When medical innovation enters the 'inflection point', the 'break' and 'establishment' of AstraZeneca CICC Medical Industry Fund

The Age of Discovery of Healthcare Innovation is coming.

According to the PwC report, China's medical and health market has continued to develop rapidly in the past 8 years, and the overall scale has increased to 13 trillion yuan, with a compound annual growth rate of 13%, which has leapt to become the second largest market in the world.

With this wave, the amount of biomedical venture capital in China continues to rise. According to data from the Eggshell Research Institute, China's medical and health industry investment and financing in the first half of 2022 totaled nearly US$10 billion (about 64.759 billion yuan), and the number of financing transactions exceeded 600.

One trend in this process is worth noting: over the past decade, follow-up innovation in the healthcare industry has come to an end, and original innovation has taken its place as the focus of China's new era of venture capital.

In order to bet on potential high-growth innovative enterprises, many investment institutions have also begun to adjust their strategies and extend in a more professional direction. For example, comprehensive VC recruits pharmaceutical industry personnel, small and medium-sized institutions vertically scan subdivisions, and large pharmaceutical companies have also begun to enter the private equity field one after another.

Among them, the medical and health industry fund jointly established by the multinational biopharmaceutical giant AstraZeneca and CICC Capital - AstraZeneca CICC Medical Industry Fund (hereinafter referred to as "AstraZeneca CICC") has attracted much attention from the industry.

In addition to the large corporate halo of AstraZeneca and CICC Capital, more importantly, since the completion of the filing in 2020, the fund has achieved achievements in just two years: it has completed the investment of more than 10 innovative medical enterprises, including a number of well-known innovative enterprises such as Abbisko Pharmaceutical, Sibiman Biotechnology, Tiankeya, Etuo Pharmaceutical, DeepInsight Medical, Zhizhong Medical, and Claritz Medical, covering biomedicine, medical devices, diagnostic services, digital medical and other subdivisions. Just this week, the fund also announced the completion of a new round of investment led by Rgenta, which develops oral small molecule drugs targeting RNA for traditional "undruggable" targets, and Hugang Zhongke, a preclinical CRO company.

Not only that, in this year's "fundraising winter" environment, AstraZeneca CICC still bucked the trend and won the trust of LPs. On November 12, at the 2nd Zhejiang Digital Healthcare Industry Hangzhou Summit, AstraZeneca CICC announced that its Hangzhou fund officially completed the filing, and the total amount of funds under management of the fund exceeded 3 billion yuan. At the just-concluded Expo, AstraZeneca also announced the signing of a letter of intent for strategic cooperation with the newly established Qingdao Fund.

Why can AstraZeneca get up fast? What is its investment logic and playing style? What is the reason for gaining LP's trust against the trend? In response to these problems, Arterial Network had an in-depth dialogue with Wang Lei, Executive Vice President, International Business and China President of AstraZeneca.

the rise of medical innovation forces,

Both entrepreneurship and investment require a long-term perspective

In the past year or two, "scientist" has begun to become a high-frequency word in the medical field, so we can always see expressions such as "scientist entrepreneurs are robbed by VC", "VC besieges college professors" and so on. Behind this phenomenon, we see the rise of China's medical innovation power.

Wang Lei confirmed this trend with his own observations, "Now there may be dozens of laboratories in the laboratory building of a college, and the leaders of the laboratories are basically foreign heavyweight returnee experts and scholars, who have accumulated a lot of valuable scientific research results in their fields of focus, and they are bringing these results to China." ”

This is not accidental, but China's medical innovation has entered a stage where "real innovation" is needed. The industry has a development cycle, of course, innovation also has, in the context of the great integration of Internet technology into the medical field and the entrepreneurial era with "domestic substitution" as the main theme, the low-hanging fruits have been almost picked so far, and the rest are some difficult bones, and more opportunities in the future must belong to those cutting-edge achievements with original innovative technologies.

Therefore, policies are constantly tilted towards scientists, and scientific research institutions are also continuing to "loosen" scientists and provide them with the best environment for innovation and transformation as much as possible. Wang Lei empathized with this, "Such a good innovation opportunity is not created by us, but by the country and scientists." With the deepening of medical institutions and clinical research bases, our clinical level continues to improve; On the other hand, with China's accession to ICH and the accelerated approval of the NMPA in recent years, innovative drugs can be quickly marketed; The booming capital market is also providing more access to financing for innovative technologies. ”

As a key part of the healthcare industry, investment institutions are also involved in this wave of medical innovation. According to the statistics of Arterial Orange Database, as of October 1, 2022, 321 early investment and financing events have occurred in China's medical field, with a total financing amount of more than 10 billion yuan, and a total of 200 investment institutions have participated in the investment, which is enough to reflect the popularity of early innovative medical projects.

There is no doubt that the current era is indeed the best era of medical innovation, but opportunities and challenges coexist, and start-ups and investment institutions are facing their own difficulties in the process of extending to innovation. In other words, after medical innovation enters a new cycle, new requirements are being put forward for the industry.

Only those innovative projects that truly have original innovative technology and have a large market space are more likely to stand out in the early market. And this logic also puts forward requirements for investment institutions rooted in the medical innovation market. The first thing they need to do is to polish their core capabilities in early medical project investment, mainly how to identify good investment targets and how to better empower the growth of invested enterprises; The second is to choose a "track", that is, anchor the investment field with value, large market scale, larger corporate profits, and greater growth possibilities; Finally, the selection of "racers", from the general direction, mainly includes three key dimensions, namely the level of innovation, business prospects and the possibility of future success.

This is very consistent with the "real innovation, real science" mentioned by Wang Lei in the interview, that is, the enterprise really has innovative technology and really has verifiable scientific data. Wang Lei said frankly that at present, China's medical market is undergoing a process of "flicking the bubble" readjustment, and it is also a process of continuous progress in twists and turns, and the speed of progress is really not slow. The state is also encouraging innovation at the moment, but this is a process that needs to start slowly now. This means that when we look at the medical innovation market, we should take a longer-term view, supplemented by creative logic.

Aiming for true science,

AstraZeneca's "breaking" and "standing"

Under the spotlight, medical innovation is in the spotlight, and competition is intensifying. In this era, if pharmaceutical giants want to maintain their advantages, they need to guard their own technical barriers and maintain cyclical expansion. Therefore, the current mainstream enterprises prefer to rely on asset advantages for cross-border investment.

In this regard, AstraZeneca has similarities with industry-led funds in the market, but the investment details and ultimate purpose are unique.

At present, AstraZeneca's investment direction includes two sectors: pharmaceutical and non-drug, and to enter the radar range of AstraZeneca, companies must meet a series of strict conditions. In the interview, Wang Lei summarized his investment logic into the following five points:

First of all, look at the "people". In start-ups, leaders are an important reference factor and need to lead the team to carry out targeted assaults. If a small startup pipeline has three or four therapeutic areas, seven or eight or nine projects, overly fragmented businesses often don't have a single qualified leader.

"Science is very difficult, we appreciate more 'one thing to the end' people, the articles posted are the best, the therapeutic field can be combined with the clinical best is the best, not only to understand science but also to understand technology, because in the end can not be transformed is useless, there is no clinical understanding."

The second thing to look at is the data, that is, there must be real science. Backed by thousands of AstraZeneca scientists around the world, AstraZeneca has a library of top-notch medical knowledge. Backed by the insights and repeated verification of scientists, when considering investment, the fund will not only rely on literature, data, and even laboratory experiments to confirm the scientific nature of the invested companies, which is based on a deep understanding of science.

The third will consider the company's innovation and integration with AstraZeneca's global pipeline. If the target company can do faster and better than AstraZeneca, or can do the best in its field, the fund will consider investing in such a company.

The fourth is whether it can empower enterprises. Wang Lei mentioned that the fund will not consider projects that cannot provide more help and empowerment after investment.

Finally, the enterprises invested by the fund must have the potential for internationalization. AstraZeneca CICC invests in enterprises that innovate not only for China, but also for the world. Wang Lei pointed out that the goal of the fund is to make China's innovation benefit the whole world and all mankind. "We are also willing to use AstraZeneca's global network to help our portfolio companies go global."

There are many requirements to shape AstraZeneca's prudent and long-term investment style, and today most medical funds lie flat, AstraZeneca CICC Fund is still cautious. In the past year, many enterprises such as Gaoguang Pharmaceutical, Claritz Medical, Tiankeya, Yueer Genetics, Anxuyuan, Yunjian Medical, Rgenta and Hugang Zhongke have entered the fund ecology. For AstraZeneca, which has only been officially established for one year, such an answer is really valuable. But the question is also this, how does AstraZeneca empower its portfolio companies? And how to gain the trust of LPs?

●Based on demand, walk side by side with enterprises

Similar to other industrial capitals, most of AstraZeneca's projects predate investment. In other words, between the completion of the transaction, both the enterprise and the capital have completed the two-way recognition.

Reading Genomics is a global genomics company driven by technological innovation with revolutionary molecular diagnostics that reduce the cost of sequencing for all NGS platforms by more than 98% and improve the sensitivity of qPCR, Sanger, and nanopore sequencing by more than 100 times.

In June this year, the fund completed its investment in Yuer Gene. As the head of non-pharmaceutical investment at AstraZeneca CICC, He Ling recalled his investment experience in Yuer. "We value our industrial fund attributes and especially hope to carry out some cooperation in research and development. At that time, they were in the process of upgrading their original business to the oncology business, and we had the ability to bring them to more pipelines to assist in the development of downstream oncology products. This happens to be what AstraZeneca is good at. ”

"Frankly speaking, in terms of empowerment, our team is relatively 'light' and does not have a full-time incubation team. But with our insight into the industry, we can find the pain points they need the most, and revitalize the entire industrial resources of AstraZeneca globally and China to empower the invested enterprises. For example, our portfolio company, Sibiman, has become AstraZeneca's global partner in the field of cell therapy, supporting the research and development and clinical practice of AstraZeneca's cell therapy field. For non-pharmaceutical companies such as Zhizhong and Shenrui, we can also promote tripartite cooperation with AstraZeneca and departments through AstraZeneca's network in China, support the implementation of the company's projects in the hospital, and provide expert resources and scientific advice in application scenarios. He Ling told Artery.com.

Not long ago, Reading Genomics announced that it has signed a licensing and product development agreement with Bio-Rad, the world's leading clinical diagnostic company, BioRad will obtain the exclusive rights to use Allele Enrichment technology for the development of multiplex digital PCR reagents, and Siebiman is also exploring global cooperation with AZ for specific solid tumor tumor targets. It can be said that AstraZeneca has effectively accelerated the industrialization process of invested enterprises.

In addition to industrial empowerment, AstraZeneca CICC will hardly overly intervene in the management of invested enterprises.

"Anxuyuan is a long-reading gene sequencing platform company that we invested in last year, and when we learned that they wanted to understand the globalization strategy of the company in the future, we helped him connect with the relevant market leaders of AstraZeneca's management developing countries. In our daily communication, we will continue to monitor the company's progress, discuss strategies with the company when needed, and help it develop products that are truly in line with clinical and scientific research. Talking about the daily management style, He Ling replied.

"That's probably the style of our fund. We will not take the opportunity to force them to develop some strategies, but more to accompany the company to face challenges and difficulties, after all, for both of us, we are in a continuous learning process. ”

As the first practice of combining industry and finance between a multinational pharmaceutical company and a leading investment bank, AstraZeneca and CICC have a clear division of labor at the specific implementation level and maximize their respective advantages as much as possible. The CICC team empowers portfolio companies in the development stage in terms of finance and finance. As a leading investment bank in China, CICC has complete capital market resources and can provide full-cycle financial advice for enterprise development, and at the same time, CICC can also tailor listing plans for portfolio companies in advance and provide long-term listing counseling for enterprises.

In Wang Lei's view, "Our cooperation is highly complementary, CICC helps in capital operation, and we complement each other in industry and science." I think the combination of AstraZeneca and gold can attract people, not AstraZeneca alone, nor gold alone, and the combination of the two is perfect. ”

With the support of AstraZeneca and CICC Capital resources and ecosystem, the fund's enabling capabilities cover R&D, clinical and commercialization of the industry, as well as financial investment and financing support, secondary market consulting and IPO planning. This is a true sense of the all-round and full-chain acceleration support based on demand.

●How does AstraZeneca CICC empower LPs?

As an industrial capital and market-oriented fund, AstraZeneca CICC also needs LPs as a cornerstone. This also means that the fund also faces the question of "what kind of relationship with LP".

During the interview, Wang Lei gave a complete answer to this question, saying: "If the invested enterprises can work closely with local governments in China and receive better policy support, they can make more contributions to the local economy." Therefore, we want to work with local government fund of funds. The government wants good industries to come down and fancy our professionalism, which is a two-way empowerment between us and government LPs, they may not have as many scientists and evaluation capabilities, so we help them do it together. ”

On the other hand, AstraZeneca CICC also welcomes industry friends and ecosystem partners to become LPs of AstraZeneca. They can enter the AstraZeneca ecosystem by investing in our funds and discover more opportunities for collaboration and further development.

Future-oriented,

Tell China's innovation story well

Although effective investment logic can help an institution obtain rich returns, for AstraZeneca, the value of the fund is not only short-term benefits, but also the support of investment for the entire ecology and even the entire pharmaceutical innovation.

As a unique presence in the wave of medical innovation, AstraZeneca has been deeply cultivating the medical innovation market since entering China in 1993. In terms of R&D and innovation, AstraZeneca will invest about 10 billion US dollars in R&D every year, and in 2021, AstraZeneca's fourth global R&D center will officially land in Shanghai, further building a medical innovation ecological matrix in the Chinese market.

At the same time, after several years of development, the innovation "troika" composed of China Smart Health Innovation Center (CCiC), International Life Science Innovation Park (iCampus) and AstraZeneca CICC Medical Industry Fund has also begun to take shape. The national collaborative life science innovation ecological network has begun to show its scale.

As an important part of AstraZeneca's medical innovation ecosystem, AstraZeneca CICC's positioning is to come from the industry to the industry. On the one hand, through capital to link the industry, on the other hand, to revitalize the resource-empowered industry, in the exchange and interaction of the industry, leverage the innovation ecosystem of AstraZeneca and CICC Capital to promote the further upgrading and expansion of the pharmaceutical innovation ecosystem.

Today, AstraZeneca CICC has completed regional fund raising filings in Hangzhou and Wuxi. Wang Lei said: "China's innovation cannot come from just one city. We will gradually implement regional funds in more cities, and through regional funds, identify more innovative enterprises and introduce them to suitable development areas. At the same time, it also leverages the region's industrial advantages to promote the incubation of innovation achievements and empower the commercial development of enterprises. ”

Looking to the future, where will AstraZeneca go again?

Wang Lei said in an interview that AstraZeneca has been in the Chinese market for nearly 30 years and has been committed to allowing Chinese patients to use world-class new drugs simultaneously, but this is still not enough. The existence of the fund is to explore more Chinese innovations, so that patients around the world can use China's new drugs. We want to help China's innovation continue to go global, which is the goal and mission of AstraZeneca CICC.

In 1993, AstraZeneca entered the Chinese market as a multinational enterprise, and now, AstraZeneca will rely on the AstraZeneca CICC Medical Industry Fund to generate blood relations through investment to help Chinese innovative enterprises go overseas.

This time, AstraZeneca will go more fiercely and determined.