Capital + Innovation — China’s Pharma Sector’s New Development Model

Published on October 12, 2021 by Junfang Wang

The private equity and venture capital (PE/VC) industry and the number of related investment events grew significantly in 2014, when China experienced the first bull market after a five-year bear market. However, the market started cooling in 2019 with a sharp drop in the number of investments due to the explosion in peer-to-peer (P2P) lending and new regulation prohibiting multi-layer nesting. With the outbreak of the pandemic in 2020, the number of investment events reduced further, but the amount of investment actually exceeded that in 2019 since more money was invested in high-value sectors such as healthcare and integrated circuits. By July 2021, the number of investment events was almost 70% of the total in 2020, and the amount of investment was more than 80% of the total in 2020.

The high-value healthcare sector has become a hot spot for investment in recent years, attractive to large PE/VC institutions. Since the start of the pandemic, the number of investment events in the sector has increased significantly. While the total number of investments dropped in 2020, the number of investments in the healthcare space increased, accounting for 11% of total investment events and 14% of the total amount of investment.

The main reasons for increasing investment in the healthcare sector:

A number of domestic institutions, such as Hillhouse Capital, focus on investment in the healthcare sector. Hillhouse Capital is best known for participating in eight financing rounds from BeiGene since 2014 — from round A to listing. BeiGene is one of China’s leading biotech companies, with a current market capitalisation of more than RMB200bn. In the 11 years since it was founded, it has achieved total financing of RMB44.1bn, has been listed on two markets and is likely to be listed on a third this year.

With healthcare in constant demand and a dearth of therapeutic drugs for a number of diseases, healthcare investment remains a hot area. Domestic policy is now trending towards innovative drugs, and PE/VC and other investors will likely focus on pharmaceutical companies with strong research and development capabilities.

How Acuity Knowledge Partners can help

We provide in-depth interpretation of macro policy and industry news, and research the fundamental values of listed and unlisted companies based on our professional valuation and financial analysis skills to support investment recommendations.

We are experienced in healthcare research and compiling professional valuation reports including analysis of policies implemented by China’s National Medical Products Administration (NMPA), the healthcare sector and the target company to help clients estimate the value of an investment.

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About the Author

Junfang Wang, Associate, has 3 years of experience in private equity investment analysis with a focus on China market. At Acuity Knowledge Partners Beijing office, Junfang supports investment services to clients, covering various industries. She holds a master degree in Finance from University of International Business and Economics.



We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.