VBS Episode 15 Feature | Lin Zhengwei of Dacheng Capital: 'High-Tech' and 'Traditional Chinese Medicine' Are Both Emerging Investment Frontiers

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“The current capital market is extremely frenzied, with investors eager to fund even very early-stage projects.”

——Lin Zhengwei, Deputy Investment Director at Fortune Capital

On April 7, co-hosted by VCBeat and the Tsinghua x-lab Health & Medical Innovation Center"Yi Jian Qing Hua Ren Series Si Xiang Hui Salon Event"Held at the Tsinghua University campus.Yang Chengkui, Vice President of Tongdu Capital; Lin Zhengwei, Deputy Investment Director at Fortune Venture Capital; and Guo Na, Co-founder of Huiyi HuiyingDelivered a keynote address as a guest speaker, with nearly 100 attendees from the medical and health industry present, fostering a lively interactive atmosphere.



Lin Zhengwei, Deputy Investment Director at Fortune Capital (Beijing), specializes in venture capital within the broader healthcare sector, including pharmaceuticals, medical services, and biotechnology, with a particular focus on biopharmaceuticals and biotechnology.

Lin Zhengwei of Fortune Capital began by discussing the biopharmaceutical sector, which has been the hottest in the United States over the past three years, and then addressed the surge of interest in Traditional Chinese Medicine (TCM) sparked by Tu Youyou’s Nobel Prize. The emerging opportunities he focuses on include high-tech biopharmaceuticals, the consistently booming biotechnology sector, and the TCM field that embodies Chinese tradition. Why does he hold this view? What specific opportunities exist within these areas? VCBeat has compiled Lin Zhengwei’s remarks into this article, hoping to provide insights for entrepreneurs and investors alike.

1. United States in the Past Three YearsMost of the new drugs approved by the FDA are biopharmaceuticals.

A review of the historical development of China’s pharmaceutical industry reveals that we are now in the era of biopharmaceuticals. This shift is driven by stagnation in small-molecule drug development, where the exploration of new molecular entities has hit a bottleneck, making novel drug discovery increasingly challenging. Biopharmaceuticals offer complementary advantages to traditional chemical drugs, including targeted therapies, protein-based therapeutics, and peptide drugs, thereby addressing many clinical failures associated with conventional treatments.

The future of the pharmaceutical industry hinges on biopharmaceuticals, a trend evident in the U.S. market. Over the past three years, the biopharmaceutical sector has experienced exceptional growth in the United States, with the majority of new drugs approved by the FDA being biologics. This momentum is now extending to China. Many scientists and professionals employed by major multinational pharmaceutical companies are returning to China to launch startups, driven by the country’s favorable business environment, the gradual maturation of its capital markets, and the increasing sophistication of its healthcare sector.

The biopharmaceutical sector features high technical barriers, and most investors are unfamiliar with this field, which precisely presents a rare opportunity for those seeking to invest in it. Meanwhile, the pharmaceutical industry itself carries substantial risks, characterized by lengthy approval cycles and a failure rate nearing 90%. Of course, high risk coexists with high reward; should a venture succeed, the returns can be very substantial.

For biopharmaceuticals, Chinese society—particularly the capital markets and the entire pharmaceutical industry—is undergoing an upgrade. With increasingly frequent communication between China and the rest of the world and blurring international boundaries, development is accelerating at a faster pace than before.

2. Raw Materials for Biopharmaceuticals or Niche Markets: A New Investment Hotspot

The development trajectory of biopharmaceuticals is not significantly different from that of chemical drugs; however, the opportunities in the niche market of raw material supply for biopharmaceuticals have been overlooked by many capital markets.

For instance, active pharmaceutical ingredients (APIs) for peptide-based drugs represent the next emerging trend or a new direction following protein therapeutics. Due to their inherent characteristics—such as low molecular weight, low toxicity, and target specificity—they essentially combine certain advantages of both small-molecule and large-molecule drugs. However, this market also has a notable drawback: poor druggability and consequently high development risk.

Internet companies may have felt that the period from the second half of last year to the first half of this year was relatively sluggish, but the life sciences sector has remained a hot spot. This is because the industry exhibits minimal cyclicality; human health is an enduring priority, as health is fundamentally the most important aspect of human life.

Biotechnology will open up many new frontiers in the 21st century. For instance, after decades of development, immunotherapy has achieved significant technological breakthroughs and has truly reached the point where it can be commercialized and industrialized, which is why the capital market has become so vibrant.

The surging popularity of a sector is never without reason. Although many issues remain to be resolved, it is time for investment institutions to enter this field.

3. Biotechnology to Pioneer New Frontiers in the 21st Century; Gene Editing Could Reach Maturity in Just Three Years

The final area I am closely monitoring is biotechnology. Given my academic background in biology, I hold a particularly optimistic view of this sector. Currently, apart from healthcare services, pharmaceuticals, and mobile internet, the most dynamic segments are all within the realm of biotechnology. The biotech industry is now experiencing a period of vibrant diversification, with each subfield demonstrating strong growth potential.

The current capital market is extremely frenzied, with investors eager to fund even very early-stage projects. While internet companies may have experienced a relatively cold period from the second half of last year through the first half of this year, the life sciences sector has consistently maintained a high level of investor interest. This is because the industry exhibits limited cyclicality; human health remains an enduring priority, as health is fundamentally the most important aspect of human well-being.

In the 21st century, biotechnology is driving breakthroughs across various fields. For instance, after decades of development, immunotherapy has achieved significant technological advancements, reaching a stage where commercialization and industrial-scale production are truly viable. As a result, it has attracted substantial attention from investors.

Any major surge in interest in a particular direction is bound to have its reasons. Although many issues remain to be resolved, it is time for investment institutions to identify an appropriate entry point and strategically position themselves in this market. Immunotherapy is just one such area. Take gene editing as another example: it is currently a hot topic and still in its early stages. It may take three to five years, or even a decade, but it will undoubtedly become highly influential. Indeed, drugs developed through gene-editing platforms by a U.S. laboratory have already been launched.

The advancement of biotechnology is blurring the boundaries between pharmaceuticals and medical technologies, ultimately giving rise to what I term “therapeutic solutions.” China’s medical approval system categorizes medical devices, pharmaceuticals, and Class III biotechnologies separately. However, I believe the distinction between Class III biotechnologies and pharmaceuticals is becoming increasingly ambiguous, as many products integrate both elements and could reasonably be classified under either category. For instance, therapeutic vaccines differ significantly from preventive vaccines; therapeutic vaccines can be approved as pharmaceuticals, and in some cases, may even be regulated as Class III biotechnologies. Furthermore, the excessive number of steps in the approval process may, to some extent, hinder the development of this industry.

Biotechnology can effectively address gaps in clinical medical practice. For instance, while CAR-T immunotherapy is primarily effective against hematologic malignancies, it shows limited efficacy against solid tumors. In contrast, certain biotechnologies, such as oncolytic viruses, may demonstrate significant potency against solid tumors; direct intratumoral injection can ablate the tumor or at least reduce tumor burden. Increasingly, oncolytic virus-based vaccines are being developed to activate patients’ own immune systems, exerting a combined cytotoxic effect on both the primary tumor and distant metastatic sites. This approach represents a promising avenue for future solid tumor therapy. The field exhibits strong innovative capacity, presenting substantial opportunities for entrepreneurship and investment, and has become a key area of focus for me recently.

4. Opportunities in the development of traditional Chinese medicine are concentrated on large platforms, with active ingredient extraction and pharmaceutical machinery projects both viewed favorably

The field of Traditional Chinese Medicine (TCM) is unique, as it embodies China’s traditional culture and carries distinct Chinese characteristics. Consequently, TCM enjoys unequivocal policy support; the strong momentum of its development is evident from the multiple policy documents issued in recent years.

Opportunities in the development of Traditional Chinese Medicine (TCM) are concentrated within larger platforms, specifically platform-oriented TCM enterprises, which are generally listed companies on the A-share market. There are also unlisted companies that boast a comprehensive product portfolio and an integrated industrial layout, spanning from GAP-compliant cultivation bases for raw herbs to the production of TCM decoction pieces and sales distribution. Such enterprises with end-to-end industry integration represent attractive investment targets.

Another area warranting attention is projects focused on the extraction of single active ingredients. Professor Tu Youyou’s Nobel Prize win has served as a catalyst in this field. The primary challenge in extracting active ingredients from Chinese herbal medicines lies in the complexity of the discovery process; it is genuinely difficult to identify the specific effective components within these herbs. This is because the therapeutic efficacy of certain Chinese herbal medicines does not stem from a single compound, but rather from a multi-component formula, or requires the synergistic interaction of numerous constituents present in the herb itself to exert its effects.

The current trend is as follows: China’s National Medical Products Administration (NMPA), formerly the CFDA, primarily references the U.S. FDA in its approval processes. The FDA requires comprehensive clarity on all aspects, including ingredients, pharmacology, efficacy, and mechanisms of action, before granting approval. Therefore, it is advantageous to identify a single active ingredient; if this is not feasible, developing a combination product is also acceptable. In either case, substantial evidence must be provided to support the product’s efficacy.

There are also auxiliary elements within the realm of Traditional Chinese Medicine (TCM), such as TCM pharmaceutical machinery. Previously, pharmaceutical machinery was predominantly designed for Western medicines; however, it is now being adapted for TCM, with several large-scale enterprises already established in this sector. This field is relatively new. TCM pharmaceutical machinery possesses distinct characteristics and is designed based on the conceptual framework of Western pharmaceutical machinery. Since such specialized equipment does not exist in the West and is unique to China, I believe this niche market has the potential to support at least one publicly listed company.

Xiao Peiling (Penny)

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