Market Restructuring and Breakthrough Strategies: 2019 Third Annual Healthcare Investment Excellence Awards Announced

Since its launch in 2017, Haoyue Capital’s “Excellence List for Healthcare Investment” has garnered extensive attention from the industry, with listed companies and investment firms becoming highly sought-after subjects of coverage by vertical healthcare media outlets.

“The 2019 Third Zhuoyue List for Healthcare Investment” is a ranking list focused on the healthcare sector, released by Haoyue Capital for three consecutive years. Reviewing the summits of the Zhuoyue List for Healthcare Investment from the past two years, a unique model has been established: “Investment Annual Report + Industry Rankings + Keynote Speeches + Roundtable Discussions.” This format integrates peak dialogues on hot topics and in-depth value perspectives into the healthcare summit, creating a true flagship event for the healthcare industry.

Over the past two years, the VCBeat Healthcare Investment Excellence Awards have tracked and documented the transformations of Chinese healthcare companies and investment institutions, bearing witness to the developmental trajectory of the healthcare sector. A review of past and current honorees on the “VCBeat Healthcare Investment Excellence Awards” list reveals that first-time awardees such as CStone Pharmaceuticals and Ping An Good Doctor have successfully listed on the Hong Kong Stock Exchange. Dozens of healthcare enterprises, including Henlius Biopharma, Ankon Medical Technologies, and Venus Medtech, have achieved a combined valuation exceeding RMB 100 billion, emerging as the new generation of unicorns in the healthcare industry. The awarded investors have truly embodied the spirit of “hundreds of vessels competing in the current, riding the wind and waves to voyage far.” In 2019, at the site of the 3rd VCBeat Healthcare Investment Excellence Awards, hundreds of pioneers in the healthcare industry gathered once again to discuss strategies for navigating the current landscape of change, delivering a brilliant and engaging event.

Looking back at 2018, the volatile capital environment and the intensive rollout of various healthcare policies brought about significant changes to the entire healthcare industry and capital markets. In response, Mr. Liu Hao, Founder and CEO of Haoyue Capital, delivered a keynote address on breaking through these challenges, pointing out that amid the current upheaval, the healthcare sector is undergoing two major processes: “investment valuation restructuring” and “industrial landscape restructuring.”

In the face of a series of challenges, Liu Hao shared three key strategies for breaking through with the attendees. First is focused consolidation: taking Wuhan Asia Heart Hospital Group as an example, expanding market share through regional focus and maintaining industry leadership by concentrating on specific sectors. Second is mergers and acquisitions integration: using medical device company Weigao as an example, broadening product line coverage through acquisitions or joint ventures to complete the IPO process. Third is continuous innovation: exemplified by vaccine company CanSinoBIO, which not only focuses on domestic innovation but also boldly pursues global innovation, growing into an outstanding company with a market capitalization exceeding HK$9 billion.

What will breakthroughs bring to the future? Liu Hao’s prediction for the next five to ten years is: valuation restructuring.

The first valuation restructuring involves investors reassessing traditional healthcare companies with heavy asset bases, shifting from Price-to-Sales (P/S) ratios to EBITA and Price-to-Earnings (P/E) multiples, and further to asset replacement costs. The more traditional the healthcare enterprise, the more investors have moved from past exuberance back to rationality. The era of wild, unchecked growth in China is over; this trend applies not only to the healthcare industry but to every sector. The second valuation restructuring reflects the willingness of many funds in recent years to invest in corporate intangible assets, including brands, patents, technologies, and data. Investors are prepared to pay high premiums for these intangible assets. To gain investor favor, companies must focus intensely on whether they can expand globally to become world-class brands, secure international patents, and possess disruptive, globally innovative technologies.

At the conclusion of his speech, Liu Hao also shared his outlook for 2019: In the healthcare services sector, significant opportunities remain for regional market leaders and projects in the assisted reproductive technology (ART) field. Regional leaders that pursue cautious expansion while further deepening their presence in niche segments are poised for continued growth. Meanwhile, the relatively asset-light profitability model of the ART and in vitro fertilization (IVF) sectors will attract substantial investor attention. In the medical devices sector, Liu Hao expressed optimism about minimally invasive interventional devices and surgical robots. As domestic heart valve companies have each completed at least two rounds of financing, and no clear industry leader has yet emerged in the surgical robot space, investors are expected to continue increasing their investments. In the biopharmaceutical sector, achieving leapfrog development requires selecting tracks with distinct Chinese characteristics, such as gene therapy, cell therapy, rare diseases, and orphan drugs, all of which are key areas of focus for the capital markets. Regarding emerging technology fields, solutions addressing rigid demand and identifiable payers can be more readily found in the tracks of clinical data application and supply chain management.

According to incomplete statistics, the “3rd Zhuoyue List Summit on Healthcare Investment” garnered support from nearly 500 founders and executives of leading enterprises in sub-sectors such as biopharmaceuticals, innovative medical devices, healthcare services, and new medical technologies; dozens of experts and scholars from China’s healthcare sector; and nearly 100 mainstream financial media outlets and vertical healthcare media organizations.

Distinguished guests participating in the on-site awards ceremony and roundtable forum at the summit primarily included Professor Ding Sheng, Director of the Global Health Drug Discovery Institute and Dean of the School of Pharmaceutical Sciences at Tsinghua University; Wang Jiejun, Expert Review Committee Member of the National Medical Products Administration; Xu Weiping, Vice President of Xinhua Hospital; Yu Rong, Chairman of Meinian Onehealth Healthcare; Gu Yushao, Global Senior Vice President and President of Greater China at Medtronic; Yin Ye, CEO of BGI Group; Yao Zhong, President of Lanhai Medical; Chen Jian, Vice Chairman of Yuwell Medical; Tan Yong, Editor-in-Chief of E-Drug Manager and China County Health; and Duan Tao, renowned obstetrician and gynecologist and founder of Chuntian Medical Management.

Under the scrutiny of numerous elites in the healthcare sector, the VCBeat Healthcare Investment Excellence List, as a third-party evaluation ranking that integrates subjective expert opinions with objective data metrics, has become an industry-recognized benchmark of value. Companies featured on the list will attract significant attention from mainstream media, investment institutions, and stakeholders across the healthcare industry.

As a highly recognized annual authoritative list in the industry, the Healthcare Investment Excellence Awards have always adhered to the principles of fairness, impartiality, and objectivity. They honor healthcare investment institutions and enterprises that have achieved outstanding results and made remarkable contributions each year, setting new benchmarks for industry development, providing high-quality case studies for technological innovation, and creating new opportunities for investment cooperation.

Over the past year, as the healthcare sector navigated deepening health system reforms, experienced volatility in the pharmaceutical segment of the secondary market, witnessed the emergence of the STAR Market, saw accelerated consolidation across various sub-sectors, and observed medical new technologies become a hot spot characterized by high technical barriers and rapid growth, the selection scope of the “3rd Excellent Healthcare Investment Awards” was adjusted accordingly. Building on the previous three categories—healthcare services, innovative medical devices, and biopharmaceuticals—a new category focusing on medical new technologies was added. This year’s awards evaluated candidates across these four dimensions, selecting eight awards in total for the Annual Best Investment Case and Annual Best Investment Fund, while retaining the Annual Best Return on Investment Fund award, bringing the total to nine awards. The announcement of the “2019 3rd Excellent Healthcare Investment Awards” brought the summit’s atmosphere to a climax.

This year’s summit features five roundtable forums, where more than 40 seasoned industry experts will provide in-depth analysis of cutting-edge topics of widespread interest, covering hot areas such as biopharmaceuticals, innovative medical devices, healthcare services, and new medical technologies.

Wang Hui, Managing Partner at Honghui Capital; Hong Tan, Managing Director at Legend Capital; Tian Zirui, Partner at Maxing Investment; Gu Yushao, Global Senior Vice President and Greater China President at Medtronic; Hu Xubo, Managing Partner at Qiming Venture Partners; Professor Ding Sheng, Director of the Global Health Drug Discovery Institute and Dean of the School of Pharmaceutical Sciences at Tsinghua University; Wu Xia, Managing Director at CICC Capital; and Liu Hao, CEO and Founder of Haoyue Capital, attended this roundtable.

This session summarized the significant challenges facing four hot sectors: healthcare institutions, medical devices, biopharmaceuticals, and new technologies. By adhering to the three core principles of “Focus,” “Integration,” and “Continuous Innovation” as strategies to break through these bottlenecks, companies can achieve a restructuring of both their valuation and intrinsic value, encompassing brand, patents, technology, and data. The direct outcome of these two types of restructuring is an acceleration of the survival-of-the-fittest dynamic among healthcare enterprises. Additionally, Mr. Liu Hao shared his outlook on the development prospects of these four key healthcare sectors in 2019.

Yang Donghui, Director of Anu Pharmaceuticals; Bao Yanghuan, Investment Partner at Mint Angel Fund; Huang Chunying, General Manager of TopAlliance Biosciences; Pan Gonghua, Chief Operating Officer of Keyue Pharmaceuticals; Leng Yan, Partner at Legend Star; Zhou Yi, General Manager of the Healthcare Industry Investment Department at Shenzhen Capital Group’s Healthcare Industry Fund; and Li Yishi, Executive Director at Haoyue Capital, attended this roundtable discussion.

The guest speaker emphasized that innovation is the primary driver of development in the biopharmaceutical sector. Insufficient innovation, clustering around similar targets, a lack of global innovative thinking, and the absence of independently developed proprietary brands are all challenges hindering the growth of China’s pharmaceutical industry. Therefore, pursuing re-innovation following transformational development will become increasingly important in the future. Both the industry and capital markets should strengthen alignment with international standards and accelerate R&D efforts.

Tan Qing, Founding Partner of Chende Capital; Qian Tingzhi, Founding Partner of Jingxu Venture Capital; Shi Yonghui, Managing Director of Medtronic China Fund; Zhang Yi, Chairman of Peijia Medical; Hua Yi, Director of New Business Development at Johnson & Johnson Medical; and Yang Zhenjun, Vice President of Haoyue Capital, attended this roundtable.

The discussion highlights 2018 as a landmark year for mergers and acquisitions in the medical device sector. China’s medical device market holds immense potential. On one hand, many Chinese innovations are already keeping pace with the global forefront, with numerous leading advancements originating in China. On the other hand, not only multinational corporations and industry giants but also capital investors are gradually building their product pipelines around various niche segments. Integration and innovation will concurrently become the main themes of investment in the medical device field in the near future.

Ji Minhua, Editor-in-Chief of Healthbound; Zhang Fengsheng, President of Chaoju Eye Care; Yao Zhong, President of Lanhai Medical; Shao Zongzong, Chairman of Malo Dental; Ye Hong, Managing Director of Wuhan Asia Heart Hospital; Duan Tao, a renowned obstetrician and gynecologist and Founder of Spring Field Medical Management; and Ge Yongbin, Partner at Zhong Lun Law Firm, attended this roundtable discussion.

All guests unanimously agreed that although the medical services sector faces various challenges from policies and capital, it still better reflects the long-term value of healthcare investment compared to other sectors. Medical service brands that have developed over five, ten, or even several decades continue to grow steadily and rapidly today. Outstanding medical service enterprises accumulate deeper strengths in disciplinary expertise, talent systems, and management frameworks as they develop over time, thereby enhancing value creation and demonstrating the amplifying effect of time.

Zhao Chunlin, Founder of Anlong Fund; Ren Bobing, Vice President of BV Baidu Ventures; Bi Yuanfeng, Co-Founder and Chief Operating Officer of VCBeat; Huang Xin, Managing Partner of Kaifeng Venture Capital; Cao Yuan, Vice President of Operations at Infervision; and Xu Yingqi, Founder of Yidianling, attended this roundtable discussion.

Amid the current internet boom, the panelists emphasized the need to strengthen data assessment and risk control. They advocated leveraging new service chains, emerging demographic segments, and the integration of diverse resources to acquire data and design tailored solutions for specific services. The panelists expressed their expectation to identify and nurture more entrepreneurs who can drive greater imagination or disruption in business model or solution innovation, aligned with China’s healthcare system, believing that abundant opportunities will certainly emerge in the future.