Nuokangda Pharma Secures RMB 160 Million Led by Summit Capital, Files for STAR Market IPO

VCBeat, February 14 – Huagai Capital announced its investment in Beijing Nuokangda Pharmaceutical Technology Co., Ltd. (“Nuokangda”). This round of financing amounted to RMB 160 million, led by Huagai Capital, with participation from Xianfeng Qiyun Fund and other investors.

Huagai Capital, established in 2012, is a private equity investment firm co-founded by professionals from renowned domestic and international investment institutions. It focuses on private equity investments in the Chinese market. The firm currently manages multiple equity investment funds, including healthcare, TMT, and cultural industry funds, with assets under management nearing RMB 10 billion.

Huagai Capital's invested cases includeZhengguangxing, Rendu Biotech, Kangtai Biological, Zhonghe Pharmaceutical, Henliusetc., with a preference for projects in drug R&D, biotechnology, elderly care, and medical services.

This transaction marks Huagai Medical Health Industry Phase II Fund’s (hereinafter referred to as “Huagai Medical”) first investment of 2017, and its second investment since the successful fundraising completed in late November 2016. Previously, on December 26, 2016, Huagai Capital announced a RMB 150 million investment in Beijing Baodao Obstetrics and Gynecology Hospital.

Nokangda Pharmaceutical, established in 2013, specializes in R&D within related fields such as contract research organization (CRO) services, consistency evaluation, innovative formulations, and medical devices and consumables. Currently, Nokangda maintains stable collaborations with top-20 pharmaceutical companies in China and has established strategic partnerships with numerous listed pharmaceutical enterprises both domestically and internationally.

Regarding the investment in Nuokangda, Zeng Zhiqiang, Managing Partner at Huagai Medical, stated that based on the experience of generic drug consistency evaluations in Japan and the United States, such processes typically require more than 20 years to complete. As China expands the variety and scope of drugs subject to consistency evaluation in the future, the market is expected to maintain steady growth for another 10–20 years. In addition, the research and development of innovative formulations and medical devices in China has witnessed rapid growth in recent years, holding immense potential for future expansion.

“Huagai Medical’s investment in Nuokangda was primarily driven by our confidence in Nuokangda Pharmaceutical’s young, dynamic, and hardworking team. Furthermore, Nuokangda Pharmaceutical’s rapid growth, with its revenue doubling annually over the past three years, has demonstrated its strong potential. Looking ahead, Huagai Medical will leverage its investments and influence in the healthcare industry, including its extensive limited partner (LP) resources, to provide comprehensive support to Nuokangda Pharmaceutical, helping it achieve its goal of becoming a world-leading research and development outsourcing enterprise at an earlier stage,” said Zeng Zhiqiang.

Tao Xiumei, Founder and General Manager of Nuokangda Pharmaceutical, stated, “Our team is dedicated to a single mission throughout our careers: to become the leader and standard-setter in the industrialization of innovative international drug formulations. The high degree of alignment between Nuokangda Pharmaceutical and Huagai Medical in terms of corporate development philosophy and values, along with the complementarity of both parties in the healthcare sector, forms a solid foundation for this successful collaboration. By introducing Huagai Capital as a strategic investor, Nuokangda Pharmaceutical will be better positioned to accelerate its domestic listing and emerge as one of the most outstanding enterprises in the industry.”

Since 2007, China’s pharmaceutical CRO industry has maintained a compound annual growth rate (CAGR) of over 30%, with its current market size approaching RMB 40 billion. The policy opportunities arising from the generic drug consistency evaluation have further accelerated the expansion of the overall CRO sector. It is projected that this will generate an incremental market space of at least RMB 10–30 billion within the next 3–5 years. Coupled with the existing base market and derived demands, the industry’s total potential capacity is substantial.

The pharmaceutical industry is a pillar sector that will drive future economic growth. According to the “Several Opinions of the State Council on Promoting the Development of the Health Service Industry” and the national “13th Five-Year Plan for Deepening the Reform of the Medical and Healthcare System,” the total scale of the medical and healthcare industry is projected to exceed RMB 8 trillion by 2020. In August 2016, President Xi Jinping presided over and reviewed the Outline of the “Healthy China 2030” Planning Program, stating that “Healthy China 2030” serves as the action plan for advancing the construction of a Healthy China over the next 15 years. With rising household incomes, upgrading consumption patterns, and accelerating population aging and urbanization, the Healthy China strategy will be further advanced and the medical insurance system will become more robust, all of which will continue to boost consumer demand for pharmaceuticals and healthcare in China and drive rapid market growth.

Huagai Healthcare is an equity investment platform under Huagai Capital, focusing on the healthcare industry. The Huagai Healthcare Industry Phase II Fund, which invested in Nuokangda Pharmaceutical, has a total scale of approximately RMB 2 billion. It has more than 20 listed companies (including major shareholders of A-share and Hong Kong Stock Exchange main board listed companies or their investment platforms) as limited partners (LPs), most of which are well-known listed enterprise groups in the healthcare industry.

Huagai Capital primarily invests in leading companies across various sub-sectors of the healthcare industry, including biopharmaceuticals, medical devices, and healthcare services. Committed to identifying undervalued enterprises and assets within the healthcare sector, Huagai Capital promotes industrial chain integration and interaction among its portfolio companies to create value-added growth. The firm focuses on growth-stage and M&A-target companies, making minority or controlling equity investments, while also selectively investing in high-quality early-stage projects to cultivate a robust deal pipeline and achieve superior returns.