcare industry will Matrix Partners China focus on?

MPCi: In the new year, we will continue to focus on three key sub-sectors:First, in the biotechnology sector, we remain optimistic that next-generation cell and gene therapies, AI-driven drug discovery, peptide-based drugs, and conjugation systems will deliver superior therapeutic outcomes. Second, in the medical devices and diagnostics sector, we are focusing on investment opportunities in innovative products that integrate multidisciplinary expertise—including mechanics, electronics, and materials science—as well as generational upgrades of products in mature industries. Third, along the healthcare industry chain, building on our existing portfolio, we continue to favor innovative life science tools and opportunities for industrial chain upgrading.。

VCBeat: 2024 is considered a pivotal year for transformation and change in the healthcare industry. In light of this, could Matrix Partners China offer some advice to entrepreneurs operating in this field?

MPCi: 2024 will still be a year full of challenges, but the ancient wisdom of the Chinese people,It has always been said that if you want to possess something, you must start from its opposite.For instance, if you seek speed, begin with slowness; if you aim for height, start from the bottom; if you desire strength, commence from weakness; and if you wish to gain, start by adapting to loss. We have always proceeded in this manner, so there is nothing to fear. Take, for example, the year-end review we mentioned this yearAdaptability is the key to thriving in the entrepreneurial journey: The Key Lies in Adaptability. The journey of leveling up and battling monsters also means that, along the way, we will eventually become desensitized to them, regarding the extraordinary as ordinary.

Of course, as for how to “slay the monsters,” to borrow a phrase from our Founding Managing Partner Zhang Ying, we are now in an era where good money drives out bad.First, founders must ensure they are “good currency” rather than “bad currency” within the industry., what constitutes “good currency”? The healthcare industry has a set of objective indicators, including revenue growth rate, profitability, clinical data and progress of products, and so on.

Second, on the basis of being a “good coin” oneself,We believe that companies, especially CEOs, should possess strong financial budgeting capabilities and leverage data-driven approaches to promote refined enterprise management.Third,In fundraising, strike a balance between the brand reputation of investment institutions and valuation; select investors with genuine industry insights and strategic thinking to ensure well-informed decision-making and continuous iteration.。

Finally, we firmly believe that in the current era, the strengths of outstanding enterprises will become even more pronounced.Longevity, that is, the ability to endure cycles, navigate through cycles, and transcend cycles.