Yida Capital Closes RMB 1.557 Billion Health Industry Fund II in Just 60 Days to Accelerate Investment in Innovative Pharmaceuticals

Recently, another large-scale health industry investment fund, with a size exceeding 1.5 billion yuan, announced the completion of its fundraising in just two months, bringing renewed attention to the continuously heating healthcare sector.

At the beginning of the Lunar New Year, ADDOR announced that its Health Outcomes Fund II had completed fundraising totaling RMB 1.557 billion. Notably, the fund closed just two months after launching. The limited partners (LPs) participating in the fund include government guidance funds, state-owned capital, and high-net-worth individuals, with a significant presence of strategic industrial investors as well. Furthermore, co-investments by core team members, including Shi Yunzhong and Xue Yi, have further bolstered investor confidence.

Amid the persistently sluggish fundraising environment since the onset of the pandemic, this stands out as a bright spot.

In a rapidly changing environment, only continuous innovation can provide an effective response. ADDOR’s approach to fund management—encompassing its philosophy, methodology, framework, and momentum—offers valuable insights for the entire venture capital industry.

Nationwide, the “capital winter” is no exaggeration: by the end of November 2020, private equity funds had raised a total of RMB 698.821 billion, representing a 21.98% decline compared with 2019. ADDOR’s Healthcare Achievement Fund II completed fundraising of over RMB 1.5 billion in less than two months—a rarity among domestic RMB-denominated funds.

Shi Yunzhong, Founding Partner of ADDOR

What Makes ADDOR Capital Attractive? Shi Yunzhong, Founding Partner of ADDOR Capital, Offers His Insights on the “Capital Winter”

“The so-called “capital winter” is not due to a shortage of money in the market, but because investors have become smarter.“Over the past two years, the private equity industry has undergone accelerated consolidation, with resources increasingly concentrating among top-tier firms. A large number of small and mid-sized institutions have found it nearly impossible to raise capital in the market due to their funds’ historical returns falling short of expectations. This is the result of ‘investors voting with their feet,’” said Shi Yunzhong.

Commenting on the rapid completion of the fundraising for Health Outcomes Fund II, Shi Yunzhong stated, “The structure of fund investors is undergoing significant changes. When Health Outcomes Fund I was established, it was also during the startup phase of ADDOR. At that time, the investors who chose to invest in our fund were primarily financial investors, relying on the personal credibility of the management team. In contrast, industrial investors account for a high proportion of the investors in Health Outcomes Fund II, relying on”Past Performance and Brand Credibility.”

“Many investors in Fund No. 2 are long-standing investors in Addor Health’s Outcome Series Funds, demonstrating their long-term and unconditional trust in us,” revealed Shi Yunzhong. The outstanding investment and operational performance of Health Outcome Fund No. 1 has generated a unique brand strength.

Five years ago, on the eve of “Healthy China” being elevated to a national strategy in May 2015, the Jiangsu Addor Achievement Innovation and Entrepreneurship Investment Fund (Fund No. 1), with a scale of RMB 1 billion, was officially established. The fund primarily targets major health sectors such as digital diagnostics and therapeutics within the National Database for Achievements in Scientific and Technological Transformation, aiming to promote the commercialization of significant scientific and technological achievements in these fields and facilitate industrial transformation and upgrading.

As of January 2020, Health Outcome No. 1 Fund had cumulatively invested in 28 technology-based small and medium-sized enterprises (SMEs), with ADDOR leading the investment in 95% of these projects, thereby mobilizing other institutions and social capital to co-invest over RMB 2 billion.

In terms of specific investment directions, Health Outcome No. 1 Fund, based on its fund attributes and team characteristics, has adopted an investment strategy of “knowing what to do and what not to do.” From the outset, it concentrated its firepower and resources on two key areas: innovative drugs and high-end active pharmaceutical ingredients (APIs), as well as in vitro diagnostics (IVD), employing a saturation attack approach. Subsequently, it further expanded into two new fields: high-end medical services and high-end medical devices that meet clinical needs and offer opportunities for import substitution.

“Today, the fund has already seen two portfolio companies, Contec Medical and Sansure Biotech, go public through IPOs; three others, including Zhongyou Medical and Hetian Medical Management, have been acquired at high premiums; and more than ten additional projects are preparing to file for IPOs,” said Shi Yunzhong.“Moreover, among these 28 technology-based small and medium-sized enterprises (SMEs), 44 scientific and technological achievements have been recommended for inclusion in the National Project Pool for the Transformation of Scientific and Technological Achievements. This demonstrates that our investments are continuously driving the iteration and upgrading of these companies’ R&D capabilities and their ability to commercialize scientific outcomes.”

In 2020, the COVID-19 pandemic struck unexpectedly. For all enterprises, it served as a stress test. To meet this formidable challenge, companies required not only robust technology, products, and services, but also entrepreneurs who demonstrated the compassion, responsibility, and commitment to healing the sick and aiding society.

The portfolio companies of Health Outcome Fund No. 1 have delivered satisfactory results, with their active presence spanning nearly every stage from COVID-19 testing and prevention to diagnosis, treatment, and rehabilitation.

Sansure Biotech has become the world’s largest supplier of diagnostic reagents, leveraging high-quality products and reliable supply capabilities; Rendu Bio’s fully integrated, end-to-end diagnostic equipment was the first to boost testing throughput to 700 samples within 24 hours; Genew Technologies provides core raw materials to major global COVID-19 vaccine manufacturers; Zhongyou Medical stands out in the field of hospital-acquired infection control and disinfection; visual laryngoscopes from Uwell Medical, remote diagnosis and treatment platforms from Huasheng Medical, and ventilators from BMC Medical have played significant roles in clinical treatment; Professor Li Lanjuan, founder of Shulan Medical, was the first to recommend the lockdown of Wuhan and led a team to Wuhan People’s Hospital to develop treatment protocols for critically ill patients.

Sansure Biotech COVID-19 Test Kit

Academician Li Lanjuan Leads Shulan Medical Team in Emergency Aid to Wuhan

Ying Wenlu, Chairman of ADDOR, stated: “Through a retrospective review, we have observed that the portfolio of Health Outcome Fund No. 1 has achieved an effective integration of social and economic benefits over five years of investment, management, and empowerment.”

What Health Outcomes Fund No. 1 has accumulated is not merely past achievements and the trust of its investors, but also an increasingly professional team, extensive practical experience, and a refined methodology derived therefrom.

It is well known that healthcare is a highly specialized investment sector. To enter this field, the team of ADDOR’s Achievement Fund has positioned itself around “professionalism” from the outset.

Head of Investment Team – Senior Partner Xue Yi, with a professional background in medicine, has over ten years of experience in fund management and investment in the healthcare and intelligent manufacturing sectors.

Beyond Xue Yi, 100% of the team members possess academic and professional backgrounds in the big health industry, with over 70% having more than five years of industry experience. The team has worked together for at least four years, and the fusion effect of “talent as the foundation, mechanisms as the tool, and culture as the soul” is beginning to take shape.

“Driving investment through industry research and sourcing projects from within the industry” has become the core methodology of ADDOR’s Healthcare Team. Seven years and 10,000 hours are the fundamental elements that define professionalism. ThroughStudying and understanding industries, expanding deal sourcing along the industrial chain, evaluating projects from the perspectives of industry trends and dimensions, and building friendships with entrepreneurs and scientists—the compound effects of these actions are aggregating more resources for ADDOR’s healthcare investments.

Two cases suffice to illustrate this.

Established in 1998, Zhaowei Technology has been dedicated to the field of nucleoside and nucleotide products for over two decades. Through thorough industry research, ADDOR Capital fully validated the future prospects of the gene therapy sector. Recognizing that the company’s technological foresight and team philosophy aligned perfectly with its own investment thesis, ADDOR conducted intensive tracking for three years before finally securing an investment opportunity and striking at the core of the value proposition.

Aide Pharmaceutical's Listing Ceremony

The Addor Capital project with Aidi Pharmaceutical is another exemplary case of combining industry research with deep regional services, and it also stands as a model for accompanying enterprises through long-cycle development. In 2011, the Addor Capital team began initial contacts with Aidi Pharmaceutical, expressing strong optimism about the company’s R&D and applications in the field of human-source proteins. In 2015, Addor Capital led the investment round in Aidi Pharmaceutical and facilitated connections with multiple industrial resources for the enterprise. In 2020, Aidi Pharmaceutical successfully completed its IPO. The entire process spanned nine years.

Perseverance always pays off. On July 20, 2020, Aidea Pharmaceutical successfully listed on the STAR Market, with an issue price of RMB 13.99. Half a month later, its closing price reached RMB 42.49, representing a surge of 203.72%. Meanwhile, Zhaowei Technology has become a key supplier of critical raw materials for global novel coronavirus diagnostic kits and vaccines during the pandemic. With its proprietary cutting-edge technologies, the company boasts immense long-term growth potential.

“The broader healthcare industry has long been a hotbed for investment. Demographic aging, shifts in disease patterns, registration-based IPO reforms, and the fight against the pandemic are driving this sector to fever pitch. How can investment firms prevail amid fierce competition?” Shi Yunzhong stated, “We have only one path to follow: specialization. Specialization fosters both sound judgment and the capacity to add value. By excelling in our own domain and achieving true excellence, we gain the confidence to withstand competitive pressures.”

Certainly, with the experience gained from Fund No. 1, ADDOR will be more adept in managing Fund No. 2.

“We will continue to apply the successful strategies previously employed by Fund No. 2, including our approach to industry and company assessment,” introduced Xue Yi.

Fund No. 2 tilts its investment strategy toward earlier-stage, newer, and more technology-driven enterprises.

“On one hand, the outbreak and global pandemic of COVID-19 have indirectly revealed that humanity still has many shortcomings in responding to epidemics, with numerous challenges and pain points requiring urgent attention. On the other hand, the technological decoupling between China and the United States and the restructuring of industrial chains will significantly impact the global landscape, making independent innovation and import substitution in key technological fields an immediate priority. With no limits to technology or innovation, our strategy for Fund No. 2 will continue to increase investment in technology, focusing on projects related to import substitution and critical industrial chains, while also shifting our investment stages further upstream,” said Xue Yi.

Xue Yi, Senior Partner at ADDOR

In terms of specific sectoral deployment, the No. 2 Foundation has increased its investment in innovative drugs.

“The proportion of Fund No. 1’s investments allocated to pure-play innovative drug companies is relatively low, a trend attributable to the era-specific challenges faced by such firms, including lengthy R&D cycles, substantial capital requirements, and difficult exit pathways,” introduced Xue Yi. He noted that with the continuous advancement of capital market reforms, including the establishment of the STAR Market, doors have been opened for pre-profit innovative drug companies. This has provided strong incentives for entrepreneurs in the innovative drug sector and offered investment institutions efficient exit channels.

“In the past two years, we have also observed an increasing number of overseas innovative drug professionals returning to China, bringing robust technical support to the innovative pharmaceutical industry. We believe that, driven by policy, talent, and capital, domestically produced innovative drugs are poised to enter a golden period of development in the coming years.”

To capitalize on this golden period of development, it is essential to increase investment—investment in capital, in technology, and most importantly, in people. ShiYun Zhong revealed that Fund No. 2 has attracted enthusiastic co-investment from ADDOR’s internal employees, reflecting their strong confidence in ADDOR’s existing layout and future investment prospects in the healthcare industry. Meanwhile, this co-investment will greatly motivate employee enthusiasm and drive the entire ADDOR team to achieve a deeper cognitive upgrade regarding the healthcare industry, thereby securing the present and locking in the future.

“After years of development, we have found that ADDOR has grown into a budding tree with an increasingly flourishing ecosystem, capable of providing support to every unit within it,” said Shi Yunzhong. During the process of project investment and post-investment management, ADDOR has provided enterprises with abundant resources. Some of these resources come from the upstream and downstream industries of ADDOR’s investments, others from strategic partners, and even the fund investors behind ADDOR have been mobilized to deliver value-added services for the projects.

Through normalized post-investment empowerment, the CEO Club, and GIFT Summit events, ADDOR has evolved from a mere capital provider into a resource-connecting platform, fostering a thriving GP-LP-CEO industrial ecosystem.

Of course, entering this ecosystem is no easy feat. ADDOR values technological sophistication and growth potential, but places even greater emphasis on the entrepreneurs themselves.

“For entrepreneurs, beyond professionalism and competence, having vision and a broader perspective is even more critical. During our due diligence on a company, the founder sincerely shared with us that his aspiration was to donate a modern hospital in his hometown. This spiritual alignment deeply resonated with us, leading to a swift agreement on cooperation,” revealed Shi Yunzhong.

Certainly, beyond tactics, principles, and methodologies, enterprises seeking to scale up and strengthen their market position must also recognize “momentum” and possess a vision that transcends the times.

At a shareholders’ meeting, Warren Buffett shared a key lesson in success: “One point is critically important—a major factor in our success has been riding the wave of America’s development.”

So, is the path chosen by ADDOR Capital the right one?

The answer is self-evident.

According to the “2020 Outlook on Global Digital Health Industry Development Trends” released by VBInsight (Artery Orange Industry Think Tank) on January 31, global healthcare financing reached a record high that year, with a year-on-year increase of 41%. The short-term trigger for this surge was the catalytic effect of the pandemic. The COVID-19 outbreak worldwide prompted people to reevaluate their relationship with health, driving public attention to healthcare to a historic peak.

However, when viewed over a longer time horizon, it becomes evident that the explosive growth of the health industry is by no means accidental; rather, it is a historical inevitability, or more precisely, a consequence of national destiny.

On October 25, 2016, the Outline of the “Healthy China 2030” Plan was issued and implemented, elevating “Healthy China” to a national strategy.

This is inevitably an opportunity for the industry, as well as for capital.

Ying Wenlu, Chairman of ADDOR

“China’s rise is the choice of our times; one must not hesitate to invest in the nation’s destiny. Industry can serve the country, and investment can revitalize it.” In the view of Ying Wenlu, Chairman of ADDOR Capital, China’s rise is an inevitable trend, Healthy China marks the beginning of happiness, and the health industry has no ceiling.

As of January 2021, ADDOR’s management team oversaw a total capital under management of RMB 113.7 billion, having cumulatively invested in and supported 957 startups—including over one hundred outstanding enterprises across various sub-sectors of the health industry. It has facilitated the listing of 205 companies on domestic and international capital markets, establishing the industry-renowned “ADDOR Quality” and “ADDOR Speed.”

On January 22, at ADDOR’s 2020 Annual Work Conference, Ying Wenlu stated, “The greatest success is not an individual achievement, but rather mutual empowerment and shared growth.” Ying’s words not only reflect ADDOR’s enduring commitment to identifying suitable enterprises and entrepreneurs for mutual success, but also underscore its firm resolve to align with national destiny, serve the country through industrial development, resonate with the times, and grow alongside China.