Tasly Capital's Investment Strategy Unveiled: Synergizing Industry and Capital through the '4D' Model to Shape the Future of Healthcare

In recent years, the broader health sector has witnessed a surge in the “industry + capital” investment model. Over the past three years, pharmaceutical group companies have initiated or participated in nearly 160 industrial funds, with proposed fundraising totals exceeding RMB 240 billion; some of these funds have already completed their fundraising and are actively engaged in project operations. Indeed, industrial funds have become the most prominent investment trend in the broader health sector.

Tasly Capital is undoubtedly a leader in the “industry + capital” operational model. As early as 2008, Tasly entered the field of private equity (PE) investment. It subsequently established a Strategic Investment Business Group and a capital holding group, further maturing its capital operation model. This has enriched its industrial layout, yielded substantial returns, and achieved an ecosystem based on the integration of industry and finance.

Recently, VCBeat interviewed Mr. Yan Kaijing, Executive Chairman of the Board of Tasly Holding Group and Chairman of Tasly Capital. They discussed the development journey and investment track record of Tasly Capital over its more than ten-year history, while he systematically elaborated on the firm’s focus areas and investment logic. Mr. Yan also shared his perspectives on current investment hotspots in the healthcare sector.

Mr. Yan Kaijing, Executive Chairman of the Board of Directors of Tasly Holding Group and Chairman of Tasly Capital (Photo provided by the interviewee)

From 2008 to 2018, China witnessed a golden decade for the development of domestic industrial capital. On one hand, policies encouraging industrial capital to serve the real economy were frequently introduced; on the other, the boom in innovation and entrepreneurship awakened the entrepreneurial spirit of the Chinese people, generating strong demand for capital. Meanwhile, China’s rapid economic growth provided ample capital support for industrial investment. Furthermore, large corporations increasingly focused on integrating along the industrial chain, building an industrial competitive landscape anchored by capital ties.

Tasly’s “Industry + Capital” strategy was developed against this backdrop. From the perspective of its development stages, Tasly’s “Industry + Capital” layout has roughly undergone two phases: The first phase involved private equity (PE) investments initiated in 2008 and lasting until 2010–2011, with most invested projects having successfully exited; the second phase, beginning around 2014, adopted a whole-industry investment model, marked by the establishment of the Big Health Industry Fund. This gradually evolved into an umbrella fund and investment system with the Big Health Industry Fund as the fund of funds, thereby constructing a multi-level capital circulation framework.

From the perspective of investment sectors, equity investments were initially concentrated in the pharmaceutical sector. After 2014, they expanded to cover pharmaceutical manufacturing, pharmaceutical distribution, traditional Chinese medicinal materials, healthcare services, health supplements, and digital health innovations, such as investments in chain pharmacies and digital health companies.

Innovative drugs are a key focus of Tasly Capital’s investments. The firm began positioning itself in the innovative drug sector in 2014, making it an early mover in China, while also prioritizing the introduction of high-quality innovative drugs from abroad to access premium global resources. Its innovative drug investment strategy is closely aligned with its listed company, supporting the latter’s “four-in-one” R&D model. This approach breaks away from the traditionally closed model of purely in-house R&D adopted by conventional pharmaceutical companies, alleviates funding bottlenecks through fund-based financing, and accelerates the development of innovative drugs.

In terms of fund size, Tasly Capital currently manages a total of RMB 12 billion, comprising eight RMB-denominated funds and three USD-denominated funds. Through its affiliated funds and related entities, Tasly Capital has conducted due diligence on over one thousand healthcare projects both domestically and internationally, completing investments in nearly one hundred of them.

Tasly Capital’s star portfolio includes Meinian Onehealth, Jichuan Pharmaceutical, Ascletis Pharma, Innovent Biologics, and 3D Medicines. It has achieved exits from nearly ten investments through IPOs and M&A. Projects such as Sugon, Meinian Onehealth, and Jiangsu Diyi realized internal rates of return (IRR) ranging from 50% to 110%, while all other projects delivered IRRs exceeding 30%. Several portfolio companies, including Chongqing Medical & Pharmaceutical, Berry Genomics, and Yiming Pharmaceutical, have successfully gone public.

In the next phase, Tasly Capital will shift its investment logic to embrace the trend of integrative medicine models and enter a more proactive stage of industry leadership. Specific pathways include: constructing a patient-needs-oriented “4D” investment model; keeping pace with cutting-edge international innovation trends by synchronizing product collaborations with capital deployment; establishing a top-tier global biomedical fund of funds to secure access to frontier opportunities in innovative drugs worldwide; and formulating a clearer external equity financing plan while appropriately introducing investment talent to expand industrial influence.

Tasly Capital is not only a witness to the “golden decade” of industrial capital but also a driver in perfecting the industrial capital ecosystem. It was the first to propose the concept of establishing industrial funds with the group company serving as the General Partner (GP). By leveraging an investment model centered on “industry + capital + strategic value-added,” it has fostered bidirectional empowerment between industry and capital. This approach has gained industry recognition and emulation, as evidenced by the growing number of pharmaceutical group companies that have recently begun to adopt the “industry + capital” investment model.

Investing is akin to “hunting”; both activities demand immense patience and meticulous preparation. Once a target is identified, one must strike swiftly to secure the prize.

Investment hotspots in the healthcare industry continue to emerge, such as internet healthcare, precision medicine, and big data in health and medical care. In response to these trends, Tasly Capital conducts a cross-evaluation of market trends and specific projects, followed by in-depth industry analysis of the trending sectors. This approach enables the firm to identify leading enterprises and projects with strong strategic alignment within niche segments for precise investment. In other words, Tasly Capital acts like an experienced hunter, consistently capturing the most valuable prey in the hunting ground.

For instance, regarding internet healthcare, Tasly Capital believes that it represents a new development direction for the medical industry. It helps address the contradiction between the uneven distribution of medical resources in China and people’s growing demand for healthcare services, and is a model of medical service actively encouraged and supported by policy.

Since 2013, with the rise of mobile internet, marked by Chunyu Doctor and Haodf Online’s successive entry into the mobile internet space, the industry has experienced explosive growth, with a surge in internet healthcare startups.

During this period, internet healthcare exhibited a diversified landscape, featuring patient-centric services such as online consultations and chronic disease management; physician-centric initiatives including research support and professional communities; and hospital-centric process optimization. After several years of development, the sector is currently transitioning toward the internet hospital model. The defining characteristic of this stage is the digitization of diagnosis and treatment. The most significant distinction from the previous phase is that physicians can now issue prescriptions (i.e., conduct clinical treatment) via the internet, rather than merely providing diagnostic recommendations. Furthermore, they can sell medications through internet platforms, thereby establishing a closed-loop service ecosystem.

These profound industry insights stem from Tasly Capital’s robust industry research. Industry research serves as the foundation of investment and constitutes a critical component of risk control. Screening projects through industry research can effectively enhance investment precision. Tasly Capital has established a dedicated industry research department under its Strategic Development Department, staffed by professionals responsible for conducting industry research in fields such as pharmaceuticals and healthcare.

Furthermore, during the process of project sourcing and advancement, various investment departments at Tasly Capital continuously monitor developments in key niche sectors and regularly compile industry analysis reports. Tasly Capital also periodically invites industry experts, industry practitioners, and experts from other departments within the group to engage in industry exchanges with its investment teams, thereby collectively enhancing their understanding of these specialized fields.

Following systematic research, Tasly Capital has accumulated in-depth industry insights into metabolic diseases, oncology, cardiovascular and cerebrovascular disorders, primary healthcare, cell therapy, and internet-based healthcare, which serve as a key guide for formulating annual investment strategies and screening projects.

Tasly Capital told VCBeat that China’s healthcare industry is undergoing an unprecedented era of transformation. The intensive rollout of national pharmaceutical policies and intensifying industry competition have heightened the need for corporate transformation. Driven by factors such as the continuous emergence of new technologies, near-maximum limits of medical insurance payment capacity, and a large volume of unmet medical needs, the ecological landscape of China’s pharmaceutical industry is undergoing significant changes.

Driven by the dual forces of healthcare policy and medical technology, the healthcare industry model is inevitably undergoing a patient-centric transformation. This shift features upgraded medical services, improved accessibility to innovative drugs, and the deepening implementation of tiered diagnosis and treatment under a dual payment system comprising basic medical insurance and commercial health insurance. Patients are transitioning from a longstanding “passive treatment” paradigm to one of “proactive health,” creating increasingly mature and refined conditions for integrated care models.

In the future health industry, patients have become the key focus. With growing patient autonomy, a value-based healthcare system centered on patients is being built to address diverse needs such as upgrading medical services and improving healthcare payment mechanisms, thereby maximizing the efficiency of medical resource utilization and enhancing consumer satisfaction and sense of gain.

Tasly Capital anticipates that massive healthcare big data will be generated across key segments such as medical services, medication use, and payment systems. Leveraging this foundation, in-depth mining of individualized needs can be conducted. By using data as a connective link and integrating multi-party resources, cross-sector interoperability will be promoted, gradually establishing a consumer-centric “4D” medical service model. This model is poised to become the core paradigm for the development of the healthcare industry over the next decade, fostering a new ecosystem within the broader health industry.

In light of this, Tasly Capital has also developed a “4D” investment model, with a strategic focus on: screening and diagnostic equipment (Diagnostic); medical devices for continuous monitoring, risk assessment, health intervention, and treatment (Device); innovative drugs addressing unmet clinical needs (Drug); and digital service tools and big data solutions (Digital). This interconnected “4D” investment approach is designed to meet patients’ growing demand for upgraded healthcare services.

Centered on the “4D” investment model, Tasly Capital has made extensive strategic deployments. For instance, to address unmet therapeutic needs, Tasly Capital has invested in multiple innovative pharmaceutical companies and facilitated their synchronized international R&D efforts. In China’s highly competitive domestic market, it leverages policy shifts to achieve rapid scaling, while in the less saturated international markets, it prioritizes quality to drive speed. Furthermore, by establishing collaborations with global industry giants, Tasly Capital facilitates the localization of advanced manufacturing technologies, enabling it to overtake competitors on the curve.

Tasly Capital has also actively expanded its presence in intelligent equipment, big data technologies, and smart healthcare domains represented by “Internet+.” Its intelligent equipment portfolio includes smart wearable devices for chronic disease management, surgical robots, intelligent prosthetics and rehabilitation robots, and medical service robots.

“Tasly Capital’s vision is to become an asset management platform respected by consumers, entrepreneurs, and investors in the broader health industry. By leveraging the integration of industry and capital, we aim to enhance industrial innovation capabilities, promote industrial upgrading, and achieve the goal of shared health for all,” said Mr. Yan Kaijing.

Healthcare big data is a critical foundational strategic resource for the nation, rapidly evolving into a new generation of information technology and innovative healthcare service models. The application of big data permeates the entire medical process, including drug research and development, clinical diagnosis and treatment, insurance reimbursement and commercial insurance design, as well as health management and public health services, exerting a profound impact on the future development of the healthcare industry.

At the national level, in 2017, under the leadership of the National Health and Family Planning Commission, three major health and medical big data groups dominated by state-owned capital were officially established, marking the entry of health and medical big data applications into a substantive phase.

At the capital level, there were 52 investment and financing events in the global healthcare big data sector in 2016, with a total financing amount exceeding RMB 9.1 billion. Among these, China accounted for as many as 28 events, representing over 50% of the total. The investments were primarily concentrated in the field of precision medicine, which accounted for 39%, followed by intelligent diagnostics and health management. The above data indicate that the era of rapid development in healthcare big data has arrived.

Recently, initiated by China Electronics Data, one of the national teams in health and medical big data,“China Health and Medical Big Data Industry Innovation Competition”Officially launched, with Tasly Capital participating as a co-organizer.

As one of the most anticipated competitions in the field of big data for health and medical care, this event will span across all sub-sectors of China’s industrial ecosystem for health and medical big data. It focuses on the most innovative projects in medical services, data technology, and data security throughout the industry; brings together the most authoritative technical experts, investment specialists, and industry research analysts; enables innovative healthcare enterprises to understand the cutting-edge trends in industrial investment, engage in dialogue with China’s top investment experts, and join hands with national-level teams to jointly advance the development of China’s health and medical industry.

Tasly Capital expressed its anticipation for co-organizing and participating in the event: “The ‘Healthcare Big Data Industry Innovation Competition’ is the most prestigious event in this field. Through this competition, we can gain a comprehensive understanding of the development of China’s healthcare big data industry and learn about the cutting-edge initiatives undertaken by leading enterprises. As a co-organizer, we aim to provide participating companies with support in areas such as resources and funding, nurture industry leaders, and promote the development of China’s healthcare big data industry.”

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