Core Viewpoint - The article discusses the emergence of NewCo transactions in China's innovative pharmaceutical sector, highlighting a shift where Chinese investment firms, such as Sequoia China, are becoming buyers in these deals, leveraging China's clinical efficiency and cost advantages to enhance the global market value of targeted drugs [1][3][6]. Group 1: NewCo Transactions Overview - NewCo transactions have seen a significant increase in China, with 14 similar deals occurring since the beginning of 2024, primarily involving both large and small pharmaceutical companies [2][6]. - The first NewCo transaction led by a Chinese fund involved a $10 million upfront payment to Lepu Biopharma, marking a notable shift in the buyer landscape from predominantly foreign funds to domestic investors [2][4][6]. Group 2: Investment Strategy and Market Impact - Sequoia China's investment strategy focuses on identifying differentiated assets, particularly in the T-cell engager (TCE) space, which has limited competition in solid tumors compared to blood cancers [6][7]. - The transaction structure allows Lepu Biopharma to retain a 10% stake in the new company, Excalipoint, and potentially earn up to $848 million in milestone payments and sales royalties, indicating a strategic approach to funding and asset management [7][10]. Group 3: Clinical Development and Cost Efficiency - The new company will conduct Phase I clinical trials in China, utilizing local resources to expedite development, contrasting with previous models that prioritized overseas clinical trials [12][13]. - The cost of conducting clinical trials in China is significantly lower than in the U.S., with estimates suggesting a cost difference of five to seven times, which enhances the feasibility of early-stage drug development [13]. Group 4: Management and Operational Considerations - The success of NewCo transactions relies heavily on the experience of the management team, with a focus on ensuring seamless integration of core technologies and research strategies [9][10]. - The article emphasizes the importance of strong relationships with potential buyers and understanding their pipeline needs, which is crucial for the successful exit of NewCo assets [16]. Group 5: Market Perception and Future Outlook - Despite some skepticism regarding the low upfront payments typical of NewCo deals, they remain a vital funding avenue for innovative pharmaceutical companies facing financial pressures [17]. - The article suggests that as the market for innovative drugs recovers, more NewCo transactions are likely to emerge, providing opportunities for companies to secure funding while maintaining involvement in their drug pipelines [17].

Core Insights - The Chinese innovative drug sector has gained global recognition, with the Hang Seng Medical ETF rising over 90% and the Hong Kong Stock Connect Innovative Drug Index increasing by 130% this year, indicating a shift to the first tier of global pharmaceutical capabilities [1] - There is a trend where investors are actively engaging in business development (BD) transactions rather than waiting for IPOs, with international capital looking to invest in domestic biopharmaceutical firms to explore promising drug development projects [1][2] - The investment model has evolved, focusing on direct investments in drug development projects and supply chain management, leading to opportunities for domestic general partners (GPs) to raise USD funds and enter international supply chains [1][2] Investment Trends - BD transactions have become mainstream in the industry, particularly large deals exceeding USD 1 billion related to overseas licensing of drug pipelines [2] - For instance, the collaboration between 3SBio and Pfizer involves a potential total transaction amount exceeding USD 6 billion, with an upfront payment of USD 1.25 billion [2] - The total value of BD transactions in the first half of the year surpassed USD 60 billion, highlighting the significance of this investment approach [2] Target Investment Institutions - International limited partners (LPs) are seeking three types of domestic GPs for investment in innovative drug projects: 1. GPs that invest in U.S. biopharmaceutical companies, primarily to introduce Chinese drug projects [3] 2. GPs that invest in foreign companies with Chinese drug authorizations [3] 3. GPs that lead investments in newly established domestic companies (NewCos) focused on overseas sales of Chinese drugs [3] NewCo as a Strategy - Establishing NewCos allows domestic GPs to enhance their bargaining power in international collaborations by determining their share of profits and selecting international teams for management [5][6] - NewCos can be established at a low valuation, enabling domestic GPs to leverage investments while providing accountability to domestic LPs [6] - However, the effectiveness of this model depends on the specific terms of agreements, particularly regarding profit-sharing and distribution [6] Challenges and Market Alignment - Despite the potential advantages of NewCos, challenges remain, particularly in aligning drug development with international market demands [7][8] - Domestic GPs need to better understand U.S. market needs and integrate into the drug project initiation phase to facilitate marketization and internationalization [8] - The use of AI technology is being explored to match Chinese drug projects with international buyer demands, enhancing the likelihood of successful collaborations [8][9] Investment Focus Areas - International LPs are also interested in investing in AI pharmaceutical companies, platforms that incubate multiple projects, and specific types of research and development projects [9] - The emphasis on supply chain management capabilities is crucial for the success of these investments, reflecting a shift in biopharmaceutical investment strategies [9]

Group 1: Market Performance - The Hong Kong pharmaceutical sector has seen a dramatic increase, with over 10 innovative drug companies achieving a maximum rise of over 200% in 2023, including a notable 30% single-day surge for Sanofi due to a $1.25 billion upfront deal with Pfizer [1][2] - More than 30 healthcare companies have submitted applications for listing on the Hong Kong Stock Exchange, with two-thirds focusing on innovative drug development [1] Group 2: Investment Trends - In 2024, the Chinese health technology industry is expected to see a significant increase in License-out transactions, with total upfront payments exceeding $3 billion, surpassing the total financing amount for innovative drugs that year [3] - The first quarter of 2025 saw License-out transaction totals reach $36.9 billion, marking a 222% year-on-year increase, with major buyers including Pfizer and Roche [3] Group 3: Strategic Shifts - Health technology companies are advised to enhance their overseas strategies by establishing R&D institutions abroad and adopting various models such as License-out and NewCo to mitigate risks and improve funding [4][5] - The License-out model allows companies to transfer commercialization risks to partners while quickly recouping funds, making it a popular choice among innovative drug companies [5] Group 4: R&D Investment - A-share pharmaceutical companies have a low R&D investment ratio, with only 5.1% in 2023, indicating a need for increased investment in innovation [6] - Recent regulatory changes, including the reintroduction of listing standards for unprofitable biotech firms, aim to support high-quality technology enterprises and enhance the capital market's appeal [7][10] Group 5: Future Opportunities - The health technology sector is predicted to experience significant growth in AI pharmaceuticals, precision medicine, and surgical robotics over the next 3-5 years, with AI healthcare leading in financing events [12][15] - The AI healthcare market is projected to grow at an annual rate of 43% from 2024 to 2032, potentially reaching a market size of $491 billion by 2032 [15]

21世纪经济报道记者 赵娜 上海报道 随着大额License-out（对外授权）交易频现，中国创新药行业在全球资本与跨国药企面前正不断证明自 己的研发实力。 行业向好势头的另一面是一级市场投融资交易仍在低谷期。聚焦到创新药领域，有些企业拿到全球BD 交易大单，更多企业还在融资的道路上艰难前行。 这意味着，中国创新药行业正步入分化阶段——具备临床数据、全球视野和融资能力的头部企业逐渐突 围，而大多数企业仍面临生存与发展的双重考验。 今年6月，《21世纪经济报道》记者专访丹麓资本管理合伙人兼北京总经理许谦，围绕创投在创新药生 态中的角色、BD交易热潮的背后逻辑、创投基金退出路径的制度现实展开对话。 在他看来，License-out不应被简化为"卖青苗"，而是一种兼顾现金流与战略验证的现实选择。更重要的 是，只要核心团队还在，具备持续研发的能力，就仍有可能围绕原有平台开展"连续创业"，推动管线的 不断发展进化。 尽管创投行业尚未迎来全面复苏，但中国创新药行业过往十年已经获得巨大发展。只要人还在、能力还 在、信心还在，创业的"种子"就不会干涸，创新项目的森林仍将延续繁茂、生生不息。 创投在创新药生态中的角色 《21世 ...