EFC Capital Focuses on Four Key Areas Including Brain Science and Synthetic Biology, Advocates Rational Response to Market Volatility

In 2022, CEC Capital completed dozens of landmark transactions in China’s primary healthcare market. These included highly influential financing rounds for companies such as WuXi Biologics (WuXi Bioray), HuiSheng Bio, ImmuneOnco Biologics, YueEr Genomics, Huake Precision, Dekang Medical, and Aoyi Technology. At year-end, CEC Capital also facilitated a strategic partnership between bioMérieux, the global leader in in vitro diagnostics, and EconoMed.

Since the establishment of its healthcare investment banking team, CEC Capital has been dedicated to serving leading global healthcare companies, partnering with them and leveraging unique market insights and extensive transaction experience to help them grow into industry leaders.

FA firms extensively connect key stakeholders, including innovative enterprises, investment institutions, and industrial companies, enabling them to accumulate unique industry insights. While 2022 was widely characterized by market downturns, Li Gang, Partner and Co-Head of the Healthcare Sector at CEC CAPITAL, identified encouraging bright spots and offered profound reflections on emerging market trends for 2023.

Li Gang, Partner and Co-Head of Healthcare at CEC Capital

“2022 was an exceptionally unusual year, with too many ‘distractions’ severely impacting investor confidence.” When reviewing the overall state of the primary market, Li Gang noted that both the number of transactions and the total transaction value declined by nearly 50% compared to 2021. A broader look at the biotechnology-related sectors in the secondary markets of A-shares and Hong Kong stocks also revealed a more depressed landscape relative to 2021.

In Li Gang’s view, the above data are indisputable facts. Yet “crisis” and “opportunity” are forever twin flowers. In the post-pandemic era, we continue to see substantial unmet medical needs, as well as a growing number of biotechnology, artificial intelligence and robotics, and synthetic biology technologies transitioning from R&D to practical application. “Even in the depths of this winter, we have witnessed an increasing number of Chinese biopharmaceutical companies licensing their proprietary pipelines to global giants at record-breaking valuations. All of this fosters hope for the entire industry. In recent years, the technological accumulation of Chinese biotech firms has significantly accelerated their internationalization, positioning them as important participants in the global market.”

It is reported that in December 2022, Kelun Pharmaceutical announced that its holding subsidiary, Kelun-Biotech, had licensed seven ADC products to Merck & Co., with total milestone payments reaching up to $9.3 billion.

Medical services were the most significantly impacted subsector in 2022 due to market conditions. At the operational level, pandemic control measures led to a decline in offline medical service volume, posing severe operational challenges for private medical institutions, particularly those still in the early stages of market development. In terms of capital markets, Li Gang summarized that the secondary market experienced an overall drawdown and sharp volatility due to multiple factors. This pressure transmitted to the primary market, resulting in a cooling of financing for companies in certain industries, with both the number and value of primary market transactions reaching their lowest levels in nearly five years.

However, with the implementation of the “Ten New Measures,” healthcare institutions are expected to return to normal operations after enduring concentrated pressure from treating COVID-19 infections. Meanwhile, the three-year pandemic has heightened public awareness and proactive attention toward diseases and health conditions, leading to a recovery in rigid demand and a potential further release of consumer demand. In 2022, the state also introduced multiple policies to continuously expand the space for privately run healthcare, encouraging such providers to focus on rehabilitation, mental health, and integrated medical and elderly care services.

“In 2022, rather than saying we were observing a market downturn, it is more accurate to say that we were witnessing the dawn of a new era’s rise,” Li Gang remarked.

"In fact, the alternation between troughs and peaks has always been the norm."

Li Gang stated that, regardless of the broader market environment, CEC CAPITAL remains committed to identifying and partnering with industry leaders that boast vast application potential for their products or services, technological innovation, and outstanding, capable founding teams. Meanwhile, recognizing that resource integration and restructuring often yield synergistic effects where “1+1>2,” CEC CAPITAL has maintained its strategic perspective on mergers, acquisitions, and restructuring within the healthcare industry, achieving remarkable progress in practice.

Reflected in the data, CEC Capital completed dozens of major transactions in China’s primary healthcare market over the past year and ranked first on Qimingpian’s “2022 China Annual Financial Advisor Ranking in the Healthcare Sector.”

In June 2022, HuiSheng Bio, a subsidiary of Sihuan Pharmaceutical, completed a RMB 500 million financing round, with CEC CAPITAL serving as the exclusive financial advisor to HuiSheng Bio in the transaction.

Currently, Huisun Bio has developed a rich and comprehensive product pipeline of nearly 40 candidates at various stages, achieving full coverage of targets in the diabetes field. The product portfolio encompasses a complete range of second-, third-, and fourth-generation insulins and analogs (covering basal, premixed, and rapid-acting products), as well as innovative drugs with novel mechanisms such as SGLT-2, GLP-1, and DPP-4 inhibitors, along with other glucose-lowering agents and medications for complications. The funds raised from this financing round will be used to advance clinical development of products under investigation, purchase production equipment, and supplement working capital.

In December 2022, bioMérieux (hereinafter referred to as “bioMérieux”) made a strategic investment in Aikenuo and initiated in-depth business cooperation, with CEC Capital serving as the exclusive buy-side financial advisor to bioMérieux China.

Iconex’s first-generation molecular diagnostics platform, DXcellence12, integrates nucleic acid extraction, amplification, and detection into a single system. As a fully automated, general-purpose molecular diagnostics instrument, DXcellence12 enables direct loading of primary sample tubes, with all operational steps—including sample dispensing—automated by the device. The product obtained Class III registration certification from China’s National Medical Products Administration (NMPA) and CE marking in the European Union in 2022. Through this strategic partnership, bioMérieux will leverage Iconex’s innovative DXcellence12 molecular diagnostics platform and its associated future reagent kits to expand and develop its molecular diagnostics business in China, while Iconex will benefit from bioMérieux’s established commercial channels in China to promote its products.

Also in December, Huake Jingzhun announced the completion of its Series D financing round and an M&A transaction, with CEC CAPITAL serving as its exclusive financial advisor.

Through this round of financing, Huake Jingzhun has simultaneously completed the acquisition of Beijing Huake Hengsheng Medical Technology Co., Ltd., expanding its product portfolio into the field of intracranial electrodes and further enriching its lineup of precision neurosurgical surgical products. Meanwhile, the company will accelerate the expansion of indications for its domestically pioneering magnetic resonance-guided laser interstitial thermal therapy (LITT) system for intracranial applications, offering innovative procedural options that provide safer, more precise, and minimally invasive treatments for patients with epilepsy and intracranial tumors.

Li Gang believes that this series of transactions not only demonstrates the CEC CAPITAL team’s sophisticated capabilities in financial advisory services, but also highlights the healthcare team’s robust expertise in high-value investment banking activities, such as asset spin-offs of listed companies, cross-border investments and M&A, and asset restructuring.

CEC Capital’s healthcare investment banking team provides comprehensive coverage across five key segments: pharmaceuticals and biotechnology, healthcare and wellness services, medical technology and devices, digital and AI health, and healthcare M&A. The team remains committed to identifying leading companies in each segment and leveraging its insights and capabilities to support their growth.

Regarding the 2023 health industry trends, Li Gang discussed four major directions.

First, we remain optimistic about the biopharmaceutical sector, particularly regarding the research and application of nucleic acid-based drugs, antibody-drug conjugates (ADCs), and cell and gene therapies (CGT). These niche areas have made significant progress in recent years and represent the technological direction for next-generation new drug development.

Next is brain science, where both basic research and commercial applications are rapidly advancing. According to the World Health Organization, brain-related disorders—including various neurological and psychiatric conditions—impose the greatest societal burden among all diseases, surpassing cardiovascular diseases and cancer. In recent years, governments, industries, and investors worldwide have increasingly focused on and invested in brain science, suggesting that new breakthroughs and emerging players in this field will continue to proliferate in the future.

Third is synthetic biology. As a foundational platform, synthetic biology can be applied across numerous industries, including biopharmaceuticals, food and agriculture, industrial manufacturing, and consumer goods. Therefore, the impact of synthetic biology will extend beyond mere technological innovation to constitute a full-scale technological revolution.

Fourth, the opportunities brought by population aging. As population aging intensifies, attention to this issue from the state, society, and individuals will continue to grow. Historically, it is rare to witness a population of such magnitude gradually transitioning into an aged society. The “silver economy” is not only a fundamental necessity but also holds immense market potential, fostering new opportunities across consumption, healthcare, technology, finance, and other sectors.

Post-pandemic, market trends have shown both continuity and inflection points; in the face of the new landscape in 2023, innovative enterprises must also adopt responsive strategies.

“Under the new landscape where virtually everything is subject to centralized procurement, cost reduction safeguards a company’s baseline, while innovation determines its ceiling,” said Li Gang. He emphasized that speed is also a critical factor; companies that can rapidly reach the next milestone and become the fastest in the industry—even if only within a specific niche—will be rewarded by the market. Amid the globalizing trend of the health industry, companies should, conditions permitting, build capabilities for international expansion, pursuing domestic and overseas businesses in tandem. “In summary, Chinese enterprises may face a more complex external environment in 2023, while simultaneously encountering unprecedented historical opportunities. We have our own unique development path, and there will surely be cases, companies, and even individuals that make history this year. The dawn of a new era is right before our eyes.”