Junliang Capital's Wang Junfeng on the Return to Fundamentals in Healthcare Investment and Reassessing Innovation Value

Wang Junfeng did not anticipate that adding Zhang Lei, CEO of Life Biosciences, to the Legend Capital CEO group chat would spark a heated discussion within the group. In recent years,Experimental Animal Model Technologyhaving become an extremely scarce resource, many R&D pipelines were forced to stall. After Zhang Lei briefly introduced her company’s business, she became the center of attention. Beyond lamenting the difficulties of experimentation, what struck Wang Junfeng most deeply was the entrepreneurs’ palpable excitement at the opportunity to communicate directly with suppliers of these scarce resources.

In recent years, Wang Junfeng, Co-Chief Investment Officer at Legend Capital, has devoted more time to engaging with the company’s portfolio firms to understand their perspectives and challenges, while also seeking ways to offer support. “We need to sit down and talk,” Wang told VCBeat. “Only through in-depth discussions of opportunities can we achieve a level of interactive efficiency that pure one-way communication cannot deliver.” This represents the early form of Legend Capital’s healthcare ecosystem.

As early as the 2018 Taihu “Health” CEO Summit hosted by Legend Capital, Wang Junfeng proposed the construction of a Legend Healthcare ecosystem, marking a step away from pure financial investment toward actively providing empowerment to create value for portfolio companies. The concept of an “ecosystem” is relatively abstract. Initially, Wang Junfeng merely set the tone: he emphasized not building physical incubators, adhering to an asset-light rather than asset-heavy approach; focusing on specialization rather than diversification; and pursuing depth rather than superficial engagement. In this framework, Legend Capital’s value was positioned as that of a “convener,” linking various stakeholders within the industry.

The role of the “convener” has become increasingly tangible in practice. After thoroughly assessing needs, Legend Capital has repeatedly attempted to provide portfolio companies with resources beyond their immediate reach to address many intricate challenges in medical innovation. For instance, as an increasing number of investee companies’ pipelines under development advance into clinical trial phases, Legend Capital leverages its healthcare ecosystem to help them rapidly connect with CROs and principal investigators (PIs). “Sometimes, to help companies save time, we even call experts in the middle of the night to convene meetings,” said Wang Junfeng.

Since making its initial foray into healthcare investments in 2007, Legend Capital has invested in more than 160 projects across the broader health sector. These initiatives have continued to deepen their market penetration, generating substantial investment returns while fostering a self-sustaining industrial ecosystem. The reciprocal sharing of resources among these portfolio companies has enhanced their respective operational efficiencies.

Today, Legend Healthcare embarks on a new journey, adapting to the evolving landscape of the healthcare industry and exploring the iteration of its ecosystem. It proposes the “Legend Healthcare Ecosystem+” strategy, which leverages capital as a纽带 to build a broader ecosystem connecting resources from the industry, scientific community, and various sectors of society, centered on “innovation” and “ecosystem.” This initiative aims to accelerate the translation of scientific achievements, drive industrial upgrading, and achieve high-quality development.

In its 17th year of healthcare investment, Legend Capital faces a vast pool of innovative resources from its portfolio companies. Technologies, processes, production capacity, funding, and even application scenarios required for translating laboratory discoveries into clinical innovations are all readily accessible. What Legend Capital now seeks to do is to expand this resource pool, moving beyond equity ties to forge connections based on needs and capabilities. In essence, this reflects the two stages of cultivating an industrial ecosystem: deepening the core and then amplifying its influence.

Over the past 17 years, driven by iterative advancements in technology and cognition, as well as continuous upgrades in medical innovation, Legend Capital has steadily expanded its capabilities in alignment with market trends while adhering to the core principles of value investing. This strategic evolution has laid the foundation for today’s open healthcare ecosystem.

At the outset, Legend Capital primarily focused its investments on healthcare services, taking equity stakes in companies such as Pharmaron, WuXi AppTec, and KingMed Diagnostics within the CRO sector. In 2010, Legend Capital integrated its internal resources to establish a dedicated healthcare team, initiating long-term, systematic investment strategies grounded in industry research. The firm concentrated its investments in specialized fields including innovative drugs, high-end generic drugs, and chemiluminescence-based in vitro diagnostics (IVD).

Among these, 2014 was a pivotal milestone. Legend Capital stayed ahead of the market by proactively focusing on innovative drugs, investing in a series of later star projects such as Innovent Biologics, Ribo Life Science, and PegBio. At that time, the mainstream direction for healthcare investment was generic drug projects with revenue, profits, and clear clinical efficacy. However, due to concerns about the sustained profitability of generic drugs, Legend Capital decided to place significant bets on innovative drugs. It was precisely this choice that allowed Legend Capital to remain composed during the capital winter. Later, Legend Capital intensified its efforts in projects focused on the commercialization of scientific research achievements, which was a logical extension of seeking innovation at the early stage based on industry research. But that is a story for another time.

Around 2020, emerging markets in Southeast Asia became a key focus for Legend Capital. In fact, this was not Legend Capital’s first foray into overseas markets. In 2018, the firm once narrowed its market scope, reducing investments in European and American projects to concentrate on domestic initiatives. This strategy persisted until around 2020, when opportunities in Southeast Asia’s emerging markets began to emerge. Legend Capital then decisively invested in Etana, an Indonesian pharmaceutical manufacturer, using this as a foothold to facilitate the market entry of Chinese-made innovative drugs in Southeast Asia.

With a foundation of over 160 portfolio companies in healthcare innovation, coupled with the deepening expansion into Southeast Asian markets, Legend Capital’s healthcare ecosystem has directly extended beyond its portfolio companies. As its capabilities and geographic boundaries continue to expand, Legend Capital’s healthcare ecosystem requires more diverse elements for support.

This time, Legend Capital’s capability building has shifted from internal breakthroughs to external openness. In the “Medical Ecosystem+” strategy proposed by Wang Junfeng, an open ecosystem is prioritized. In this dimension, Legend Capital’s medical ecosystem is no longer confined to interconnections among its portfolio companies but has expanded its boundaries to better fulfill its role as an industry orchestrator.

According to Wang Junfeng, the open ecosystem is centered on the 160+ portfolio companies within the Legend Capital healthcare ecosystem, extending to encompass resources from across society—including upstream and downstream industry players, clinical institutions, government bodies, multinational corporations (MNCs), business development (BD) partners, and research institutes—to foster mutual cooperation and achieve win-win outcomes.

In recent years, Legend Capital has increased its focus on projects involving the commercialization of scientific research achievements. A widely circulated WeChat Moments post revealed that, in order to secure top-tier professorial talent, Legend Capital’s healthcare team has even maintained a long-term “presence” in university laboratories.

“This is the true source of innovation.” Wang Junfeng assigned a highly strategic significance to the translation of scientific and technological achievements within Legend Capital’s medical investment landscape, stating, “Future competition will become increasingly intense, and the way forward must be found through innovation.” The translation of scientific and technological achievements is closely linked, to a large extent, with early-stage investment. It is precisely because Legend Capital intends to do more work in this area that it partnered with Chengdu High-Tech Zone to establish the Frontier Biotechnology Fund. Wang Junfeng pointed out that as Legend Capital extends its layout further upstream toward the source of innovation, more high-quality enterprises will emerge. Leveraging the complementary advantages of Legend Capital’s medical ecosystem resources, the future pathways for translating these innovative achievements will become more diversified—either advancing further into clinical translation or being transferred to other companies within the ecosystem to bolster their R&D pipelines.

However, successfully translating scientific research achievements into viable projects and achieving product commercialization is extremely challenging. Wang Junfeng pointed out that medical projects are highly deceptive; some may boast prominent technical features and top-tier teams, yet at a certain stage of development, it becomes evident that the technological pathway is unfeasible or the R&D pipeline is outdated. By the time the core product reaches the market, competitors have already surged ahead.

Overall, current projects for the commercialization of scientific and technological achievements face a series of pain points in operations, team management, and commercialization.

First, at the operational level, university professors often lack sufficient understanding of the market and products. Typically, when a technology is verified to possess unique, breakthrough characteristics, it easily attracts market attention. However, many professors lack experience in commercial translation, making it difficult to effectively translate and solidify innovative achievements into tangible outcomes. “Entrepreneurship and investment in the pharmaceutical sector place particular emphasis on hands-on experience; one must have done it before,” pointed out Wang Junfeng. In most cases, professors proceed with implementation after gaining familiarity with only certain aspects of the process for translating scientific research results. As a result, they may successfully complete the journey from 0 to 1, but remain entirely unfamiliar with scaling from 1 to 10, and then to 100. As the product translation process advances, the entire team often experiences significant distress.

On the other hand, in most cases, professorial teams tend to overestimate their operational capabilities. The commercialization of scientific research achievements is highly complex, demanding substantial expertise and a long process of accumulation; it is often forged through countless failures. However, many professors who are new to this field fail to fully grasp this reality and overly optimistically overestimate their team’s capabilities.

Secondly, many R&D professionals struggle to build truly high-performing teams. Having devoted years to scientific research, professors often have limited professional networks. When they decide to commercialize innovative achievements, they typically seek resources only within their circles of friends, classmates, and students. Their insufficient engagement with the industry leads to a critical shortage of available talent, representing a significant weakness.

Such a talent selection environment means that when professors build their entrepreneurial teams, the team members are not necessarily the best of the best. As a result, core members may lack industry expertise and fail to integrate all resources for efficient commercialization. In other words, such teams face a long learning curve in translating scientific achievements into marketable products; attempting to learn while pushing forward innovation often leads to project stagnation in later stages.

Finally, commercialization remains a formidable challenge. Professor-led startups often overestimate the commercial value of technological advancement while underestimating the significance and difficulty of product market positioning. “Many products, once developed from scratch, are found to lack clear market positioning or have missed their market window. Due to insufficient industry experience and weak business acumen, the market landscape has already shifted by the time the product launches,” pointed out Wang Junfeng.

Addressing the aforementioned issues, Wang Junfeng explained that Legend Capital has historically leveraged its medical ecosystem resources to help researcher-entrepreneurs address their weaknesses in three key areas. First, it assists companies in clarifying their strategies, assessing whether the direction for translating innovative products holds potential and whether future products will be competitive in the market. Second, it utilizes its resources to help build management teams, assisting innovative research-based enterprises in finding suitable partners. Third, it supports continuous strategic iteration. “The market is changing rapidly. At times, it is necessary to sit down with entrepreneurs to discuss when to recoup capital to reduce development risks, and when to decisively terminate certain R&D pipelines and introduce new ones. Timing these decisions correctly is crucial.”

Currently, Legend Capital has established regular communication mechanisms with numerous research institutes and medical institutions. By first identifying needs and then directing them to suitable portfolio companies, it forms a closed-loop information feedback system. Leveraging Legend Capital’s healthcare ecosystem resources, it brings together industry, academia, research, and various sectors of society to foster exchange and collaboration. This accelerates technology transfer and product implementation, ultimately achieving commercial transformation and ecosystem synergy—turning technologies into high-quality products, and these products into marketable, innovative medical solutions that benefit the public.

Wang Junfeng candidly stated that within Legend Capital’s ecosystem, the convergence of industry players, research institutions, and capital investors naturally fosters extensive interaction. However, a key bottleneck in the translation of innovative products lies in the fact that many technologies developed and accumulated in research institutes fail to achieve industrial commercialization. This gap requires a “connector” to bring key stakeholders together for effective communication, enabling strong partnerships and complementary advantages to spark the chemical reaction necessary for successful translation. In this context, Legend Capital serves as that “connector.”

The final component of Legend Capital’s healthcare ecosystem and strategy targets an international ecosystem, leveraging the interaction between domestic and global ecosystems to help innovative drug companies expand overseas and achieve a “cold start” for their novel products in unfamiliar markets.

At this stage, many innovative pharmaceutical companies in China have reached the point of expanding globally. Once their products and technologies are sufficiently mature, they are no longer content with serving only the domestic market. This aligns with Legend Capital’s perspective on internationalization. Legend Capital believes that true globalization is rooted in the local market while maintaining a global vision; it involves actively expanding into Belt and Road Initiative markets such as Southeast Asia and the Middle East, without abandoning established markets in Europe, the United States, Japan, and South Korea. Therefore, Legend Capital has begun to assist its ecosystem-plus enterprises in going global.

However, in the process of going global, companies often face the challenge of lacking an understanding of local markets. Issues such as how to conduct clinical trials and navigate overseas regulatory requirements cannot be simply addressed by replicating Chinese experiences; localization is essential. “The model of Chinese innovation going global is currently viewed favorably by many, but what exactly makes it promising? Is it worth strategic investment? We aim to help the ecosystem and enterprises gain insights through this approach.” By leveraging Legend Capital’s network of portfolio companies in Southeast Asia, we can organize visits and study tours for domestic innovative pharmaceutical companies abroad, enabling them to understand local regulatory landscapes and engage more actively with relevant regulatory authorities and local partners.

Practice has shown that partnering with local enterprises to leverage their established channels for international expansion is an effective global growth strategy that Legend Capital has pioneered for innovative pharmaceutical companies.

In 2020, Legend Capital invested in the Indonesian biopharmaceutical company Etana. Following the investment, Legend Capital leveraged its healthcare ecosystem advantages to facilitate connections between Etana and domestic innovative pharmaceutical companies in areas such as corporate strategy and business partnerships, thereby promoting collaboration and synergy. Notably, it played an active role in advancing the strategic partnership between Innovent Biologics and Etana.

VCBeat has learned that Etana has engaged in discussions with more than ten Chinese biopharmaceutical companies regarding potential collaborations, with plans to introduce medications currently scarce in Indonesia, such as monoclonal antibody therapies for cancer, COVID-19 vaccines, and antiviral drugs. Through strategic investment, Legend Capital has positioned Etana as a strategic foothold in the Southeast Asian pharmaceutical market, thereby establishing a pathway for Chinese-made high-end biologics to enter the Indonesian market.

In 2021, CMS Pharmaceutical Group (00867.HK) and Legend Capital jointly established the Singapore-based company Kanglianda. Kanglianda is an open platform integrating innovative research, formulation custom development and manufacturing (CDMO), as well as sales and promotion. Focusing on unmet clinical needs in the Southeast Asian market, it is independently operated by a professional and experienced localized team. The company continues to deepen cooperation with global biopharmaceutical enterprises, rapidly introducing high-quality products from Europe, the United States, Japan, and China, thereby building a win-win and mutually beneficial biomedical ecosystem in Southeast Asia.

“Trading technology for market access.” In Wang Junfeng’s view, helping domestic enterprises “go global” is not merely about expanding product sales channels; more importantly, it enhances their product competitiveness and brand strength through the rigors of the global marketplace. “Domestic medical innovation companies possess advantages in technology, well-developed products, and leading efficiency. By leveraging these strengths to enter emerging markets, they can continuously bolster their product and market capabilities, thereby penetrating markets in Europe, the United States, Japan, and South Korea that were previously monopolized by industry giants.”

Wang Junfeng emphasized that the translation of innovative achievements is a complex systemic engineering project. The journey from the laboratory to the market involves multiple stages, necessitating the establishment of an ecosystem that addresses every pain point in the product commercialization process. Drug R&D and translation represent a global challenge. How can we accelerate the R&D and translation of innovative drugs and bridge the gap between scientific innovation and industrial application?

In recent years, Legend Capital has leveraged its resources from over a hundred healthcare and medical enterprises in its investment portfolio to continuously integrate resources around the innovative translation of scientific achievements. It is exploring the establishment of a full-chain ecosystem that connects “ideas” to commercialization, with a particular emphasis on professional and managerial empowerment. The firm aims to converge medical ecosystem resources into truly innovative products, thereby providing support to scientists engaged in genuine innovation.

Wang Junfeng stated that by integrating superior resources both domestically and internationally, Legend Capital is actively promoting and assisting Chinese pharmaceutical companies in entering the global market at a higher level. This serves as a concrete manifestation of the iterative upgrade of Legend Capital’s “Healthcare Ecosystem+” strategy, which continuously expands its capability boundaries, introduces greater international elements into its ecosystem, supports the strategic upgrades of ecosystem partners, and helps make innovative Chinese drugs accessible to patients worldwide. Meanwhile, leveraging Legend Capital’s international ecosystem will further broaden the boundaries of its domestic “Ecosystem+,” attracting more industry resources into the system and strengthening the capabilities of Legend Capital’s Healthcare Ecosystem+.

VCBeat has learned that the Healthcare Innovative Ecosystem Alliance (HIEA), jointly initiated by Legend Capital and its ecosystem companies, has been officially established. The founding members of HIEA include research institutes, medical institutions, industry leaders, industry partners, Legend Capital’s ecosystem enterprises, and invited experts. The alliance is committed to providing its members with extensive platforms for exchange, opportunities for collaboration, and access to resources, thereby further promoting the transformation of scientific and technological achievements in the healthcare industry, the integration of industry and finance, and industrial upgrading. It also aims to assist members in addressing difficulties and challenges, ultimately fostering continuous innovation and development within the healthcare ecosystem.