Interview with Yu Zhengkun, founding managing partner of Jifeng Capital: "Under the curtain of "Collection and Procurement", pay attention to new investment opportunities in three major areas

Per reporter: Yao Yanan Per editor: Ye Feng

As a popular golden track, the medical and health field investment and financing and IPO is very active, on November 8, the endoscope leading enterprise Aohua Endoscopy landed on the science and technology board, on August 19, mRNA technology company Aibo Bio announced the completion of a new round of financing of more than 700 million US dollars, refreshing the chinese biomedical field before the IPO single financing amount of a new high, the reporter noted that behind these two high-profile innovative enterprises, Jifeng Capital has participated in its investment in the early stage.

Jifeng Capital is a venture capital institution focusing on the field of medical and health care, and the founding managing partner Yu Zhengkun was responsible for medical investment at IDG Capital, and was the first batch of medical investors in China. In 2015, Yu Zhengkun announced the establishment of Jifeng Capital, a professional fund, hoping to achieve faster decision-making and more targeted post-investment management services. Since its establishment, the team has invested in a number of enterprises such as Aibo Biologics, Aimek, Yingke Medical, Xiangyu Medical, Ping An Good Doctor, etc., and inming Biologics, Tianze Yuntai, Kekai Life and other projects have also recently announced the completion of a new round of financing.

In a recent interview, Yu Zhengkun told reporters that business conduct, international vision, and execution are the three qualities that are most valued by investment entrepreneurs. In terms of project selection, Jifeng Capital prefers innovative enterprises that can IPO in the mainstream capital market within 4 years after investment.

Yu Zhengkun, founding managing partner of Jifeng Capital, courtesy of the interviewee

"Gathering" brings uncertainty Investment needs to be laid out four or five years in advance

Talking about the changes in innovation and entrepreneurship in the pharmaceutical field in the past 20 years, Yu Zhengkun sighed that the only constant is the change itself, China's pharmaceutical industry itself has been progressing and changing, the policy and regulatory direction introduced by the state has also been adjusted, therefore, different types of pharmaceutical companies are facing different ecological and development situations: from the perspective of the market value changes of A+H-share pharmaceutical companies in the past 10 years, the top 20 in the 2009 list are mainly generic drugs and pharmaceutical circulation enterprises, and in this year, Hengrui, Mindray, Companies with innovative capabilities and international markets such as WuXi AppTec rank among the top market capitalization companies in the medical industry.

"In recent years, we have felt that there are three things that have changed in the industry in particular." Yu Zhengkun said that first, in terms of talents, more and more innovative talents return to China, from the technical point of view, there is no generation gap between traditional small molecules and large molecule drugs at home and abroad, the rise of domestic small molecules / large molecule CDMO has also paved the way for talent entrepreneurship, at present, the domestic technology and talents for gene therapy, small nucleic acid drugs are relatively scarce, these areas are also the focus of Jifeng Capital; followed by the capital environment, the overall view of funds is very abundant, especially the liberalization of the science and technology innovation board and Hong Kong stock 18A, PE/ The third point is that in terms of industrial policy, the state's support for innovative devices and innovative drugs is very large, especially the treatment direction with significant clinical unmet needs, including some reforms of the drug review center, the implementation of the MAH system, and China's accession to the ICH.

"In addition to many positive factors, the biggest uncertainty facing the medical industry at present is 'collection'." Yu Zhengkun said frankly that the collection has been implemented as early as a few years ago, and it is expected to become a vane in the medical industry. In this context, Jifeng did some investment layouts to avoid "collection" in advance, such as increasing investment in the field of consumer medical treatment, such enterprises have both higher barriers in the medical field and the dual attributes of large growth space in the field of consumption, and because it is a spontaneous purchase by consumers, it is not affected by the collection, at present, Jifeng Capital has invested in 4 listed companies in this field, and 1 company has also applied for an IPO.

In addition, regarding investment in the field of medical devices, Yu Zhengkun said that in recent years, Jifeng Capital has been looking for investment opportunities that are less affected by "collection and mining", "First of all, we will focus on the categories and subdivisions with a low proportion of domestic production, although in these areas, although the collection and mining may lead to a decline in the net profit margin of enterprises in the short term, but with the gradual increase in the proportion of domestic production, the growth space of enterprises is very large, coupled with the scale effect will reduce production costs, and the collection and mining may produce benefits." The second is the field of medical devices, we are optimistic about enterprises with export potential and advantages, medical devices are both high-end manufacturing, but also belong to the category of 'specialized and new', is the direction clearly encouraged by national policies, the international market pricing of enterprises with a high proportion of exports will not be affected by 'collection', taking The Yingke Medical invested by Jifeng Capital as an example, more than 90% of its products are exported. Third, we will prefer enterprises with strong R & D capabilities, the sales ability of pharmaceutical companies under the influence of 'collection and procurement' is no longer important, if the main products of the enterprise have entered the list of 'collection and procurement', it is equivalent to knocking on the door of many hospitals, and if the research and development capabilities are strong enough to innovate every year, they can use the channel advantages of 'collection and procurement' to do promotion. ”

The irreversible trend of aging brings systemic opportunities for healthcare investment

In addition to the policy, population aging is another important investment theme that Jifeng Capital pays attention to, "We began to systematically pay attention to the investment opportunities brought by population aging as early as 2017, the proportion of the elderly over 65 years old in 2021 has exceeded 13%, the trend of aging is irreversible, and there is a very serious 'two eight' phenomenon in the field of medical consumption, that is, 20% of the elderly will consume 80% of medical resources, which contains many investment opportunities." Yu Zhengkun said that under this theme, the investment layout of Jifeng Capital mainly revolves around three aspects: innovative drugs and related services, medical devices and consumer medical treatment.

In the field of innovative drugs and related services, the tumor field is hot, new technologies emerge in an endless stream, sometimes a small company to make a new technology its efficacy may be better than that of large enterprises, the market can soon become larger, so many small companies to replace the original large pharmaceutical factory speed may be very fast, for VC, innovative technology is always an investment opportunity, Jifeng Capital will focus on. In terms of new treatment methods, Jifeng Capital invested in Abbott Biologics this year, the company's mRNA vaccine is currently in the global phase III, mRNA treatment technology application prospects are very extensive, not only in the new crown field can obtain more than 95% of the protection rate, but also partially replace most of the current protein drugs including monoclonal antibodies, etc., traditional antibody drugs can theoretically use mRNA technology to try and compare, imagination space is huge. In addition, with the acceleration of new drug research and development, the deep experience and competitive advantage accumulated by CXO in the service process is also the focus of Jifeng Capital, CXO is an important embodiment of the domestic engineer dividend, not limited to the domestic market, the potential is great.

In the field of medical devices, for the elderly cardiovascular diseases, orthopedics, neurology and postoperative rehabilitation, Yu Zhengkun believes that the leader in the subdivision field has a good room for growth, "medical devices belong to the concept of iteration, the industry is characterized by steady innovation, deep research and development accumulation, high barriers, we are optimistic about the team with process iteration ability and medical device companies with international strength." Yu Zhengkun said. In addition, in the field of consumer medical treatment, Jifeng Capital has previously invested in rehabilitation equipment company Xiangyu Medical, inming Biology of the medical beauty track, dental medical platform Boendent, etc. Yu Zhengkun believes that ophthalmology, dentistry, rehabilitation, and medical beauty have strong consumer attributes, and the purchase behavior is determined by consumers, not bound by the national medical insurance control fee, and consumption upgrading will also bring many opportunities in the field of medical and health.

As the investment value in the medical and health field continues to be highlighted, there are more and more VC/PE institutions in this layout, and in the past two years, many TMT funds and consumer funds in the market have also joined in, and the attention of the industry has continued to rise. According to data from Zero2IPO, the total investment in China's equity investment market in the first three quarters of this year exceeded 1 trillion yuan, and the number of cases and the total investment amount increased by more than 70% year-on-year, of which the biotechnology and medical health fields were quite sought after by capital, with an investment amount of 191.5 billion yuan.

Yu Zhengkun said frankly that the current industry competition is very fierce. Talking about the differentiated competition of investment institutions, he believes that "it is not only necessary to continue to do in-depth industry research, run more errands, use professionalism and diligence, and find good projects and invest in them before others find them." Moreover, for some good projects whose valuations have risen, after judging the future growth, certainty, and height of barriers, we must dare to start when peers hesitate. ”

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