Tririver Capital and Essence Securities Successfully Host the 8th China Biotech & Healthcare Investment Summit in 2019

On December 13, 2019, the 2019 China Biotech and Healthcare Investment Conference, co-hosted by Sanjiang Capital and Essence Securities, was successfully held.

This summit invited distinguished guests from renowned investment firms, high-potential startups, listed companies, and professional third-party organizations, with actual attendance exceeding 500 participants. Through thematic reports, roundtable discussions, keynote speeches, and project pitch sessions, the conference analyzed current investment trends, M&A and IPO opportunities, and industry development prospects. It also provided investors and entrepreneurs with a high-quality platform for accessing industry insights, networking, and business matchmaking.

The CBHIS Summit, founded by Sanjiang Capital, was first held in 2012 and has successfully convened eight editions to date. With cumulative attendance exceeding 3,000 participants, it has evolved into one of the longest-running and most influential industry conferences in China’s biotechnology and healthcare investment sector.

Address by Mr. Jin Yilun, Representative of the Organizer

Address by Mr. Li Zeye, Representative of the Co-organizer

In his report, “The ‘1-2-3-4-5’ Framework for Pharmaceutical Investment in 2020,” Ma Shuai, Chief Analyst at Essence Securities, provided highly professional recommendations on investment directions and methodologies for the pharmaceutical sector in 2020. By analyzing one background context, two strategies, three policies, four choices, and five main themes, the report garnered high acclaim from numerous attending investors.

In his report, “Capital Market Choices for Biopharmaceutical Companies Under New Policies,” Pu Songtao, Co-Chair of the Life and Health Industry Group at Essence Securities, helps startups and primary-market investors clarify uncertainties and make more appropriate positioning decisions for their own companies or portfolio companies through an introduction and in-depth analysis of various listing options.

In the early-stage investment session, panelists included Dang Feng, Partner at Huiding Investment; Qian Jing, Partner at Dingfeng Life Sciences Capital; Li Zhe, Founding Partner at Proxima Ventures; Xu Yuanping, Managing Director at Fortune Capital; Xue Wenyu, Managing Director at Morningside Venture Capital; and Zhou Yi, General Manager of the Healthcare Industry Fund at Shenzhen Capital Group.

Discussing the current environment, Wang Haijiao, Managing Partner of Golta VC, remarked: “I believe we are currently in a ‘quartet,’ possibly in its lower register, which is why everyone feels quite fatigued. First, macroeconomic growth rates are at unprecedented lows. Second, there is a complex interplay of healthcare policies. The National Healthcare Security Administration has introduced factors that were previously unforeseen. Third, China’s venture capital industry began around 2008; now, in 2019, it has been exactly ten years. In terms of typical fund lifecycles, we are likely entering a period of reckoning, where the Chinese VC industry needs to take stock. Whether the first wave of investors has made profits remains questionable. Fourth, there has been a surge in healthcare investment. This ‘quartet’ includes both high and low notes, but overall, the tone is rather low.”

Regarding the focus on early-stage investment opportunities, Li Zhe, Founding Partner of Proxima Ventures, stated, “There are still abundant opportunities in innovative investment. There is significant potential to integrate overseas innovative technologies with domestic demand, revealing numerous opportunities within this space. From our fund’s perspective, we continuously analyze, research, and track market trends. We conduct 80 to 90 industry studies annually to identify promising sectors and opportunities for strategic deployment. Meanwhile, we are actively positioning ourselves in early-stage opportunities, including facilitating collaborations between hospital department heads and entrepreneurial teams, which has already yielded several practical case studies.”

In discussions on the success and failure of investment projects, Xu Yuanping, Managing Director at Fortune Capital (Focusee), highlighted several key reasons for the failure of early-stage ventures. The most critical factor is a lack of focus, with founders attempting to pursue too many initiatives simultaneously. Secondly, some entrepreneurs treat raised capital as earned revenue, leading to undisciplined spending; it is crucial to allocate funds strategically where they yield the greatest impact. Additionally, excessive democratization in decision-making is detrimental to early-stage companies, which benefit from more centralized leadership. In contrast, mature, late-stage enterprises should embrace democratic processes, as democracy drives innovation. However, excessive democratization in the early stages results in a lack of focus and slow decision-making. These factors warrant deeper reflection on why teams operating within the same sector often achieve vastly different outcomes.

Regarding advice for entrepreneurs, Xue Wenyu, Managing Director at Morningside Venture Capital, advised against gambling with the market. Investors have time on their side, whereas biotechnology companies operate on a model that requires substantial capital expenditure to advance product development; they simply cannot afford to wait. From a corporate perspective, it is crucial to secure funding as quickly as possible under reasonable terms, because ultimate success is defined by the company’s overall achievement, not by the valuation highs or lows of any single financing round.

At the late-stage investment session, participants included Sun Yun, Managing Partner at Purun Investment Management; Chen Ke, General Manager of Boxin Fund; Fu Feng, Head of China Everbright Limited’s Healthcare Fund; Shen Qin, Managing Partner at Shengyu Investment Management; Sun Jigang, Founding Partner at Haisong Fund; Xu Qiang, Vice President of Healthcare Investments at Sequoia Capital China; and the General Manager of Fosun Pharma’s Investment Department.

Addressing the pace and selection of investments, Xu Qiang, Vice President of Sequoia Capital China, stated, “As investment institutions become increasingly professional, companies that truly possess core value within their industrial chains have encountered little resistance in securing financing; on the contrary, they have attracted significant attention. For us, the key lies in assessing what core value a company holds within its industrial chain. Additionally, we evaluate whether the founders have sufficient foresight and deep insights into industry trends, thereby judging the company’s ability to cope with challenges and sustain development. In summary, on one hand, we examine whether a company genuinely possesses core competitiveness and core value; on the other hand, we place great emphasis on whether the management team has the capacity for continuous learning and self-evolution. The team’s upper limit is a critical factor determining the height of the company’s development.”

In contrast to USD-denominated funds, Shengyu Investment, a domestic private equity firm, has adopted a more conservative investment strategy. Shen Qin, Managing Partner at Shengyu, stated, “We aim to effectively serve grassroots entrepreneurs in China as well as teams returning from overseas studies. While many investors are pouring capital into new drug development, we will not invest in this sector this year; we prefer to wait until the market bubble subsides. This does not mean our team is neglecting research on new drugs. We prioritize research before investment, and it is still timely to invest once the underlying logic is clearly established. Our focus this year is primarily on medical devices, with investments strategically aligned around disease spectra.”

During the panel discussion on “Mergers & Acquisitions and Initial Public Offerings,” moderated by Mr. Pan Wensen, Partner at Gaoying International Law Firm (USA), distinguished guests including Mr. Chen Fu’an, Partner at King & Wood Mallesons; Mr. Fei Fan, Greater China Life Sciences Industry Managing Partner at Ernst & Young; Ms. Fei Ying, M&A Partner at PwC; and Mr. Ye Qingwen, Executive Director and Sponsor Representative at Essence Securities, shared their market insights and data, offering expert recommendations on the technical aspects of M&A and IPOs.

Ms. Fei Ying suggests: First, companies have the opportunity to upgrade their internal control and financial systems, whether they are profitable or purely cash-burning; second, tax planning can be laid out in advance regardless of which board they will list on in the future, including taxes related to the company, entrepreneurs, and employee equity incentives.

Lu Hai, Managing Director at SDIC Innovation, shared insights on the fund’s status and his views on the current market: “While an initial public offering (IPO) is our most common exit route, we are also exploring alternative methods for partial exits. The greatest pressure on investors stems from challenges facing both the primary and secondary markets. Valuations in the primary market are indeed more inflated than those in the secondary market, where price corrections have been significant. In contrast, primary market valuations have adjusted more slowly. This discrepancy has led to some companies listed on the STAR Market experiencing immediate post-IPO sell-offs that disadvantage retail investors, posing a major challenge for us as investors—namely, achieving reasonable valuations across both primary and secondary markets.”

About Tririver Capital

Sanjiang Capital is China’s earliest new-type investment bank dedicated to the biotechnology and healthcare sectors. Founded in early 2008 by several senior bankers from top-tier international investment banks, the firm is headquartered in Shanghai. Its business spans subsectors including biotechnology, pharmaceuticals, medical devices, healthcare services, and health IT.

Since its inception, Sanjiang’s advisory business has served over one hundred clients, earning a strong reputation and positive word-of-mouth in the market. Unlike most investment banks that prioritize deal volume, Sanjiang places primary emphasis on achieving a high completion rate for client mandates rather than pursuing scale. In recent years, the annual actual completion rate of Sanjiang’s equity financing advisory services has significantly outperformed industry peers; notably, the completion rate reached 100% in both 2016 and 2017.

About Essence Securities

Essence Securities is a wholly-owned, full-service securities firm under the listed company SDIC Capital (600061.SH), with a registered capital of RMB 7 billion. Its actual controller, the central state-owned enterprise China State Development & Investment Corporation (SDIC), has established an investment platform centered on SDIC High-Tech, an industrial platform centered on Sinopharm Group, and a financial services platform centered on Essence Securities in the biopharmaceutical sector.

Essence Securities has been actively building a boutique investment banking business focused on innovation and has received numerous accolades. In August 2019, it was awarded the title of “Top Ten Investment Banks Most Respected by Listed Companies” by Securities Times. Its Life and Health Industry Group enjoys a strong reputation within the sector; in 2019, as the exclusive sponsor, it successfully assisted Chipscreen Biosciences in becoming the first company to pass the listing review on the STAR Market, making it China’s first publicly listed innovator of original new drugs and setting multiple historical precedents. In 2018, the firm was honored with the “Best Investment Bank in Healthcare” award by New Fortune.