Tasly Capital Proposes a New Technological Paradigm for Reconstructing Healthcare Investment
As we entered Q3, industry bubbles gradually dissipated. With the completion of cyclical adjustments in the industrial structure, the healthcare venture capital sector rebounded against the trend. Technology, as a pivotal force, permeated this transformation, reshaping the healthcare industry as a whole and driving its forward momentum, thereby giving rise to new industrial opportunities.
On one hand, the accelerated emergence of artificial intelligence technologies is driving profound transformations in technology, industry, and society. Rapid advancements in life sciences are continuously giving rise to new frontiers in emerging technologies. Deep interdisciplinary convergence is consistently facilitating major breakthroughs in the efficiency of translating research into applications, thereby driving new medical supply capabilities and creating new development opportunities for the industry.
On the other hand, as technological competition gradually becomes the frontier and core of national strategic rivalry, a new development paradigm is being constructed. Whether it involves breakthroughs in “chokehold” technologies, the acceleration of domestic substitution for imports, or the upgrading and self-controllability of industrial chains through chain supplementation, strengthening, and extension, these factors are all intensifying the reshuffling of the venture capital industry.
In the face of a series of industry adjustments and changes, healthcare investors mustRapidly transition roles and reshape the value creation model within the new round of technological innovation strategy.However, how exactly to accomplish the transformation and restructuring still requires further consideration.
Against this backdrop, the “5th Health Investment Innovation Ecosystem Conference,” guided by the Fund of Funds Professional Committee of the Asset Management Association of China (AMAC) and hosted by Tasly Capital, was recently held in Shenzhen, serving as a timely boon.
At the conference, Yan Kaijing, Chairman of the Board of Tasly Holding Group, delivered a keynote address titled “Building a New ‘Tech’ Dimension in Healthcare Investment.” He provided an in-depth analysis of current development trends and, drawing on the continuously iterated and upgraded investment strategies of Tasly Capital, addressed common challenges facing the healthcare venture capital industry. VCBeat also conducted an in-depth interview with Mr. Yan. It is evident that for industrial capital to sustain its growth, it must closely align with industry trends and continuously evolve its investment paradigm.
Yan Kaijing, Chairman of the Board of Directors of Tasly Holding Group
Although the impact of the pandemic on the primary market has weakened over time, venture capital (VC) firms have remained relatively cautious this year, with a continued decline in both the pace and frequency of investments. According to statistics from the Artery Orange database, the number of global healthcare financing events (722) and the total amount raised ($14.2 billion) in Q1 2023 both decreased quarter-on-quarter.
“Compared to 2020, when capital was concentrated in leading enterprises, the concentration of funding in the global and Chinese healthcare sectors decreased in Q1 2023. This indicates that policy, economic, social, and technological factors are collectively driving a restructuring of the industry. Although the venture capital sector remains cautious, but”As structural opportunities gradually emerge in the process of high-quality development, startups will have broader space and opportunities for growth,Investment institutions will inevitably strike with precision after evolving their investment paradigms.“Yan Kaijing said.”
Under these circumstances, Tasly Capital has once again revamped its investment paradigm, fully leveraging the quasi-investment banking role of industrial capital to build“A new investment paradigm for the pharmaceutical industry, in which government capital guides industrial capital to take root, drives technological innovation, fosters emerging industries, and promotes industrial finance,” with investment allocations centered on three major themes: “clearing existing inventory, domestic substitution, and intelligent technologies.”
"Inventory Clearance"This refers to seizing high-quality projects for mergers and acquisitions in a market where supply far exceeds demand. The economic growth of the past few years has brought prosperity to society, but has also led to a certain degree of project oversupply. As the economy undergoes a painful transition, these oversupplied projects begin to face reduction. Investors can seize this opportunity to acquire high-potential projects at low valuations, swimming against the tide during the period of “inventory clearance.”
"Domestic Substitution"This is to address the increasingly complex macroeconomic environment. As geopolitical pressures intensify, the global balance of power is being redistributed, and China faces a heightened risk of external economic containment, the nation must concentrate its resources on breaking through in certain core technologies. In this context, significant opportunities for domestic substitution will emerge in the healthcare sector. Tasly Capital is strategically focusing on the medical device sector to capitalize on high-certainty market segments.
"Intelligent Technology"This theme covers a broad scope. On one hand, cutting-edge technologies represented by artificial intelligence and medical big data are becoming the primary drivers of the modern emerging economic system, requiring investment institutions to identify and support valuable projects within this landscape. On the other hand, changes in demographic, family, and consumption structures are reshaping Chinese society, necessitating that technology companies leverage intelligent solutions to address the various crises arising during this restructuring process.
Clearly, this is an era full of challenges and opportunities, as well as one characterized by innovation and transformation. It is foreseeable that the drivers of economic growth will shift under the influence of multiple factors.
In light of the aforementioned circumstances, Yan Kaijing believes that,Capital needs to focus on the real economy, building a new economic flywheel in which technology, industry, and finance form a virtuous cycle.Enhance industrial competitiveness through technological innovation, thereby driving the development of industrial finance; innovate financial service models by prioritizing support for the commercialization of scientific and technological achievements. This approach aims to strengthen weak links in disadvantaged industries, extend value chains in advantageous industries, upgrade traditional industries, and establish new chains in emerging industries, ultimately facilitating the digital and modern transformation of industries while effectively mitigating the associated transitional challenges.
Looking back from the present, the overall VC industry is undergoing a reshuffle. How can investors seize high-probability investment opportunities?
“Analyze industry trends, identify key pain points, engage in deep reflection, and develop precise strategic maps.“Yan Kaijing stated that when the industry faces structural transformation, it is essential to engage in deep reflection centered on industry pain points while simultaneously identifying future tipping points. By integrating trend-oriented thinking and formulating a precise strategic roadmap, teams can clearly pinpoint strategic opportunities within specific scenarios, thereby enabling saturated investment.”
First, identify M&A opportunities amid the clearance of existing assets, establish industrial funds, and achieve a win-win outcome for government, industry, and technology. Second, prioritize allocations in areas of domestic substitution, capitalizing on investment opportunities with substantial growth potential and high certainty. Finally, align with clinical needs and emerging trends to seek out innovative products and solutions. Meanwhile, starting from demand, uncover foundational and key technologies, and—based on strategic judgment—invest in “blockbuster” products.
“While we cannot accurately predict what changes will occur among the top 20 companies by market capitalization in the biopharmaceutical sector over the next decade, one thing is certain:”The greatest opportunity in the pharmaceutical industry stems from the explosive growth driven by product innovation under multidisciplinary convergence.“Yan Kaijing stated.
Having clarified the investment roadmap, investment returns, and expected revenue models, Tasly Capital closely follows national strategic directions and assesses industry trends,Guided by innovation and anchored in the cross-disciplinary integration of technologies, diverse new therapeutic approaches and methods are being developed through intelligent and combinatorial R&D models, with close attention paid to innovations in areas such as “Future – In Silico Experiment Empowerment,” “Intelligent Drugs,” and “Intelligent Medical Devices.”。
Yan Kaijing believes that,High-success-rate investment opportunities lie in the saturated investment approach across multiple technological pathways based on strategic opportunity points.Only by analyzing shifts in the disease spectrum and addressing unmet clinical needs can we identify strategic opportunities and pinpoint specific strategic opportunity areas. This enables the classification of various technological pathways based on these strategic points, accurate assessment of technology cycles according to the Technology Adoption Lifecycle, and the construction of a precise strategic investment map to inform sound investment decisions.
In addition,Tasly Capital will also delve into the origins of innovation to leverage breakthroughs in original scientific and technological innovation.Integrate into the national system to identify and acquire high-quality foundational technologies and critical technologies in “chokepoint” areas. By integrating resources and providing precise incubation, we create projects from the ground up and establish a scientist incubation mechanism. We offer support in funding, industrial resources, corporate governance, HR assistance, and post-investment empowerment, thereby bridging the capability gap for scientists transitioning into entrepreneurs. This facilitates the 0-to-1 and 1-to-N transformation, enabling scientific and technological achievements to move out of the laboratory.
Under this mechanism, Tasly Capital has invested in several representative projects by practicing its technology investment methodology, including iCell, a leading enterprise in stem cell drug R&D; Bangyao Biotechnology, a gene editing and cell therapy company; Yuanxing Gene, a leading domestic large-scale viral vector CDMO company; Synrise, a high-throughput design, R&D, and manufacturing enterprise in the field of synthetic biology; Triastek, an intelligent 3D-printed pharmaceutical company with a global proprietary technology platform; and Hengyu Medical, an integrated pan-vascular solutions provider that independently develops intravascular ultrasound.
Subsequently, more high-quality projects aligned with the three major investment themes will also join in, empowering the Tasly ecosystem in the post-intelligence era.
Over the past 16 years since its establishment, Tasly Capital has consistently adhered to analyzing industry trends and continuously iterated its investment strategies, thereby carving out a successful path.
From an initial pharmaceutical-centric approach, to abandoning scaled-up pharmaceutical investments in 2014 and launching the “4D” model (Diagnostic, Device, Drug, and Digital Health), and now closely aligning with evolving healthcare paradigms by shifting focus from treatment and disease prevention to proactive health management, thereby establishing a health-function-network investment model. Leveraging its dual-core development strategy of “industry + capital,” Tasly Capital has set up angel, venture capital (VC), private equity (PE), and M&A funds covering all stages, continuously refining its investment maps in areas such as oncology, cardiovascular diseases, and the nervous system, while optimizing its investment strategies.
Today, Tasly Capital manages assets of nearly RMB 15 billion, has invested in over 110 companies, and oversees more than 10 healthcare industry funds. Leveraging the extensive ecosystem of its shareholder, Tasly, in the big health sector, it has implemented multi-faceted post-investment value-added services. The firm has successfully exited from more than 30 projects, including 16 IPOs, achieving an exit rate of nearly 30%, and has become one of the most influential investment institutions in China’s big health industry.
Going forward, in addition to leveraging its fund platform to deliver strong investment returns, Tasly Capital will continue to seize opportunities throughout this economic cycle. By collaborating closely with Tasly Group’s industrial subsidiaries and other leading industry players, it aims to build a bridge from technology transfer to product introduction and M&A for the industry, thereby establishing diversified intermediate exit channels. By continuously strengthening its core capabilities as an industrial capital firm, Tasly Capital is committed to becoming an asset management platform respected by consumers, entrepreneurs, and investors across the greater health industry, working hand in hand with ecosystem partners to achieve mutual success.
“China’s healthcare sector has entered a critical phase that demands ‘genuine innovation.’ As the essential characteristic of ‘self-reliance and self-strengthening’ becomes increasingly prominent, new opportunities have already emerged,”We look forward to joining forces with scientists, entrepreneurs, and investors to pool our wisdom and usher in a new era of “tech”-driven healthcare investment."Yan Kaijing stated.