Venture capital institutions rave about the temptation of the 3 trillion yuan biopharmaceutical industry scale

Recently, Li Jun (pseudonym) traveled around in many cities and met with entrepreneurs of biomedical companies one after another.

"Now there are too many funds to invest in biomedicine. If you don't hurry to talk, it is easy to be robbed by other institutions." Li Jun is now a partner in Chengdu Hi-tech Zone who prefers biomedical venture capital.

As biomedicine becomes a strategic emerging industry, both venture capital and local governments are eager to try to join this round of "gold rush". For example, Chengdu recently decided to invest 5 billion yuan to build a biotechnology park.

Capital competition

At present, in the field of biomedicine, a large enterprise group has not yet formed, and many companies have the opportunity to grow bigger and stronger.

Not long ago, an executive from a listed biopharmaceutical company in Jiangsu and Zhejiang came to Huang Huajun, head of Tianhe Biomedical Science and Technology Park, to visit the office of Chengdu High-tech Zone. The purpose of their trip is very clear. Because the listed companies are plentiful, they hope to find potential biomedical projects and participate in shares by venture capital.

"For them, this is a very attractive investment." Huang Huajun said, because up to now, Chengdu High-tech Zone has gathered more than 200 biomedical companies, including 40 large-scale companies, well-known companies with sales revenue of more than 100 million14 Home.

But Chengdu is not satisfied with this, and is also preparing to continue to invest heavily in the field of biomedicine.

Huang Huajun revealed that Tianfu Life Science and Technology Park will cultivate more than 20 biomedical innovation enterprises with an output value of over 100 million yuan, and more than 10 biomedical potential enterprises with listing conditions, and will incubate and cultivate more than 300 new biomedical projects (new products).

These projects have brought great temptation to venture capital.

For example, as early as November 2010, Chengdu Yinke Ventures and Vivo Venture Investment Management Company of the United States established Vivo (Chengdu) Biotechnology Venture Capital Co., Ltd. in the Chengdu High-tech Zone, with a total initial fund of 100 million yuan. yuan.

According to relevant sources in Chengdu High-tech Zone, the first phase of the fund has been invested, and the second phase of funds is currently being raised, with a scale of 400 million to 500 million yuan. According to statistics, in the first half of 2011, biotechnology / healthcare topped the list of PE fund investment hotspots with 22 cases, surpassing the Internet and clean technology industries. In terms of investment amount, biotechnology / medical health has exceeded the 2010 level.

According to the analysis of people in the Chengdu High-tech Zone, there are two reasons why various capitals are so fond of the biopharmaceutical industry: First, the pharmaceutical industry has a large market space in the future. Yao Jun, director of the Planning Department of the Ministry of Industry and Information Technology, said recently that the overall goal of the development of the biopharmaceutical industry in the next five years is: the industry scale will exceed 3 trillion yuan by 2015, with an average annual growth of 20%.

Another reason is that in this area, a large enterprise group has not yet been formed, and many enterprises are still in the early stages of development and have the opportunity to grow bigger and stronger.

Test funding match

The industry is too sought after, and it is easy to cause rapid capital gains, but it is not recommended that companies get too much exposure to venture capital.

Funds are surging, but the matching is still insufficient.

Mejin Bio is a company engaged in the research and development of cancer stem cell targeted drugs and gene therapy technology, as well as the research on the transformation of cell biotherapy technology in Chengdu Hi-tech Zone. The company has invested 50 million yuan in the first phase, and its products are still in pre-clinical research.

"We are now mainly relying on capital investment from shareholders, and have not been able to borrow or introduce venture capital." A company official said.

Compared with other industries, biomedicine is characterized by high threshold, large investment and long cycle. From the pre-clinical research to the final market, a biomedical variety has to go through nearly 8 to 10 years.

An executive of Chengdu High-tech Guarantee Company said that the characteristics of the industry determine that the financing of biomedicine is divided into three stages: R & D, clinical and industrialization: VC should be entered in the early stage, various PE institutions are in the middle, and the bank is at the back end.

"One of our loan customers is an enterprise that has already achieved small batch production." The source said, but since there are few VCs in the true sense, the current domestic venture capital institutions mainly focus on investment in the middle stage.

However, the concentration of venture capital has also pushed up valuations.

"We often encounter some peers competing with high prices, such as a price-earnings ratio of 20 times. We certainly dare not fight for this kind of quotation." Li Jun said that the risk is that first of all, the product line of small and medium-sized biopharmaceutical companies Single, the market is uncertain after the product is listed; secondly, the new drug approval system is becoming more and more strict. When making profit forecasts and valuation analysis, if it is too optimistic, the delay of product listing time will often bring more pressure to investors. .

A local person in Chengdu said that in this case, it is not recommended that companies get too much exposure to venture capital, because the industry is too sought after by capital, which is more likely to cause rapid capital gains, which is not conducive to the development of biomedicine.

The above information source "Venture Investment" is authorized by the China Venture Capital Research Institute (CVCRI) to publish it. All rights reserved. Please indicate the source when reprinting.

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