Value Discovery and Investment Pathways in the Era of Health Industry Transformation

In recent years, the investment and financing market in the health industry has shown a significant upward trend in both the number of deals and the total amount involved. Wind data indicates that in 2014, only 140 companies in the health sector secured private equity and venture capital (PE-VC) financing, with a total funding volume of RMB 15.9 billion. By 2017, the number of health companies raising funds had increased to 247, with the total funding volume reaching RMB 38 billion, representing a compound annual growth rate (CAGR) of 34%. In the A-share market, both the number of companies raising capital and the scale of financing have also seen substantial increases. In 2014, there were 47 listed health enterprises on the Shanghai and Shenzhen A-share markets, with a total financing amount of RMB 450 million. However, by 2017, 78 newly listed health enterprises on the Shanghai and Shenzhen A-share markets raised a total of RMB 815 million.

Amid the vibrant boom in investment and financing within the health industry, capital exit pathways have become further diversified and refined. On April 30, 2018, the Hong Kong Stock Exchange’s amended Main Board Listing Rules officially took effect, allowing pre-revenue biotechnology companies to join the ranks of firms eligible for initial public offerings (IPOs). This new policy significantly reduces the risks associated with capital investment in the health sector. The enrichment and improvement of exit channels will greatly promote the further development of emerging industries and technologies within the health sector, offering greater possibilities for both the industry and investors. Currently, biopharmaceutical companies such as Ascletis Pharma, Innovent Biologics, and MicuRx Pharmaceuticals have submitted IPO applications to the Hong Kong Stock Exchange, positioning themselves as early beneficiaries of this new regulatory framework.

On one hand, the wave of capital has swept through the health industry, leading to significant changes in China’s health industry landscape: the strong grow stronger while the weak are eliminated. On the other hand, there is an awakening of health awareness among Chinese citizens, resulting in an explosive growth in health-related demands. A large number of entrepreneurs in the health industry have emerged like mushrooms after rain, with investment and financing amounts consecutively hitting new highs. The industry is ushering in leapfrog development opportunities.

In this context, how can enterprises and investors identify new tracks for industrial leapfrogging? Against the backdrop of frequently introduced and increasingly systematized healthcare reforms, what new rules for development will emerge in the industry? Amid the surge of interest in China’s health industry, what investment logic will take shape?

From August 12 to 16, the 11th Health Industry Ecology Conference, known as “Xipu Hui,” hosted by Sinohealth Information and gathering over 5,000 industry elites from the entire health industry chain, will be grandly held in Boao, Hainan. Concurrently, on August 12–13, the 2018 New Kangjie Health Industry Capital Summit (2nd Edition) will take place. Organized by New Kangjie, an industry-leading media outlet (search “New Kangjie” on WeChat to register), the summit is themed “Investment Value Amid Industrial Transition.” It will bring together more than 200 listed companies in the pharmaceutical and healthcare sectors, over 70 unicorn companies, more than 130 public mutual funds and mainstream private equity funds, over 80 top-tier VC/PE firms and industrial funds, major investment banks, and more than 160 high-quality domestic and international projects. Participants will engage in in-depth discussions on new investment tracks in the pharmaceutical and healthcare industries, while conducting value analysis and assessment of five hot investment areas: innovative drugs, generic drugs, branded traditional Chinese medicines, chain pharmacies, and medical services. The summit will feature a special “Industry-Finance Face-to-Face” session to facilitate precise and efficient connections between industry and capital.