Top-Tier VCs Unanimously Declare: Innovative Drugs Remain China's Premier Investment Sector

"Over the past few years, the innovative drug industry has indeed been affected by fluctuations in the capital market cycle, policy changes, and geopolitical shifts. But I believe,From the perspective of technological innovation in this industry and the large number of unmet clinical needs, the innovative drug sector remains one of the best investment industries.”

At the 10th Innovation and Investment Conference,Yuan Quanhong, Founder and CEO of Hancang CapitalA few words expressed the consensus of the guests present.

In 2025, whenInnovative DrugSecondary Market FollowBD Fever Restores Valuations, Hong Kong IPO Window Wide Open, Primary Market Still on Hold. According to statistics from the PharmaCube InvestGo database, in the first three quarters of 2025,Primary Market in China's Medical and Health Field (excludingIPO) A total of 972 investment and financing events occurred, a year-on-year decrease of 15.3%; the total financing amount was 54.625 billion yuan, a year-on-year decrease of 7.7%.

At present, the pullback in the secondary market has cast a deeper shadow over the industry's future."Now HIBOR has reached over three percent, significantly higher than the level of just over one percent at the beginning of the year, indicating that the abundance of funds is indeed weaker than in July and August." Chen Zhu, Chief Analyst of the Healthcare Business at CITIC SecuritiesAnalysis,"From a medium- to long-term perspective, the market trend will continue to rise, but there may be a small half-year consolidation period — this trend has already emerged recently in Hong Kong stocks and A-shares. Funds that have already entered the market will take profit by the end of the year, and new funds are unlikely to take over at high positions, potentially shifting their focus to primary markets instead."

A round of rally in the secondary market has materialized.The bets placed by VCs nearly a decade ago. After the清算, the primary market will eventually need to answer the question of "Where is China's innovative drug industry heading?"At this moment, H&K Capital, Hillhouse Ventures, Morningside Ventures, Boyuan Capital, and HD Investment collectively voiced:VCs haven't exited the market but are instead examining new structural opportunities.

Back toα, Addressing Unmet Clinical Needs

"We have always believed that the demand for innovative drugs continues to exist, even in 2024 and 2025. These are also the two years where we are investing the fastest."Yuan Quanhong said,"The two major investment themes we focus on are, firstly, China's major diseases — currently, the biggest infectious disease in China is hepatitis B, with an infected population reaching 70 million; and secondly, the next generation of cancer immunotherapy following PD-1."

Last YearIn December, Hancang Capital led the investment.AusperBio$73 million Series B financing, followed by continuous participation in Series B+ and Series B2 financings in May and September this year, to support the clinical development of its core product — AHB-137, an ASO drug for the functional cure of chronic hepatitis B.

Currently,AHB-137 has entered Phase 3 clinical stage in China, ranking second globally in terms of development progress, only after GSK and Ionis Pharmaceuticals.Co-developedBepirovirsen。

On another main thread, Hancon Capital had a deal lastingAn 8-year investment has seized the window of opportunity for this year's recovery in Hong Kong stocks, leading to an IPO.

From 2017 to 2019, Hanking Capital saw potential inVibeBio's monoclonal and bispecific antibody technology platforms and next-generation immunotherapy antibody pipeline, continuously participating in its seed and angel rounds of financing. In July this year, V立志AusperBio with registered clinical-stage products andNewCo Achievements Rings the Bell at HKEX, becoming a new generation of Hong Kong stocksBenchmark Enterprise in 18A.

Similarly inIn 2017, when He Xin founded Huiding Investment, "the unmet clinical needs globally were evident, particularly aging."

Therefore, she chose to gatherFocus on Three Aging-related Tracks: Degenerative Diseases, Corresponding to Regenerative Medicine; Based on Chronic Inflammation as a Pathogenic Factor of Major Diseases, Focus on Immunity; Targeting the Often Complex Diseases in the Aging Population, Bet on Precision Treatment; and Emphasize Doing"Global New".

In eight years, what impressed He Xin most wasMicroZhuo Bio, a company that develops bio-artificial livers.In 2018, Huiding Investment exclusively participated in its RMB 50 million Series A financing round, taking the lead in clinical trials and deeply engaging in the research and development of its core products.

"It directly transdifferentiates human fibroblasts into functional hepatocytes. Without a comparable project overseas,From the approval of clinical trials by the pharmaceutical regulatory authorities to validations in various aspects such as safety and production, both the company and we have faced numerous doubts and challenges."He Xin said.

Currently,MicroVita Bio's Bioartificial LiverHepaCure has advanced to the pivotal registration clinical stage, with indications expanding from severe liver failure to post-surgical rehabilitation for late-stage liver cancer, liver cirrhosis, and more, demonstrating clinical application potential as an alternative to liver transplantation.

These innovative drugs have reached the forefront globally, thanks not only to companies focusing on clinical needs and strong support from investors, but also to another factor that cannot be ignored.——The Engineer Bonus and Clinical Efficiency Advantages in China. This has been the key to China's leapfrogging development over the past few years, and will also be a powerful tool for expanding competitive advantages across more drug types and disease areas in the future.

“Innovative drug development ultimately boils down to competing in trial-and-error efficiency.Tao Feng, Founding Partner of Boyuan CapitalSummary,"The efficiency of China's innovative pharmaceutical companies is currently the highest in history from a time perspective and the strongest globally from a spatial perspective, without a doubt."

Hallmark Ventures Director and General Manager Xie TingAlso agree:"Cost, speed, and quality are the three key factors in innovative drug development. Twenty years ago, there was a gap between China's quality and international standards, but today they are basically on par. At the same time, costs are much lower and speed is much faster, allowing for rapid iteration."For exampleIn the ADC field, there is now a clear shift towards bispecific ADCs, which is actually because this kind of engineered innovation is China's strength. Once the technical bottlenecks are thoroughly understood, it’s all about who can make good drugs the fastest and at the lowest cost."

In the field of antibody drug discovery, which requires high-frequency experiments, extensive screening, and repeated optimization, China's advantage in the number of engineers has created a dividend.

According to the Shanghai Pharmaceutical Industry Information Center, the cost of preclinical stages such as animal testing and compound screening in China is30%~60%。With the same budget, Chinese pharmaceutical companies can invest more manpower and experimental resources, thereby increasing the likelihood of screening out"Ideal Antibody".

He Xin in the R&D of invested enterprisesIn the process of developing IL-12 polyclonal antibodies, this point was deeply realized. After several years of preliminary research and development, its compound is about to enter the clinical stage.

"At present, it shows very little increase in interferon-γ, virtually no systemic toxicity, and a therapeutic window 50 to 100 times greater than existing international options."This is also due to our efforts in the early stage of the mouse model phase.'China Advantage', tried more than 4,000 combinations, including different combinations of antibody targets and different combinations of affinities."He Xin said.

Entering the proof-of-concept stage, the advantages of China's clinical resources and efficiency become prominent. The large population base, combined with the continuous optimization of clinical trial management by the drug regulatory authority in recent years and the introduction of specific clinical trial frameworks, allows Chinese pharmaceutical companies to generate first-in-human trial data more conveniently and quickly compared to other countries.

This is particularly beneficial for companies in China.In cutting-edge fields such as CGT and nuclear medicine, development is proceeding with "zero gap" globally, or even achieving a "head start".

Investors have also noticed this. Xie Ting stated:"GL Ventures has never reduced its investment in the CGT field, including in-vivo CAR-T based on mRNA or lentivirus."We encourage relevant invested companies to make use of China as soon as possible.IIT Resources Obtain Clinical Data, Seek International Cooperation.”

Huang Lu, Executive General Manager of晨兴创投, frankly stated,"China has an absolute advantage in in-vivo CAR-T," not only because of the convenience of entering clinical validation at an early stage, but also due to the overall technological advancement in China's biopharmaceutical innovation.

"Whether it is editing technology, high-throughput protein sequence screening, delivery system construction, or viral vector development, China has moved beyond the laboratory stage to reach industrial-level standards." She further concluded,“In the future, as capabilities strengthen, China inCMC-driven drug types will also have an absolute advantage.”

Global CoolingCGT Gains Favor in China, Reflecting the Country's Biomedical Industry Leveraging Its Strengths to Make a Global Impact. The global biopharmaceutical industry is watching this trend closely — as highlighted in a recent article by Endpoints News, which pointed out that China's biotech sector is moving away from the "fast-follow" model of drug development, thanks to an influx of top talent, flexible regulatory policies, and an unmatched speed advantage.

"Small nucleic acids are absolutely leading globally, radiopharmaceuticals are absolutely leading, and the modification of tumor surface carbonylated proteins is also absolutely leading."Chen Zhu has observed the frontier signals,"In the early days, when we communicated with many scientists, most of them were following the mature targets transplanted from abroad. Now, we can see more and more Chinese scientists taking the lead in clinical research, with R&D pipelines that possess global foresight. Conducting MRCT is no longer a concern due to a lack of participants. I believe this system is improving and will be able to support the emergence of more 'true innovations' from within China over the next 5 to 10 years."

With the two major advantages of talent aggregation and clinical efficiency, Chinese pharmaceutical companies have alreadyThe early stage of "screening and validation" has established global competitiveness, even showing a trend of "spreading to the US Biotech".

"Whether it's due to U.S. demands for lower drug prices or their own development needs, MNCs want to cut costs and will inevitably license-in from cheaper places," Xie Ting analyzed.“From this perspective, China"Biotech has replaced many overseas Biotechs, and their share of the market has basically been taken by us."

According to PharmaCubeAccording to the NextPharma database, in 2025, the transaction value of China's innovative drug license-out deals surpassed that of the United States for the first time, with a gap of 3.2 times.

But on the flip side, when Chinese pharmaceutical companies maximize their efficiency advantage and export a large number of early-stage assets, the weaknesses in late-stage clinical development capabilities and the lack of original innovation start to become more prominent.

In recent years, ChinaThe R&D stage of license-out projects tends to be in the early phase, with the proportion of assets from preclinical to Phase II clinical stages increasing year by year. However, Phase III clinical assets that can "go global" remain few and far between.

In response to this,Xie Ting frankly stated that Chinese pharmaceutical companies inThere is still a significant gap in the capability of Phase 3 clinical development compared to MNCs."When we communicate with MNCs, we find that they generally have an awareness, which is to continuously 'enhance' a drug – maximizing its function and efficiency through clinical design. We are lacking in this aspect."”

More严峻的是，当中国药企在全球生物医药创新生态中抢下美国Biotech's Position: MNCs Also Leverage Mature Clinical Development Capabilities to Capitalize on the Advantages of China’s Clinical Resources and Efficiency.

Huang Lu reminded that Chinese pharmaceutical companies must realize the competition in this aspect."Now all MNCs have come to China, using master contracts to secure the top-tier Class III hospitals in China, ensuring they get priority access to these clinical resources."

Hospital resources are not only crucial to the quality and speed of clinical trials but also directly impact the development of clinical translational capabilities. Huang Lu reminded,In the past, in oncology drugs,"The Pearl on the Crown" era is when MNCs cultivated oncology experts in China, helping them grow from purely clinical doctors to research-oriented doctors, thereby supporting innovation and development in this field.

The underlying implication is that, with the rise of disease areas other than oncology in the current landscape, whether Chinese pharmaceutical companies can cultivate a group of research-oriented doctors in the corresponding fields and form independent clinical translational capabilities will be crucial."The Key to 'Shifting the Balance of Power'."

Huang Lu's observation is that the number and quality of original innovation laboratories in China have already ranked among the world’s top, second only to the United States, but the weak clinical transformation ability is restricting the implementation of original innovations."This is limited by our own lack of know-how, and research-oriented clinicians also need to grow."

In the field of immunology, for example, in recent years, Huang Lu has observed the development of a large number of new immunological targets in the immunology departments of multiple scientific research institutes in China, many of which have completed mechanism validation, and there are even world-class research achievements."But the most challenging issue is how to select the indications. The pathogenesis of many immune diseases itself is not clear. How to collaborate with clinical teams to find the most suitable targets and indications is the most difficult part."

In the past few years, Chinese pharmaceutical companies have successfully implemented what Yuan Quanhong mentioned."The Path of 'Mature Target Iteration',"如今，from 0 to 1 source innovation has become the industry-recognized next major trend.It remains to be seen who can be the first to break through these bottlenecks.

Yuan Quanhong Summary:“If we want to take it to the next level,Basic research, clinical practice, and regulatory review need to work together.——For a scientific breakthrough to move from the laboratory to clinical application, it requires interaction with clinicians and also collaboration with regulatory agencies to clarify approval standards."

This is not only a challenge for scientists, entrepreneurs, clinicians, and regulatory authorities, but also for investors, from the perspective of the secondary market.Chen Zhu's Judgment:"From the past fast-follow to future source innovation, in this process, funds will definitely have a corresponding reshuffle, gradually returning from general funds to vertical funds taking the lead."

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