Prospects and Opportunities in the Healthcare Sector

From November 18 to 20, 2020, the 12th Qiming Venture Partners CEO Cloud Summit Week, themed “Resilience Leads to Long-Term Success,” arrived as scheduled.

The sudden onset of the COVID-19 pandemic has redefined the global landscape, the world economy, and the zeitgeist of innovation. Its impact has permeated every aspect of the economy, society, and human life. This year, Qiming Venture Partners has moved its CEO Summit, held annually for the past eleven years, from an offline to an online format. The event has also been expanded from a half-day session to three half-day sessions, with the addition of specialized CEO workshops focusing on topics of keen interest to CEOs, such as equity incentives, red-chip structures, and domestic and overseas listings. In the TMT Forum and the Healthcare Forum, Qiming Venture Partners has invited CEOs from its portfolio companies and industry leaders to discuss widely anticipated subjects, including enterprise services, semiconductors, new brands, COVID-19 vaccines, innovative drugs, gene technology, and technology-driven pandemic response.

Qiming Venture Partners aims to provide CEOs with a platform for in-depth exchange and discussion, jointly witnessing the pioneering power of technology and innovation, exploring the opportunities and challenges facing the TMT and healthcare sectors amid significant disruption, and outlooking future directions and trends.

On November 20, during the healthcare forum on the third day of Qiming Venture Partners’ 12th Annual CEO Cloud Summit Week, Liang Yingyu, Managing Partner at Qiming Venture Partners, delivered a keynote speech titled “Outlook on Development Opportunities in the Healthcare Sector.” On November 19, at the same healthcare forum, Ms. Liang also presented her keynote address under the same title. She noted that Qiming Venture Partners has invested in more than 120 companies in the healthcare sector to date. She emphasized that, as a venture capital firm, Qiming made an early decision to focus on investing in the early stages of company development, helping entrepreneurs and founding teams with the genuine capacity and strength to change the world realize their dreams. Looking ahead, significant opportunities remain in areas such as new drug development, medical devices, diagnostics, healthcare services, and digital health.

Below is the verbatim transcript.

Dear CEOs, US dollar and RMB LPs, and friends watching online, hello.

Thank you all for your enthusiastic attention to Qiming Venture Partners’ CEO Cloud Summit Week over the past three days. The sudden outbreak of the COVID-19 pandemic has brought about significant changes to our ways of life and work. While our meetings have traditionally been closed-door, in-person events, this marks the first time in 12 years that we are hosting a CEO summit online. It is also my first time sharing with CEOs, limited partners (LPs), and friends who care about and follow Qiming Venture Partners our outlook on future development opportunities in the healthcare sector.

The outbreak of the COVID-19 pandemic, coupled with the development cycle of the medical and health industry, has made the healthcare sector and its enterprises a global focal point.

According to the “Q3 2020 Global Healthcare Investment and Financing Report” released by market analysis firm CB Insights, global investment and financing in the healthcare sector reached a record high this quarter, with total funding exceeding $21.8 billion across 1,539 deals, representing an 18% quarter-on-quarter increase.

We have repeatedly ranked as the world’s most active investor in the healthcare sector in this report. Since the beginning of this year, we have been the only Chinese venture capital firm to rank alongside leading U.S. firms such as OrbiMed, NEA, and CASDIN for three consecutive quarters.

Meanwhile, we have continued to demonstrate strong momentum in exits. Since the beginning of this year, a total of nine healthcare companies in our portfolio, including Schrödinger, Sanyou Medical, Gan & Lee Pharmaceuticals, Sinocelltech, CanSino Biologics, and Zai Lab, have listed on the NASDAQ, the Hong Kong Stock Exchange, the Main Board of China’s A-share market, and the STAR Market. (Note: On November 20, Antengene, a company invested by Qiming Venture Partners, listed on the Hong Kong Stock Exchange.)

For Qiming Venture Partners, we did not enter this investment arena only when the healthcare sector became a hot trend. In fact, as early as 2008, we had already decided to make healthcare one of our two core investment sectors, alongside TMT (Technology, Media, and Telecom).

Many people have asked why Qiming Venture Partners decided to invest in the healthcare sector. Looking back, our motivation was quite simple: we aimed to “save lives” and “improve quality of life.” At the same time, we firmly believe that the era when Chinese healthcare companies will emerge as industry leaders is fast approaching.

As a venture capital firm, we decided from the outset to focus on investing in the early stages of corporate development, helping entrepreneurs and founding teams with the genuine capacity and strength to change the world achieve their dreams. To date, 70–80% of Qiming Venture Partners’ investments in this sector remain concentrated in early-stage and growth-stage companies. In 2014, when we invested in Zai Lab, the team consisted of only two people, including founder Dr. Ying Du. In 2017, Zai Lab successfully listed on the NASDAQ, with its market capitalization consistently reflecting objective market valuation, establishing it as a representative company in China’s new drug R&D sector. This year, Zai Lab became the first biotech company to conduct a secondary listing under Chapter 19C of the Main Board of the Hong Kong Stock Exchange.

Our latest statistical data shows that Qiming Venture Partners has completed investments in more than 120 companies in the healthcare sector. We have strategically positioned ourselves across five major areas, among which new drug development, medical devices, diagnostics, and healthcare services have been our steadfast focus since the early stages of investment. Digital health is a newly added investment area, as we have capitalized on the growing trend of integrating digital technology with healthcare in recent years. Fortunately, Qiming Venture Partners already possesses strong TMT (Technology, Media, and Telecom) investment capabilities, allowing us to seamlessly achieve cross-sector integration between these two fields.

The achievements of our company have largely aligned with our initial assessments. Today, we excel where others fall short; many of the companies in which we have invested have become industry leaders and truly value-driven enterprises that contribute significantly to society. Gan & Lee Pharmaceuticals, which successfully listed on the main board of China’s A-share market this year and is hailed as the “King of Insulin in China,” represents a journey of 10 years and 2 months from Qiming Venture Partners’ initial investment to its public listing. Today, leveraging its robust R&D capabilities, Gan & Lee has not only emerged as a leading enterprise in the Chinese market but also gained widespread recognition in mature markets such as Europe and the United States, as well as globally.

Why Are We Firmly Investing in the Healthcare Sector? First, we believe that demand drives industry development. We have observed that GDP growth, favorable government policies, and rising household incomes in China have become the “cornerstones” for people’s pursuit of a higher quality of life. Meanwhile, population aging and the increasing incidence of diseases such as cancer and heart disease require the healthcare industry and enterprises to match their level of development and growth pace accordingly.

Secondly, top-tier talent has become a vital force in entrepreneurship and innovation. An increasing number of brilliant Chinese scientists and researchers are either founding startups or joining entrepreneurial ventures. Leveraging their broad perspectives and ability to address real-world challenges, they continuously innovate in technology and business models to deliver world-class products and services that meet public needs.

Furthermore, favorable policies in the secondary market have bolstered the development of the healthcare sector. Reforms to Hong Kong’s listing rules, the STAR Market, the ChiNext Board, and the widespread adoption of the registration-based IPO system across A-shares will accommodate more high-quality healthcare companies.

Seventeen years ago, in an effort to mobilize medical and scientific research resources to combat SARS, I traveled extensively between mainland China, Hong Kong, and the West. Today, China’s medical technology and R&D capabilities are incomparable to what they were at that time. Chinese innovation and technology are no longer playing the role of followers or imitators; instead, they have become surpassers and leaders.

Among the companies invested in by Qiming Venture Partners alone, more than 60 have contributed to the fight against the epidemic. Many of these achievements are “global debuts” and “globally leading.” CanSino Biologics’ development of its recombinant COVID-19 vaccine leads the world; Sino Biological globally debuted research-grade proteins for the novel coronavirus; Infervision launched the world’s first AI system targeting novel coronavirus pneumonia...

This summit is designed for CEOs; therefore, we aim to examine the future of healthcare from the perspective of development opportunities rather than investment opportunities.

We believe that significant opportunities still exist in the fields of new drug R&D, medical devices, diagnostics, healthcare services, and digital health. The landscape of China’s entire healthcare industry is poised for transformative change—a prediction I discussed as early as ten years ago.

Compared with global benchmarks in the same field, Chinese enterprises possess immense potential for growth and innovation. We look forward to seeing global leaders from China bring well-being to society. Thank you all.