China Research Hospital Association and Hillhouse Launch $1.5 Billion Life Sciences Translation Fund to Advance Domestic Healthcare Innovation

VCBeat (WeChat ID: vcbeat) has learned that on October 24, 2020, the 2020 China Research Hospital Summit was held at the Beijing International Convention Center. At the event, the Chinese Association of Research Hospitals and Hillhouse signed a strategic cooperation framework agreement to jointly establish the “Life Science Translation Fund,” with an initial size of RMB 1 billion. The fund will focus on the development of research hospitals in China, original innovations in the pharmaceutical and medical device sectors, building an industry ecosystem, and supporting Chinese healthcare companies in expanding globally.

Zhang Lei, Founder and CEO of Hillhouse Capital, and Yi Nuoqing, Co-Chief Investment Officer and Partner of Hillhouse Capital, attended the signing ceremony. Yi Nuoqing stated that he hopes to leverage the strategic agreement signed today as an opportunity to deepen cooperation with the Chinese Association of Research Hospitals, building a “medical-industrial-academic-financial” integrated research and innovation platform. This platform aims to provide a vibrant stage for Chinese researchers, scientists, physicians, and entrepreneurs in the broader health sector, facilitating the translation of scientific achievements into practical applications, helping healthcare companies navigate the “valley of death,” and ultimately addressing unmet patient needs.

The strategic cooperation agreement primarily focuses on four key areas: the development of the research-oriented hospital model, the promotion of domestic and international academic exchanges, the cultivation of talent in research-oriented healthcare, and technological collaboration along with the translation of scientific achievements. The Chinese Association of Research Hospitals will lead the top-level design for research-oriented hospitals, while Gaobo Medical Group, a wholly-owned subsidiary of Hillhouse, will utilize its affiliated physical hospitals as pilot units. Together, they will explore and implement the research-oriented hospital model, providing the industry with exemplary models and practical experience in building such institutions.

Leveraging Hillhouse’s and Gaobo Medical Group’s extensive ecosystem of top-tier domestic and international medical institutions and innovative pharmaceutical companies, the two parties will connect with high-quality pharmaceutical and innovative enterprise resources both at home and abroad, introduce high-caliber clinical research projects, and enhance the quality of clinical trial design as well as the translational efficiency of clinical research. As an incubator, Gaobo Medical Group will implement models for the clinical translation of innovative achievements by exploring the research-oriented hospital model.

All parties shall fully leverage their respective resource advantages, strengthen cooperation and exchange, accelerate the construction and development of research-oriented hospitals in China, expedite the clinical research, application, and clinical trials of innovative technologies, and jointly promote the translation of scientific achievements and technology empowerment, thereby benefiting more patients.

In recent years, China has seen the emergence of a large number of pharmaceutical R&D enterprises driven by independent innovation, achieving remarkable results in the development of innovative drugs. Notably, clinical research is a critical link in the pharmaceutical innovation industry and is essential for building a sustainable and internationally competitive ecosystem for pharmaceutical innovation.

However, the development of clinical research has lagged behind other segments of the pharmaceutical innovation industry chain. Industry experts analyze that if capacity and resource constraints in clinical research are not addressed promptly, they will delay the development of China’s innovative drug industry by at least five to ten years. Independent research-oriented hospitals have become a critical link in the development of the pharmaceutical innovation industry.

At the Hillhouse HCare 2020 Global Health Industry Summit held in August, Yi Nuoqing revealed that Hillhouse is strategically positioning itself in the field of research-oriented hospitals. He stated that clinical research is the only method to verify the safety and efficacy of drugs in humans, and it is also the most capital- and time-intensive phase in the new drug development process. However, the reality is that there are still few institutions capable of conducting clinical trials, and the sector faces numerous pain points, including insufficient capacity, limited investment in resources such as experts and hospital beds, lack of professionalism, and inadequate attention. This imbalance between the supply and demand for clinical research resources is the original motivation behind Hillhouse’s strategic move into research-oriented hospitals.

On March 25, Hillhouse commenced construction of the Gaobo Research Hospital in Changping District, Beijing, marking its latest venture in the field of research-oriented hospitals following the opening of the Shanghai Atmon Hospital last year. On September 24, the Gaobo Changping International Research Hospital became one of the first batch of projects to settle in the Beijing Free Trade Zone.

Biopharmaceuticals and healthcare have always been Hillhouse’s key strategic investment focuses. In the field of innovative drugs, Hillhouse has supported dozens of innovative biopharmaceutical companies worldwide across multiple therapeutic areas, including cancer targeted therapy, immunotherapy, gene therapy, genetic disease treatment, cell therapy, and autoimmune diseases. It has invested in star companies such as BeiGene, Junshi Biosciences, Innovent Biologics, Hengrui Medicine, and Gan & Lee Pharmaceuticals. In the medical intervention sector, after investing in Peijia Medical, Hillhouse subsequently invested in Venus Medtech and MicroPort CardioFlow, and made deep upstream and downstream investments in companies specializing in interventional imaging. In the CXO (Contract Research/Manufacturing Organization) sector, Hillhouse participated in the privatization and return of WuXi AppTec and invested in companies such as Tigermed and Asymchem. In healthcare services, Hillhouse has explored the development of research-oriented hospitals, facilitated the construction of a collaborative innovation system integrating industry, academia, research, and clinical practice, supported the establishment of specialized hospitals, and invested in companies such as Amcare, Arrail Dental, and Aier Eye Hospital.

Over the years, Hillhouse has become a veritable “King of Investment” in the healthcare industry by employing flexible and diverse investment strategies, spanning venture capital and private equity in the primary market, private placement markets, and secondary markets. By continuously integrating the upstream and downstream ecosystem of the healthcare industry through investments, mergers and acquisitions, and collaborations, Hillhouse promotes industrial convergence, innovation, and win-win outcomes. It is one of the few investment institutions that have conducted in-depth research and established extensive networks across various sub-sectors of the global healthcare industry, covering major business models and leading companies. Furthermore, it leverages its ecosystem resources to empower the research and development and production capabilities of its portfolio companies.

Zhang Lei, founder of Hillhouse Capital, has stated that the firm remains firmly bullish on the pharmaceutical and broader healthcare industries. With ample capital to sustain long-term investment, Hillhouse is committed to deepening its engagement in the sector over a horizon of ten, twenty, or even more years.