Hengdao Pathology Completes Series B Financing of Over RMB 100 Million, Marking the Largest Single Investment in the Specialized Field

VCBeat has learned that Hengdao Medical Pathology Diagnostic Center (“Hengdao Pathology”), China’s first third-party independent pathology diagnostic institution, completed a B-round financing of over RMB 100 million in the first quarter of 2021. The round was led by Haier Medical Fund, with participation from prominent life sciences funds such as Feitu Venture Capital. China Renaissance served as the exclusive financial advisor for this financing round.

It is worth noting that, to date, this financing round represents the largest ever secured by a professional institution holding a third-party pathology license.The completion of Hengdao Pathology’s current round of financing is also regarded by the industry as a positive signal that further unleashes the potential of the pathology specialty sector, facilitating the emergence of technology-driven leading enterprises and accelerating specialized development.

Since its inception, Hengdao Pathology has remained centered on pathology, focusing intently and comprehensively deepening its expertise to become the only integrated professional pathology service provider in China.Zuo Yanfei, General Manager of the Digital Products Department at Hengdao Medical Pathology Diagnostic Center and President of the Medical Big Data and Artificial Intelligence R&D Center, gave an exclusive interview to VCBeat. He provided analysis and insights on the key issues surrounding Hengdao Pathology’s recent financing round, as well as its subsequent business layout and development priorities.

VCBeat:Huidao Pathology has completed several rounds of financing in the past. What is its development trajectory? How should we understand the significance of this round of financing for its development?

Zuo Yanfei:Hengdao Pathology officially commenced operations in 2018 and completed its Series A+ financing round by the end of that year. Anchored in pathological diagnosis, the company conducts its business along two main thrusts: the provision of high-quality pathological diagnostic technologies and services, and the development of digital infrastructure and artificial intelligence (AI) capabilities for the pathology industry. The proceeds from the Series A+ financing were primarily invested in R&D for AI applications in pathology, thereby building a technological reserve to secure a competitive edge in the era of AI-driven pathology.

The Series A++ funding was primarily allocated to the development of application technologies for the service market, focusing on digital pathology and AI-assisted capability building, academic development of its medical new media platforms, and the underlying infrastructure supporting all these applications—China’s First 5G-Based Pathology Diagnosis Service NetworkHengdao Pathology ensures robust R&D capabilities and service capacity for industrial-grade healthcare clients through substantial technological investment, thereby achieving its own growth while driving industry advancement.

At this point, Hengdao Pathology has established a cohesive organizational structure characterized by “One Core and Four Wings,” namely clinical diagnostic services, standardized industrial services, digital and AI support, and medical education and media support. With the simultaneous and rapid advancement of these four sectors,Hengdao Pathology has become the only comprehensive entity in China currently capable of providing full-spectrum pathology services and supporting infrastructure.

Unlike the business model of typical third-party medical laboratories, which prioritize biochemical testing and offer pathology services as an adjunct, Hengdao Pathology centers its core business and technological platform on pathology. By building a comprehensive, pathology-centric service framework, it meets the specialized needs of clinical practice, contract research organizations (CROs), and scientific research. Furthermore, by integrating artificial intelligence and medical media capabilities, Hengdao Pathology continuously strengthens its unique service offerings and competitive barriers, elevating “specialized development” to a new level.

This round of financing will be primarily used to enhance technological and R&D capabilities, continuously expand the medical technical and operational teams, and recruit more specialized technical talent globally. These efforts aim to strengthen technical reserves, service iteration, and R&D translation in the specialized fields of digital pathology, artificial intelligence, and tumor immunodiagnostics, thereby further expanding the coverage and accessibility of the service network.

VCBeat:In Hengdao Pathology’s business segments, what does “Standardized Industrial Services” refer to?

Zuo Yanfei:As a comprehensive pathology services provider, Hengdao Pathology not only delves deeply into the core of pathological diagnostic services but also expands its peripheral reach. Healthcare in this era is fully advancing toward precision medicine, which manifests as patient-specific, personalized treatment plans in clinical diagnosis and therapy, and as root-cause analysis and precise targeting at the molecular and even single-cell protein levels in drug development.

For example, the Intelligent Pathology Joint Laboratory, established by Shanghai Jiao Tong University’s School of Individualized Medicine in collaboration with Hengdao Pathology, conducts various standardized and customized immune microenvironment assays based on mass cytometry (CyTOF) and imaging mass cytometry (IMC). By providing richer data on cell subtypes and topological information, the laboratory helps researchers expand the dimensions and enhance the precision of their studies, thereby enabling a deeper understanding of disease mechanisms.This is a typical application of standardized industrial services.

The research and development of innovative biologics is flourishing in China. The core teams of such companies are predominantly composed of professionals with backgrounds in biomedicine, possessing a thorough understanding of pharmacology; however, pathology remains a relative weakness. Hengdao Pathology’s specialized diagnostic capabilities, combined with artificial intelligence analysis technology, can significantly enhance the pathological assessment phase of drug development, thereby improving R&D efficiency. Consequently, in recent years, an increasing number of innovative biopharmaceutical companies have extended olive branches to Hengdao Pathology for in-depth collaboration.

VCBeat:Since its inception, Hengdao Pathology has established a medical new media platform. Currently, it has further introduced “medical education media support” as part of its business segments. What was the rationale behind this decision?

Zuo Yanfei:In recent years, the rapid growth of self-media has made it common for enterprises to establish their own Weibo accounts and WeChat Official Accounts. Hengdao Pathology’s engagement in new media is driven by the desire to promote the balanced distribution and sharing of high-quality pathological academic resources. This aligns with the same original intention and logic behind Hengdao Pathology’s provision of offline and remote pathological diagnostic services, which aims to optimize the allocation of high-quality pathological diagnostic resources, rather than being motivated by corporate publicity considerations. Naturally, this process has also objectively helped the company build its brand and reputation.

In alignment with overall development, the functions of Hengdao Medicine’s new media platform are continuously evolving. In addition to maintaining its role as a professional platform by providing high-quality academic education in pathology, Hengdao Medicine is increasingly leveraging its media attributes as user base and influence expand. As a communication platform, it provides technical and branding services to partners in the pharmaceutical and healthcare industry. This approach aligns with the broader development needs of the pharmaceutical and healthcare sector in the era of precision medicine. Consequently, this business has gained significant industry recognition shortly after its launch.Hengdao Medical New Media’s partners include Fortune 500 multinational pharmaceutical companies, innovative biopharmaceutical firms, and publicly listed pharmaceutical enterprises.

VCBeat:Hengdao Pathology’s latest corporate promotional video introduces the concept of “technology empowerment.” As a relatively traditional industry, how does pathological diagnosis integrate with cutting-edge technologies?

Zuo Yanfei:It must be acknowledged that while third-party pathology diagnosis can, to some extent, promote the intensive utilization of scarce, high-quality pathology resources, it cannot fundamentally resolve the industry’s persistent challenges of personnel shortages and uneven diagnostic quality. Therefore, Hengdao Pathology strategically invested in artificial intelligence-assisted technologies from its inception, aiming to advance the homogeneity, consistency, and reliability of pathological diagnostic standards, with the future goal of extending these validated underlying methodologies to broader medical fields.

On the other hand, with the continuous updating and iteration of underlying technologies such as the Internet and mobile communications, the digital transformation of traditional pathology departments has become an inevitable trend. Starting with remote slide reading and diagnosis, the digitization of pathology diagnosis and reporting systems is the first step. Furthermore, information systems for pathology department management and quality control, pathology slide management and educational teaching systems, and AI-assisted pathology diagnosis systems all require iterative upgrades.

With the completion of business layout and the refinement of product systems,Hengdao Pathology’s capacity to empower the industry is also becoming increasingly mature, as demonstrated by its 5G comprehensive digital smart pathology solution. Centered on the “Full-Process Smart Pathology Innovation Platform,” this solution integrates all of Hengdao Pathology’s independently developed digital hardware and software products. It targets both primary care institutions and large hospitals, addressing multi-level, multi-dimensional needs in pathological diagnosis.

Overall, Hengdao Pathology drives the balanced distribution and intensive utilization of high-quality pathological resources through continuous technological R&D. While enhancing resource utilization efficiency across the entire pathology industry, it also strives to pioneer a sustainable development path for third-party service providers in the sector.