From September 27th to 29th, the 2020 5th China Pharmaceutical Innovation and Investment Conference was held in Suzhou. Participants believe that the next five years will be a critical period for the transformation and upgrading of China's biomedicine. With the intensification of aging and the improvement of people's living standards, the pharmaceutical industry has been improving for a long time.

The critical period of biomedicine transformation and upgrading

Ren Jinsheng, the annual president of China Pharmaceutical Innovation Promotion Association and chairman and CEO of Simcere Pharmaceuticals, said at the meeting that the biomedical industry is facing uncertainty and unprecedented challenges. The next five years will be a critical period for China's biomedical transformation and upgrading.

Elizabeth Myers, global chairman of JPMorgan Chase Investment Bank, said: "I have full confidence in the healthcare industry." For China's biotechnology and pharmaceutical industry, strong demand, technological progress and government support have formed strong support. In addition, the medical service sector has attracted more and more attention from investors, such as CRO, CDMO, and medical equipment and devices with high technical barriers. China is becoming a major accelerator of innovation in the global medical and health industry.

Zhou Yunshu, chairman and general manager of Hengrui Pharmaceuticals, said that the epidemic has had an impact on the pharmaceutical industry, with a sharp decrease in patients, a slowdown in sales revenue growth, and even a negative growth. In the long run, with the intensification of aging and the improvement of people's living standards, the entire pharmaceutical industry will improve in the long run. With the emergence of more biotechnology and the entry of capital, biomedical innovation activities have been active, a number of innovative products and innovative enterprises have emerged, and more innovative products have been clinically and listed overseas simultaneously.

Zhou Yunshu pointed out that the scale of domestic pharmaceutical companies is small. Whether it is a traditional pharmaceutical company or a new pharmaceutical company, the proportion and absolute value of R&D investment are not high enough, and the homogeneity competition is serious, and the competition for the development of the same target is fierce. More and more innovative products of multinational companies enter the Chinese market. Due to the problems of policy inconsistency and incompatibility, the sustainability of innovation activities is an issue that enterprises need to consider. "Long-term capital investment is the foundation of innovation activities, and a high-level R&D team is the guarantee of innovation activities."

Effective combination of innovation and capital

Song Ruilin, executive chairman of the China Pharmaceutical Innovation Promotion Association, said that innovators need to effectively integrate with capital.

Sha Yan, general manager of the Shenzhen Stock Exchange, said that the ChiNext has formed an agglomeration effect in the biomedical industry. Up to now, there are 69 pharmaceutical production and R&D listed companies on the ChiNext, with a total market value of 1.2 trillion yuan, accounting for nearly 15% of the total market value of the ChiNext, and it is the largest market value industry on the ChiNext.

Sha Yan said that the inherent uncertainty of industrial development has made it difficult to integrate the biomedical field with the traditional financial market, and the characteristics of capital market benefit sharing and risk sharing can be highly matched. The capital market will become a key booster for scientific and technological innovation in the biomedical field. With an efficient capital formation mechanism, various factors of production, including capital, information, technology, and talent, will be promoted to form an optimal allocation around the development of the industry.

Zeng Xin, chief risk officer and head of the core of Guosen Securities Co., Ltd., said that the medical and health industry will benefit the most from the reform of the registration system, and more pharmaceutical companies in the early stage of research and development will have better listing opportunities. At the end of last year, the China Securities Regulatory Commission issued a number of regulations on the pilot domestic listing of listed companies to spin off their subsidiaries. The results have been seen immediately after implementation, and there are many cases in the medical and health industry. In addition, the types of listed companies in the medical industry have become more diversified, such as innovative drug companies and medical service companies. The number of listed companies has increased significantly in the past year or two.

Focus on long-term investment logic

From an investment perspective, Fang Min, vice chairman of the Pharmaceutical Innovation Investment Professional Committee of the China Pharmaceutical Promotion Association, partner of Warburg Pincus, and head of China Pharmaceutical and Health Investment, said that in the first half of this year, investment in the medical industry ushered in a flourishing spring. The market's attention to the pharmaceutical sector, especially the innovative drug sector, has reached an unprecedented level. The pharmaceutical sector has reached historical highs in both the primary and secondary markets.

Huang Qing, chairman of Gaotejia Hongrui Investment, said that the biomedical industry has been the top priority of investment in the past two years. In the first half of this year, the pharmaceutical industry hit a new high in investment in all industries. The fundamental reason for the investment boom set off in the health care industry is that the domestic economy is growing rapidly and huge market demand supports the rapid growth of the entire industry. At the same time, the state has issued a series of policies and promoted more industry concentration. Huang Qing said that we should grasp the logic of long-term investment and invest in companies that have clinical efficacy and can truly solve clinical hot spots, or companies that have real clinical value in technology and models. This is also the focus of the company's investment layout and focus.

This article is from China Securities Journal