Chongqing Launches $30 Billion Industrial Investment Fund to Propel Biopharmaceutical Sector Growth

The Era of Hundred-Billion-Yuan Fund-of-Funds Has Arrived.

At the Inaugural Conference and Investment Summit for the Chongqing Industrial Investment Fund of Funds held on May 19, the RMB 200 billion Chongqing Industrial Investment Fund of Funds was officially established. With a total size exceeding RMB 200 billion, the fund will be implemented in two phases, with RMB 80 billion in committed capital for Phase I. It will conduct industrial investments through a “sub-fund + direct investment” model, aiming to leverage its scale into a fund cluster totaling RMB 600 billion.

The summit attracted more than 100 investment institutions, including prominent firms such as Hillhouse Investment, CICC Capital, Sequoia China, Shenzhen Capital Group, IDG Capital, and Legend Capital. The industrial investment fund of funds, with a scale of hundreds of billions of yuan, will undoubtedly attract core elements for industrial development, such as top-tier domestic and international investment institutions and leading industry enterprises. It will facilitate the rapid implementation of major industrial projects and key initiatives along the industrial chain, ushering in a new wave of investment enthusiasm in Chongqing.

As an industry closely tied to life and health, the biopharmaceutical sector has always held a significant position in national economic development. The Outline of the 14th Five-Year Plan (2021–2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035, issued by the National Development and Reform Commission in 2021, explicitly called for “accelerating the development of industries such as biopharmaceuticals, biological breeding, biomaterials, and bioenergy,” thereby underscoring the importance of advancing the biopharmaceutical industry.

Biopharmaceuticals is also one of the key investment sectors for this fund of funds (FoF). How will the RMB 200 billion FoF empower the development of Chongqing’s biopharmaceutical industry? How can it enhance professional capital operation capabilities while balancing industrial growth with financial returns? What favorable impacts will the FoF cluster have on the agglomeration of the biopharmaceutical industry, and how can coordinated development be achieved? This article explores these questions.

Since last year, governments in multiple regions, including Guangdong, Anhui, and Zhejiang, have frequently intensified their efforts in government guidance funds and venture capital, actively building competitive, phenomenal fund clusters. Now, it is Chongqing’s turn.

The underlying rationale is that leveraging fund-of-funds structures to drive industrial development can, on one hand, inject more abundant and diversified capital into the capital markets, thereby generating more investment opportunities amid institutional optimizations and fostering healthy industry growth. On the other hand, market-oriented mechanisms for investment promotion enable the selection of truly high-quality enterprises, allowing local governments to share in the dividends of corporate growth and alleviate fiscal pressures.

The Chongqing Industrial Investment Fund of Funds has also included biopharmaceuticals as a key investment sector, underscoring its significance to the development of Chongqing’s biopharmaceutical industry.

This large-scale fund of funds can leverage capital, guide investment, and aggregate resources to attract more investment institutions to establish a presence in Chongqing. It will facilitate the rapid implementation of major industrial projects, establish a long-term, market-oriented mechanism for industrial promotion, and further accelerate the clustering of regional biopharmaceutical enterprises. This plays a significant role in building a biopharmaceutical industrial ecosystem and innovation chain with international competitiveness.

In fact, this is not the first time Chongqing has prioritized biomedicine as a key investment area for its fund of funds. Chongqing’s efforts to leverage the guiding role of funds and the amplifying effect of capital to accelerate the high-quality development of the biopharmaceutical industry have long been evident.

In January 2022, Chongqing collaborated with ten state-owned enterprises in Sichuan to jointly establish the Chengdu-Chongqing Twin-City Economic Circle Development Fund. The fund focuses on supporting national industrial development priorities and those of the Twin-City Economic Circle, with an emphasis on cultivating industries such as integrated circuits, intelligent manufacturing, new-type displays, new materials, new energy, biopharmaceuticals, and general health.

As the operator of this fund of funds, Yufu Fund Company has initiated and established more than 30 funds since its inception, with a total fund size exceeding RMB 170 billion. Its investment portfolio spans multiple industries, including biopharmaceuticals and new materials.

As is well known, the biopharmaceutical industry is capital-intensive, characterized by high technology, high investment, high returns, and long development cycles. Sustained capital investment serves as a crucial foundation for ensuring continuous innovation in the biopharmaceutical sector.

In recent years, due to factors such as the recurring pandemic, downward economic pressure, and the cyclical nature of the pharmaceutical industry itself, social capital has tended toward conservatism and caution. For biopharmaceutical startups, time is not only money but also life.

In contrast, fund of funds can serve as an effective regulatory tool, becoming the “source of living water” that supports the sustained and steady advancement of the biopharmaceutical industry.

First, the capital scale of a fund of funds is significantly larger than that of a single fund. Meanwhile, a fund of funds possesses inherent diversification, enabling it to cover a sufficiently broad range of sub-sectors and thereby track and evaluate investment and growth opportunities in these sub-sectors more comprehensively and systematically over the long term. This allows it to achieve medium-to-high returns while mitigating risk.

Leveraging this advantage, fund-of-funds have also developed unique investment logics and preferences, enabling them to better “invest early, invest in small-scale ventures, invest in innovation, and invest for the long term” than single funds, thereby supporting early-stage, small-sized innovative enterprises with social value.

For biopharmaceutical companies, multi-year R&D cycles and substantial R&D expenditures are virtually unavoidable. Today, investment in the biopharmaceutical sector is increasingly favoring early-stage original innovation, emphasizing the high barriers to entry associated with technological innovation. The characteristics of fund-of-funds align well with the innovative and long-term needs of biopharmaceutical enterprises.

Secondly, for the entire biopharmaceutical industry, building a full-cycle fund product matrix that covers projects in the early-to-mid and mid-to-late stages, and forming a comprehensive fund portfolio that includes both fund-of-funds and subsidiary funds, holds significant value in supporting industrial development.

It can be observed that the Chongqing Industrial Investment Fund of Funds operates under a “sub-fund + direct investment” model. Strategic major industrial projects are generally funded through direct investments and special-purpose funds, while market-oriented projects are typically supported by establishing sub-funds. Market-oriented sub-funds are primarily categorized into three types: industry-specific funds, regional funds, and special-purpose funds.

Through these measures, Chongqing will further promote the cultivation of a large-scale, multi-tiered, and market-oriented fund cluster, helping to create an industrial landscape characterized by “a thousand trees blooming with pear blossoms.”

More importantly, while ensuring the preservation and appreciation of state-owned capital, this fund-of-funds does not solely emphasize high returns but instead pursues reasonable yields; it does not prioritize serving as a General Partner (GP), but rather highlights its capability to empower industries, thereby demonstrating Chongqing’s sincerity and boldness in driving industrial upgrading.

The core mission of a fund of funds is twofold: first, to integrate professional funds, innovative enterprises, and industrial chains to collectively empower industrial upgrading; second, to facilitate investment promotion by leveraging additional social capital to invest in local businesses and introduce new projects, thereby creating a strong synergy that jointly drives industrial development.

From this perspective, in addition to financial incentives, essential factors such as land, tax policies, R&D support, and market access are also critical for enterprises. This is precisely where industrial parks excel.

As the fundamental vehicle for industrial agglomeration, the industrial park can leverage complementary advantages with the fund of funds to vigorously promote the construction of upstream and downstream industry chains. This not only supports the development of existing local innovative enterprises but also generates incremental growth by attracting large external corporations to establish a presence, thereby fostering synergy across the industrial chain and achieving stability, strengthening, and supplementation of the supply chain.

Chongqing International Bio-City

Located in Banan, Chongqing, the Chongqing International Bio-City is one of the first batches of national strategic emerging industry cluster development projects. It is also Chongqing’s only key industrial park dedicated to biopharmaceuticals, boasting the highest concentration, most premium projects, and fastest growth in the city’s biopharmaceutical sector.

Chongqing International Bio-City has actively pursued capital cooperation, successfully facilitating the implementation of several projects. Previously, Banan District established two funds targeting its five major industries. The first, the Southern Fund, is an investment promotion fund with a scale of RMB 1 billion. It has already invested in and facilitated the industrialization of projects such as bio-artificial liver systems, surgical robots, organoid-based precision medicine, and antibody-drug conjugate (ADC) therapeutics. The second fund, the Nancheng Shenyin Wanguo Fund, operates as a fund-of-funds with a scale of RMB 500 million.

Located in Chongqing International Bio-CityZhixiang Jintai Biologics

Meanwhile, to encourage R&D innovation, Chongqing International Bio-City’s early explorations also established industrial fund platforms with a total scale of approximately RMB 800 million, such as Zhi’en and Xingrong, to provide targeted support for new drug development and the commercialization of research achievements.

The Zhien Liujiang International High-End Drug Technology Transfer Platform is currently a key platform in Chongqing Municipality providing end-to-end services for the consistency evaluation of generic drugs. By offering pharmaceutical research and clinical trial bioanalytical testing services, the platform helps pharmaceutical companies pass the consistency evaluation for generic drugs. In its first phase, the platform will incubate 50 projects and complete clinical trial applications for 30–40 projects. To date, the platform has established collaborations with over one hundred pharmaceutical companies.

Located in Chongqing International BiocityWizdom Biopharmaceutical Industrial Park

“Medicine serves to save the world, and excellence is paramount in medical practice.” As a critical industry where lives are at stake, healthcare has always been characterized by high barriers to entry, long development cycles, and an indispensable need for innovation, thus requiring precise and specialized investment support. By establishing a dedicated biomedical sub-fund under Chongqing’s RMB 200 billion fund of funds, we can achieve more targeted investment in innovative pharmaceuticals and provide comprehensive industrial support, thereby propelling the rapid growth of Chongqing’s biomedical industry.

The Era of Hundred-Billion-Yuan Fund-of-Funds Has Arrived: Investment Forces Represented by Fund-of-Funds Are Penetrating Every Link of Industrial Development. Next, the Chongqing Industrial Investment Fund-of-Funds will extensively recruit industrial development partners, strengthen social fundraising and external cooperation, optimize investment structures and strategies, build a full-lifecycle fund cluster, accelerate the construction of industrial clusters, and strive to transform capital, this key variable, into the greatest incremental driver for enhancing Chongqing’s innovation and industrial capabilities and comprehensively building a modern new Chongqing.