Research shows that health industry is still the top priority of venture capital

Business Club December 17th With abundant investment appetite and unimpeded exit channels, VC and PE are not afraid of high-risk hardships, and are not willing to give up on biotechnology and medical health complexes.

"From a professional point of view, it is difficult to say which specific direction we are more concerned about. The key is to have characteristics. We will continue to invest in health care." On December 8, at the 10th Annual Forum on Venture Capital and Private Equity, Tian Lixin, partner in charge of Tak Capital, said.

This event brought together the biggest names in venture capital circles including Shen Nanpeng, Zhang Suyang, and Qi Linqi. They analyzed the development trend of current venture capital from different angles.

The reporter found at the forum that medical and health care has become a hot spot for investment, and investments and withdrawals have been more active. In contrast, private equity investment is more popular than venture capital, IPO is still the main channel for exit, and M&A exit is also very active. Although the average rate of return in the domestic market is higher than that in foreign countries, how to choose the place of listing is still a matter that needs comprehensive consideration.

Active market

According to a research report issued by the founder of the Zero2IPO Group, Ni Zhengdong, from January to November 2010, the total amount of venture capital investment (hereinafter referred to as VC) raised a record high, which laid a solid foundation for the active investment. This year, there are 707 total VC investment cases, including 64 cases investing in biotechnology and healthcare, with a total funding of 346 million U.S. dollars, and 21 VC-backed deals.

In the equity investment (hereinafter referred to as PE) market, a total of 26.409 billion U.S. dollars were raised from January to November 2010, and the investment scale was 9.317 billion U.S. dollars, a total of 307 investment cases. Biotechnology and health care have become the hearts of PE. They have won the top spot with 49 investment cases, and the investment scale is 700 million U.S. dollars, ranking the 5th, indicating that the average investment amount per one single is smaller.

From the perspective of exit channels, there were 16 IPO exit cases in the biotechnology and healthcare fields, accounting for 12% of IPO exit cases.

In addition, 44 mergers and acquisitions occurred in the biomedical field, with an average acquisition amount of nearly US$66 million. Excluding the undisclosed portion, the biotechnology and healthcare areas ranked No. 5 with the average amount of M&A, and the total amount of M&A accounted for 6.9% of all M&A cases, which was approximately US$2.9 billion. The number of M&A cases with VC/PE background was 9 and the amount of acquisitions was nearly 300 million U.S. dollars. The average acquisition amount was 0.33 million U.S. dollars. In addition, 12 cases of overseas listings in the field of biomedicine have also taken place, with an average amount of nearly US$150 million being raised.

Ni Zhengdong concluded that the rapid recovery of China's VC market this year, the PE pattern began to change, the diversification trend of the two investments is obvious, and biomedical care has begun to be favored. Overall, industry investment is still in close touch with the adjustment of national industrial organizations, but the continuously rising investment fundraising scale has laid a slogan for the pressure of late investment competition.

A participating venture capitalist explained to the “Medicine Economics” reporter the hidden trend behind the numbers. He believes that activity is increasing in the biotechnology and healthcare fields and will continue in the future. This year, the number of PE cases in the biomedical field ranks first. It also shows that PE is optimistic about this. This indicates that in the future, the GEM will see more companies in the biomedical field, but it also indicates that the intensification of competition and the increase in the multiple of PE under the contradiction between supply and demand may bring about a certain negative impact on future exits. In the secondary market in the future, the biomedical industry must either maintain a high valuation, or PE will have to bear the result of a low rate of return.

Listing choice

How to choose the place of listing is very important for the company and the VC/PE behind it. After all, the difference between the domestic and overseas markets should not be underestimated. The rise of RMB funds and the high price-to-earnings ratio of the Growth Enterprise Board have led many companies to start to look forward to the domestic market.

Lou Yunli, co-founder of Maiton Investment, pointed out that overseas listing requires a certain company equity structure. Overseas listing is sufficient as long as it satisfies the requirements, so it is possible to roughly predict the timetable for listing, which is beneficial to both investors and investees. The domestic market is an approved system, and some procedures are not controllable by a company or VC/PE. He believes that the factors that will make the company's faster time-to-market need to be faster, if the PE is not much different, it will be more inclined to fast.

“Where are your investors? Who will buy your stocks? Where will your company be understood?” Peng Zhijian believes that choosing a listed location requires first answering the above three questions, only the market where the company’s value can be understood. Is the most suitable listing site. Overseas, the main business of some Chinese companies is difficult to understand, such as traditional Chinese medicine, the value of the company can hardly be reflected. He feels that the Hong Kong market is a good place. It is closely related to overseas financial markets and the common cultural foundation will make understanding and communication easier.

As to whether the high valuation of the GEM will continue next year, there are differences among the participants: Some believe that it may continue, while others believe that the regulatory level may be adjusted and will be lower than this year. However, in the long run, everyone agrees that they will return to the value standard. This means that the attractiveness of the high valuation to the choice of the company's listing will gradually dissipate, and the listing of the company will eventually return to a better understanding of the value of the market and reflect this fundamental point.

For specific investment areas, the reporter interviewed some of the heads of venture capital companies. Many responsible persons stated that there are more or less funds invested in medical services. Medical devices are more popular at present, but biopharmaceuticals are relatively rare. Everyone says that bio-pharmaceutical expertise is too high to be seen. Understanding, so the investment is more cautious.

And some specialized medical industry funds are emerging. Xu Ping, founding partner of Pangu Chuangfu Investment Management Co., Ltd. disclosed that she is currently setting up a special fund to examine the value of some Japanese patents that are about to expire, and selectively introduce them to China to land. Its partner in Japan has been selected as a Chinese who has traveled to Japan for many years and has been immersed in Japan's bio-pharmaceutical field for many years. Fidelity Asia Ventures, which focuses on biotechnology and healthcare, also revealed that it is investing in a biopharmaceutical case. Although the project is still in its infancy, the innovative business model is exciting.