In the past week, a significant amount of medical funds have been established, with the total reaching as high as RMB 6 billion. Amidst the ongoing economic crisis, the healthcare industry—known for its anti-cyclical nature—has become a focal point for investors. The influx of investment funds has quietly accelerated the pace of development in this sector. Recently, the global H1N1 flu outbreak has once again brought attention to vaccine development and related industries. Venture capitalists believe that such crises will continue to draw investor interest, and many have expressed their views on the future of the industry.
**A 6 Billion Medical Fund is Now Available**
At the end of last month, it was disclosed that CCB International's healthcare equity fund (referred to as the CCB Medical Fund) received approval from the National Development and Reform Commission. This marks the first approved RMB medical fund in China and the first domestic company to focus on equity investments in the healthcare sector.
Chen Chunliu, deputy director of marketing at Jianyin Medical Fund, recently stated that the CCB Medical Fund is jointly managed by CCB International and Tongren Medical Industry Group. It is expected that the initial phase of the fund will not exceed RMB 5 billion over the next seven years. In the week leading up to May Day, Bio Veda Capital, a globally renowned biotech venture capital firm, showed interest in setting up a joint venture in the Guangzhou Development Zone, driven by optimism about the region’s biopharmaceutical industry. They are planning to establish a fund worth between one and two billion yuan focused on biomedical development.
Within just one week, the total amount of medical funds disclosed exceeded RMB 6 billion, which is a major development. According to venture capitalists, the introduction of large-scale medical funds will directly benefit from the new national medical reform program launched recently.
However, some experts caution that while the arrival of these funds is encouraging, the actual impact remains to be seen. Liao Junjun, president of Shenzhen Junsheng Investment Management, shared his perspective: “The management of large-scale industrial funds is crucial. Once funds are idle, it creates pressure. Evaluating projects typically involves reviewing 20 to 30 opportunities, and the operational costs are quite high.â€
**Potential to Create a Major Biopharmaceutical Player**
As the economy faces challenges, the healthcare sector—being anti-cyclical—has consistently attracted venture capital. Reports from brokerage firms highlight the promising future of the biopharmaceutical industry.
On the 6th of last month, the new medical reform program was officially released. Li Qiushi, an industry researcher at East Bank Securities Research Institute, pointed out in his report that China is strengthening its biotech R&D efforts. He emphasized the importance of tracking biopharmaceutical companies that may develop key products, including hepatitis B and AIDS vaccines, monoclonal antibodies, and recombinant human growth hormone.
CIC Securities analysts noted that the release of the medical reform draft will accelerate improvements in the healthcare system, and continued government investment will unleash pent-up demand for drugs over the next 3–5 years.
The CCB Medical Fund plans to invest in five key areas: pharmaceuticals (new drugs, specialty drugs, traditional Chinese medicine), medical devices (purchase, leasing, and equipment), medical institutions (hospital operations, renovation, and equipment management), medical services (logistics, tele-consultation, and training), and rehabilitation health care. As one venture capital CEO noted, these areas cover nearly all aspects of the medical field, except for general pharmaceuticals. However, he added that the profit margins in generic drugs are low, making them less attractive to venture capital.
Liao Yujun, however, believes that the new medical reform has reduced distribution costs, thereby increasing profits for generic drugs. "Previously, rural areas mainly used outdated drugs. With the universal health insurance plan covering 80% of the market in the next few years, the overall drug demand will rise significantly," he said.
**Epidemic Situation Drives Increased Investment**
During interviews, several venture capitalists mentioned that the spread of the H1N1 flu has led to a stronger focus on the medical industry, with investment activity increasing accordingly.
Huang Wei, president of Shenzhen High-tech Investment Group, which specializes in biopharmaceuticals, stated that the company is currently preparing to invest in vaccine companies. "We’ve been closely watching vaccine companies. Our previous investments were in upstream and downstream sectors, and vaccines will be a key area for our future investments."
Liao Yujun also mentioned that his company is following up on vaccine projects. "Currently, HIV and HBV vaccines are mainly imported. If domestic companies can produce them, the cost would drop significantly." He also highlighted the need for cervical cancer vaccines, noting that whether they are imported or produced domestically remains uncertain.
"However, this is a challenging industry that requires long-term commitment. New capital must be patient and not rush in just because of the H1N1 flu," Huang Xin reminded.
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