Medical Investment Map Of Hony Investment Behind The Listing Of Xiansheng Pharmaceutical

On October 27, Xiansheng pharmaceutical officially landed on the main board of Hong Kong stock market. As of the time of publication, the market value of the company was close to HK $30 billion. This listing is also the first time that Xiansheng Pharmaceutical Co., Ltd. landed on the capital market again after listing on the New York Stock Exchange in April 2007.

Founded in 1995, Xiansheng Pharmaceutical Co., Ltd. is a pharmaceutical company rapidly transforming into an innovation and R & D driven pharmaceutical company, focusing on three treatment areas with rapid growth and huge unmet medical needs, including cancer, central nervous system and autoimmune diseases.

In 2007, Xiansheng Pharmaceutical Co., Ltd. entered the New York Stock Exchange as China's first biological and chemical pharmaceutical company. In 2014, Xiansheng Pharmaceutical Co., Ltd. completed privatization. Today, six years later, Xiansheng Pharmaceutical Co., Ltd. is listed again. Xiansheng Pharmaceutical Co., Ltd., which returns to the capital market this time, has won the favor of many well-known investment institutions. Hillhood capital, hi-tech, laterite, Qingchi capital, orb capital and so on all appear in the lineup of cornerstone investors.

What is more noteworthy is that Hony investment, as the "longest love" investor, has been accompanying Xiansheng pharmaceutical for 15 years. Up to now, Zhao Linghuan, chairman and President of Hony investment, is still on the non-executive board seat of Xiansheng pharmaceutical. Hony investment is just starting from Xiansheng Pharmaceutical Co., Ltd., which has opened the systematic investment layout from point to area in the field of medical and health, and formed a set of effective methodology.

"Hongyi has been optimistic about the health industry for more than ten years, and regards it as an investment field that can be deeply cultivated and refined to earn returns." Zhao Linghuan said, "the health industry is one of the areas that we have been deepening and strengthening. We are focusing on it, and the focus is on a large number of investment, long-term investment and continuous investment."

15 years of investment company, second listing support

The earliest tie between Xiansheng pharmaceutical and Hony investment was in September 2005, when Hony investment's US dollar phase II fund was invested into Xiansheng pharmaceutical, which was also the first project Hony invested in the pharmaceutical industry three years after its establishment.

Hongyi pharmaceutical investment team recalled to the 21st century economic report that the investment in Xiansheng pharmaceutical was mainly optimistic about three characteristics of the company. First of all, at that time, Xiansheng pharmaceutical was a leading medium-sized enterprise that produced and sold brand generic drugs and generic drugs in China. It had superior varieties in the fields of antibiotics, orthopedics, neurology, etc., and had rapid growth potential.

Second, as the founder and soul of the company, chairman Ren Jinsheng is an outstanding entrepreneur. He has a profound understanding of the pharmaceutical industry and is constantly innovating and leading in strategy and management. At the same time, the core team of Xiansheng pharmaceutical has gradually formed in the long-term struggle, and has good performance. Third, the company has a nationwide sales force, and established an efficient new product development system.

Hony's investment vision was quickly verified a year and a half later. On April 20, 2007, Xiansheng pharmaceutical entered the NYSE and became the first Chinese biological and chemical pharmaceutical company to be listed on the NYSE. The company raised $226 million, with a market value of more than $1 billion, setting the IPO record of the largest pharmaceutical company in Asia at that time.

It is understood that after the listing of Xiansheng Pharmaceutical Co., Ltd., due to the global financial crisis, muddy water and other factors, the market value of the company has been undervalued in the U.S. stock market for a long time. The management team began to prepare for privatization in 2013. Hony investment made another move, formed a consortium through the US dollar five phase fund management, Zhixin capital, Fosun Pharmaceutical, etc., and made an offer of US $495 million to acquire Xiansheng pharmaceutical, which was also the largest privatization transaction in China's pharmaceutical industry at that time. As a result, the long-term strategic cooperative relationship between Hony and Xiansheng has been continued.

After six years of privatization, with the support of Hony investment, Xiansheng Pharmaceutical Co., Ltd. has been listed on the Hong Kong stock exchange for the second time.

In addition to the important role of Hongyi in the past 15 years, it has also played an important role in the development of its investment strategy and investment in the past 15 years.

For example, in 2006, Hony investment helped Xiansheng defeat more than 60 domestic and foreign competitors with 200 million yuan, and successfully acquired Yantai madejin company, thus bringing "endo", a new anticancer drug and the world's first recombinant human endostatin product, into its pocket, realizing a qualitative leap in enterprise development.

Ren Jinsheng, chairman of Xiansheng pharmaceutical, said at that time that the acquisition of Endo was suitable for the company's development strategy. In the future, Xiansheng would take the anti-tumor and cardio cerebrovascular fields as the company's strategic development, "with the help of Endo, the company entered a new field of anti-tumor for the first time, striving for a high starting point".

Head innovative pharmaceutical enterprise innovation transformation, the market entered the 2.0 era

In the stock book, it can also show the strength of Xiansheng pharmaceutical. According to the prospectus, Xiansheng pharmaceutical currently has nearly 50 new drug products under research and development at different development stages, including small molecule drugs, macromolecular drugs and car T-cell therapy, of which more than 10 are in clinical stage, have submitted new drug application or have been approved.

In addition, unlike a large number of unprofitable innovative pharmaceutical companies, as a vertically integrated pharmaceutical company, Xiansheng pharmaceutical has mature production and commercialization capabilities, and has built a nationwide sales and professional promotion network in China. At the same time, more than 30 products of Xiansheng pharmaceutical have been included in the national medical insurance drug list.

In terms of the company's performance, the prospectus shows that from 2017 to 2019, Xiansheng pharmaceutical achieved sales revenue of 3.868 billion yuan, 4.514 billion yuan and 5.037 billion yuan respectively, and realized net profits of 350 million yuan, 734 million yuan and 1.004 billion yuan, with an annual compound growth rate of 69.2%. Over the same period, the proportion of revenue from class I innovative drugs in total revenue was 21.4%, 25.5% and 32.9%. However, in the first half of this year, due to the impact of the epidemic, the revenue of Xiansheng pharmaceutical was 2.414 billion yuan, with a net profit of 185 million yuan, up by - 20.2% and - 59.9% respectively.

"We are optimistic about mature Biopharmaceutical Enterprises with systematic advantages in the whole industry chain (including R & D, market access, sales, etc.). We are optimistic about the directors and the team. Over the past 15 years, we have been working with entrepreneurs for a long time to fully support the transformation and development of enterprises. We are optimistic about the two wheel driving force of independent R & D and foreign cooperation, as well as the company's continuous innovation and expansion ability. The executive power of the directors and the team, as well as the development of the company, exceeded our expectations. " Hongyi pharmaceutical investment team has made no secret of its recognition of the development of Xiansheng pharmaceutical.

In fact, in the pharmaceutical investment layout of Hony, there are not only big pharma (mature pharmaceutical enterprises in the whole industry chain) such as Xiansheng pharmaceutical and Shijiazhuang Pharmaceutical Group, but also Biotechnology (unprofitable early biotechnology enterprises) such as fibrogen and Tianjing biology. Hony investment has been exploring the organic combination of the two.

In the view of Hongyi team, China's innovative drug market is gradually entering the era of 2.0. In 2016, with the launch of the policy of "generic drug consistency evaluation and priority review of innovative drugs", China's pharmaceutical industry officially opened the era of innovative drug 1.0. In the past four years, both big pharma and biotech's head innovative pharmaceutical enterprises have achieved innovation transformation, that is, the value realization of years of innovation layout precipitation.

As a result, China's innovative drug market has gradually entered the era of 2.0, and the best in class and first in class drugs have been continuously innovated. In the medium and long term, the transition from me too / me better to best in class and the final development of first in class drugs is an important way and inevitable trend for China to transform from a pharmaceutical power to a pharmaceutical power.

Hongyi investment believes that with the accumulation of domestic pharmaceutical enterprises for many years and the continuous introduction of overseas excellent innovative drug talents, the R & D strength of domestic pharmaceutical enterprises has gradually upgraded, and the number of enterprises with high-quality innovative drug R & D strength has gradually increased. Finally, the differentiation depends on the three key areas of differentiation:

First, we should solve the unmet clinical needs, and the market potential is large enough; second, we should have real innovation and implementation ability; after the concept validation of "from 0 to 1", the clinical development and commercialization of "from 1 to n" will be more challenging, and the team will have higher requirements; thirdly, on the basis of the former two elements, the primary and secondary capital markets will provide sufficient financial support and Valuation recognition, leading enterprises will enjoy valuation premium.

Hongyi medical investment map scanning

Investment in Xiansheng pharmaceutical is the starting point of Hony's medical investment layout. In the next 15 years, Hony has made systematic investment in medicine, equipment, services and other fields from point to area.

Up to now, Hony has invested in 16 projects in the medical and health industry, with a total investment amount of about 10 billion yuan. These projects include not only Xiansheng Pharmaceutical Co., Ltd., Shiyao Group Co., Ltd., Kangchen Pharmaceutical Co., Ltd., Dianhong Pharmaceutical Co., Ltd., Tianjing biology Co., Ltd., fibrogen and other pharmaceutical enterprises, but also the leaders in the field of medical equipment and medical services such as Quanyi health, Neusoft medical, Neusoft Xikang and Xiansheng diagnosis. At the same time, Hongyi also built a hospital investment management platform, Honghe benevolence.

In addition to investing in drugs and equipment, Hony also recognizes opportunities for medical services. In October 2014, Honghe Renai medical group, which focuses on hospital investment and management, was established. At present, Honghe Renai has been listed on the main board of the Hong Kong stock exchange, and has successively completed the acquisition of six hospitals, including Yangsi hospital, Jiande Hospital of traditional Chinese medicine and Cixi Union Medical College Hospital.

"In the future, the return on investment in health care will come more and more from the realization of value-added through management improvement." Zhao Linghuan said, "for example, in the hospital, we have proved through management that if we do a good job in the hospital, make the medical treatment reassuring and the service feel dignified, you will become the first choice hospital for these residents to get medical treatment, and the opportunity of promoting and benevolence is based on this."

Summarizing the investment strategy of Hony's investment in healthcare, Liu Xi of Hony's investment team said that in the past 15 years, Hony has always regarded medicine as the most important focus area, focusing on value investment driven and long-term partnership with entrepreneurs. In the future, Hony will continue to firmly invest in innovation, invest in local innovative pharmaceutical enterprises with global competitiveness, and actively lay out the next generation of biotechnology while laying out mature Biopharmaceutical Enterprises.

At the same time, rooted in the focus of the medical and health industry, Hony investment is good at matching three-dimensional investment tools and teams according to the characteristics of subdivided industries, forming the characteristics and advantages of "VC + PE + secondary", "China + America".

Hony has been able to match the investment tools of PE group in domestic and overseas markets according to the characteristics of its investment projects and PE market. For example, Jinyong capital, Hongyi's overseas secondary market investment platform, takes global health care investment as one of the key strategies, focusing on the two markets of China and the United States, and has a variety of investment tools. Mr. Li Hongyi, the manager of the global medical fund, was directly responsible for the investment strategy of the global pharmaceutical company. He said that investment in innovative medicine must have: 1. A global perspective. The R & D capability of Chinese enterprises is improving day by day, and they have competed with American enterprises in many fields. We must grasp the trend of global pharmaceutical R & D in order to better invest in China and the world. 2. The ability to break through the industrial chain of capital market. With the development of capital market, the threshold of innovative drug enterprises to be listed has been lowered, and there are still many years of financing needs after listing. Investors need to be able to lay out the whole industrial chain, continuously provide funds and support for enterprises, and grasp the optimal investment opportunities.

On the basis of strict compliance, the PE and secondary market teams fully share the research on the open market information between China and the United States. With the corresponding efficient organizational structure, it matches the full-time personnel with corresponding ability for each investment tool, so as to realize the industry focus and the connection of different investment modes.