Author: Qing Yi Translator: Kunyang Wang
Publisher: GPLP
“the boundless scenery is at the perilous peak. ” It is normality that there are few entrepreneurs, high threshold and long cycle in the medical area, which has become obstacles to restrain the development of emerging medical industry. However, when the temptation of the medical industry’s rosy prospect and huge opportunity is waving at us, few can resist.
On June 24, 2018, 2018 Medical Investment Summit hosted by GPLP was held in Beijing. Let’s check out what inspiration the celebrities in the industry’s investment circle and entrepreneurs have given us.
Tingyou Si: It is the key to grasping the allocation and trend of assets in investment.
Tingyou Si, General Manager of Asset Management Center, BUCHANG PHARMA
The return of investment is comprised of:
First, asset portfolio.
Second, the timing. It means the tendency and the cycle of the market. If I were an investor, 60% the chances of success belong to asset portfolio, timing or tendency accounts for 20/30%, the percentage of the project is more or less the same.
The rationale behind the asset allocation is: Why do LPs invest those funds?
The reason is easy: you can only allocate 24 hours a day. With limited time, there are not numerous choices available. That’s why LPs choose asset allocation.
Firstly, there are too many things and people beyond my understanding. So the best possible choice left for me is to invest in the top GP and follow him.
Secondly, invest in the sector you’re most familiar with.
However, a question remains: When investing in the top GP, the quality of the projects available for LP is much worse.
That requires the following abilities of the GP invested by LP:
First is the ability to foresee the future;
Second is the ability to develop the strategic map;
Third is the ability to adapt to changes of the market, a character without which is fatal;
Fourth is the ability to transform timely;
Fifth is the ability to establish an innovative business model, which requires creation of something new;
Ultimately, combined with excellent management and continuous innovation, you will eventually be able to achieve great cause, whether it is a company, GP or LP. You can’t do it yourself blindly. You need to know the future trend and the direction of development. Only by constantly innovating and adapting to changes in the market can innovation be achieved.
Jinsong Zhao: properly capturing the cycle of the market, every industry will step into quick development.
Jinsong Zhao, founder of Cybernaut Growth Fund, L.P.
CGF mainly focuses on growth funds. Our earliest investment is in the communications industry because that’s where we started. In addition, we have invested in some GPs to let them expand the boundaries.
For the future market trend, although the overall economy will not develop as fast as before, I think that some market segments have opportunities for rapid development at a certain stage. If you are familiar with an industry, you know that the cycle and the precise point where you would not miss your footing. For example, medical services pharmaceuticals or medical devices in the medical industry. That’s my case in point: every industry has a high-speed growth point.
Yuanping Xu: adhere to prudence and non-regulatory market
Yuanping Xu, partner of Fortune Capital
Fortune Capital is investing in a prudent yet radical way, while medical investment takes on a more steady tone.
For medical investment, Fortune Capital’s investment logic is:
First of all, Fortune capital generally does not make a layout investment. Every penny they spent is responsible for LP. However, not making layout investment signals an inevitable flaw.
Secondly, real medical investment is in the regulatory market, which needs to be reviewed, and its development is relatively slow. The data of the regulatory market are also open. So many people could have access to the regulatory market projects. Therefore, the value of the regulatory market is relatively high in recent years. That led to us alter the course of medical non-regulatory market. In the past two years, nearly one-third of our money have been invested in non-regulatory markets related to health care, such as biotechnology, devices or drug-related products.
Huiting Jia:work with hospital helping them upgrade
Huiting Jia , the Managing Director of Pagoda Investment
Pagoda investment is a fund platform created by the Australian sovereign fund QIC in China. It is a private equity investment fund that invests in technology-based and growth-oriented companies. We focus on finding investment opportunities for growth and mergers and acquisitions across the globe, investing primarily in high technology and healthcare, with projects in China, Australia, the US and Germany. At present, it has invested in more than 30 high-tech barriers and high-growth innovative companies such as Himalayan FM, JD Finance, Didi, Meituan-Dianping, ICON Australia Private Oncology Service.
In the field of medical and health care, the Chinese market is optimistic. At present, the incidence of cancer in China remains high, the 5-year survival rate of cancer and the gap among China, Europe and the United States are huge, which leads to and huge investment opportunities in this field. Our investment is deeply integrated with new medical technologies and services around the world. We are committed to bringing advanced medical technology and services from overseas to China through the cross-border technology transfer platform, and to achieve advanced cooperation with partners in the medical and health industry chain. The develop of bio-medicine, medical devices and medical services in China will improve the efficiency of medical services and help the domestic medical industry to upgrade and transform.
We focus on finding systematic investment opportunities in the industry chain. At present, our investment focuses on the oncology industry, and we have introduced the largest cancer comprehensive treatment chain hospital in Australia, one of our invested company, to our country. We’re deeply committed to in the whole industry of cancer screening, treatment and rehabilitation. Investing in the cancer-treating equipment, pharmacy and service companies, bringing the most advanced and comprehensive cancer treatment services to patients in China. At present, we are working with top hospitals, large medical groups and insurance institutions in China to promote ICON’s development in China and invest in cancer treatment centers in various regions of China.
In my opinion, the most important thing for entrepreneurs and investors in the medical field is focusing. Entrepreneurs should put their own technology to the extreme. Investors should focus on finding good companies and doing good services, breaking the bottleneck of the development of entrepreneurial enterprises, and using their own professional knowledge to enhance their understanding of the direction of industrial development and business, keeping pursuing the perfection of the model.
Dalong Fan: Industry and investment run neck and neck,and innovation is even more important
Dalong Fan, partner of GITA Investment Group
The 2018 is a special year.
This is especially true in the medical industry, where the medical industry is known as fast capital and slow medical care, so both investment institutions and entrepreneurs need to be cautious.
Before the LP configuration, the investors must consider the cash flow issue in advance. Funds in 2018 are relatively tight. For entrepreneurs, the difficulty of financing has increased. Therefore, my suggestion to entrepreneurs is to accumulate grain in great account and take things slowly.
Regarding the pros GITA investment has, it is advantageous that GITA focuses on medical investment, the single amount of investment is relatively large, basically more than one billion yuan, focusing on PE investment. At present, GITA has formed its own eco-industrial circle, including medicine, medical equipment, and medical services, with industry and investment running neck and neck.
But what is the next breakthrough for GITA? In my opinion, it is innovation. In 2018, only innovators can break through the dilemma.
Ningyuan Zhao: the professionalism and range of ability is a key factor of assessment
Zhao Ningyuan, Managing Director of Tang mother funds
Tang has its own map of the GP location. Instead of GPS-baesd industrial map, our FOF map is made by personally reviewing. Last year alone, Tang had contact with 826 GPs, and conducted exchange with 493 GP. Only by having access to more information, then you can make comparisons.
Regarding the elements of medical GP, professional background, resume, and performance is important, because medical care is an industry with a very high threshold and technology-preference. Only GP that is professional enough, can give reasonable valuations and avoid investing in many overheated projects;
Secondly, we hope that GP has his or her range of ability, because the subdivision of the medical industry is too subdivided and the barriers are high. Even if one GP is professional, it is impossible for him or her to cover all fields. If gave a project he or she is not familiar with, the GP needs to give it to the hands of professionals who really understand by using his or her own professionalism, experience and range of ability. So they can make sure the technology is countable and valuable.
Another thing is the layout of industry. A 500 million funds only from a small ecosystems, but investors still need to possess a sense of layout, which means they need to have backup logic of investing.
Finally, of course, post-investment service is of high importance, rather than the general meaning of post-investment management. I hope that GPs invested by us will pay more attention to post-investment services when investing in enterprises, relying on their own range of ability and professional investment to help them through the early death curve, including R&D, sales channels, administrative approval, crisis public relations, and human resources. Hiring, etc. And giving them a hand when necessary would be much appreciated.
