Learning pharmaceuticals is highly sought after by capital. Investment institutions active in the global healthcare industry include Aobo Capital, Hillhouse Capital, Sequoia Capital China Fund, Shanghai Pharmaceutical (Hong Kong) Investment Co., Ltd., Ra Capital, Junhui Capital, Casdin Capital Eli Lilly Asia Fund, Perceptive Advisors, Qiming Venture capital.
Li Bin, the founder of Qingchi Capital, said that the epidemic will accelerate the industrial upgrading of China’s medical and pharmaceutical industry, and it will especially bring qualitative changes to the sub-sections of medical equipment, diagnosis and Internet medical treatment. The broad market and good development prospects have brought a new round of joyous songs to investment institutions.
03 R&D demand, urgent listing
Medical-related companies have always been a driving force in the Hong Kong stock market.
Medical companies get together to go public not only to meet the requirements of investment institutions, but more importantly for long-term development. Listing has a lot of benefits for the capital needs and liquidity needs of new product research and development of pharmaceutical companies.
Medical companies, especially pharmaceutical companies, are different from companies in other industries. The products have higher requirements for research and development, and the costs are greater, and the corresponding companies bear more concentrated risks.
According to a report from the China Commercial Industry Research Institute, the development cycle of a new drug may be as long as 15 years, and the development cost may exceed hundreds of millions of yuan. In addition to research and development expenditures, the establishment of production bases, quality systems and technical teams all require a large amount of capital investment. Therefore, huge investment and long payback period have become the main barriers to entry in the pharmaceutical market.
In addition, delays in the development of innovative drugs and first generic drugs and delays in drug registration and approval procedures will affect the time to market. The experienced R&D team and technical team have become the industry’s hottest sweets and pastries, which have high technical barriers for new entrants.
Therefore, affected by many restrictive factors such as R&D capabilities, development costs, risk assessment, etc., ordinary pharmaceutical companies can only develop a limited number of new products, and once the development fails, the company’s losses are huge.
But in the same way, having a competitive product can allow medical companies to occupy the high ground in the market.
For medical companies, investment may not be able to develop new products, but without investment, there must be no new products. Huge R&D expenditure is the key to maintaining long-term competitiveness.
04 stable performance, strong stocks come out in large numbers
“This is really scarce value. Healthcare may be the most active industry (in capital markets) at the moment,” said Cathy Zhang, managing director of Morgan Stanley and head of Asia’s healthcare business in global capital markets.
Looking through the past, the pharmaceutical sector has always been an important target for crossing bulls and bears, and it is also a concentration camp for bull stocks. After the listing of medical companies with core products, their performance is basically in a state of continuous growth, and they are heavily invested.The favored.
Take A-shares as an example. Among the proprietary Chinese medicines, Yunnan Baiyao, Cardiac Stent Lepu Medical, Biomedical Shuanglu Pharmaceutical, Sinopharm Circulation, and Hengrui Pharmaceuticals of chemical preparations, etc., have continued to increase their share prices after listing. Bring huge benefits to investors.
Medical companies naturally carry the “bull stock” gene.
First, it is quite difficult for innovative medical products or medicines to be imitated. High-tech technology and R&D have turned away a large number of companies that want to get a share of the pie. Moreover, new products developed under continuous R&D investment and clinical accumulation are under patent protection, and the profits of medical companies can be imagined. However, it is difficult for new products in medical companies to successfully enter the market. The average probability of success of drugs is only 1/10000~1/5000. Therefore, the emergence of a blockbuster product has a very high level of irreplaceability.
The second is that the history of human change is the history of fighting against disease. People’s demand for drugs will not suddenly decrease. The diseases threatening human beings are evolving from infectious diseases, respiratory system diseases, and digestive system diseases to malignant tumors, mental disorders, cardiovascular diseases and other diseases with high mortality. Diseases continue to evolve, and medical companies keep up with the changes in research and development.
Senrui Investment Chairman Lin Cunzeng wrote an article that medical and medicine is a sector with both consumer attributes and technological attributes, with both offensive and defensive characteristics; from the perspective of medical and medical innovation, there is no ceiling in this industry. , There will always be new things, new companies will come out, and excellent companies will continue to grow into great companies, become great companies in China and become great companies in the world.
As Andy Lin, the co-founder of China’s private equity fund Zhengxingu Innovation Capital, once said, “After the outbreak, government and society spending on the healthcare system will increase significantly, which will be beneficial to this industry.”
While my country’s medical industry is setting off a capital boom, it will drive many segments of the medical industry to achieve a qualitative leap to meet the needs of the further expanded market. At the same time, domestic medical companies will also face increasingly fierce global competition, speeding up research and development, and mastering research and development technology becomes a top priority.
Continuous research and development of new products, further market exploration, competition for imitation rights of star drugs, inter-industry mergers and acquisitions, and commissioning of business models are the foundations for medical companies to grow.
In the post-epidemic era, China’s population is aging, the middle class is growing, and medical companies are favored by investors. In the wave of capital, who will take advantage of the trend and become the next medical bull stock, and who will leave the market sadly under the rolling waves?
The medical reform is accelerating and the market is changing rapidly. Lin Cunzeng said, “Living in the right country, choosing the right track, choosing a reliable company, and firming up your beliefs will surely get excess returns.” Do you think the medical industry is such a track?