How to find the next Hengrui? Investor: pay attention to these six points and have a practice across time

Medical and health industry is one of the most important industries in China's industrial structure in the next few decades, but a high-quality medical and health industry fund that continuously obtains excess earnings is so precious and difficult no matter what kind of capital market it is in As a pharmaceutical graduate, after a short career in the pharmaceutical industry, I entered the pharmaceutical secondary market securities research and investment work more than ten years ago, and then I was responsible for equity investment and debt financing in the primary market of medical health in an institution In this market, there are not many medical investors who have done primary and secondary work I like to enter a multi-dimensional space and constantly change my perspective to repeatedly look at the medical and health industry The real practical investment system is to keep the "original" of value investment system and explore the "extraordinary" of the system that adapts to the changes of various industries and capital markets Value investment is to study the fundamentals, moat and growth space of an enterprise systematically, and then carry out arbitrage between the real value and price of the enterprise, but the arbitrage that is really effective and sustainable may only be time arbitrage and cognitive arbitrage In practice, investors are often interfered by short-term information, limited by the dimension of capital market, or limited by the dimensions of national boundaries, industries and other cognitive areas This is the first level of thinking that medical investors usually have, which is often the obstacle to achieve better long-term sustainable investment returns If we continue to cultivate and have the ability to upgrade to the second level of investment thinking, we will get an amazing long-term excess return Therefore, we have constructed four dimensions of upgrading: cross time length, cross primary and secondary capital markets, cross-border global perspective, and cross industry and cross discipline, to look at this booming industry in many ways, humbly explore the medical world full of hope and merit, eliminate limitations and ignorance, improve self-cultivation as a medical investor, and contribute to this industry We should make some efforts to promote the sound development of our financial business Excellent medical and health companies are the champions of long-distance running No matter in the primary market or the secondary market, no matter in the capital market of China or the United States, more than half of the listed companies of A share and Hong Kong stock in the past 10 years and 20 years are medical and health enterprises Changchun hi tech, Hengrui pharmaceutical, China Bio pharmaceutical, etc have become long-term super strong stocks Meirui medical and Wuxi Pharmaceutical Co., Ltd., no matter in the US stock market, the primary market after privatization, or later the A-share market, have been constantly surpassing The larger the structure of the enterprise, the growth of the enterprise itself across all the capital markets, across a long period of time However, it's not easy for medical investors to make real long-term investment They are like a diligent little bee, flying around the flowers every day, but they don't know that the trees behind the flowers are thriving Investors in the secondary market tend to focus on the short-term quarterly performance, event driven, industry rotation configuration, etc., but they often ignore the long-term growth drive and industrial pattern of an excellent enterprise We all know that Hengrui pharmaceutical is good But few investors make more than three times in Hengrui pharmaceutical Investors in the primary market often have longer endurance than those in the secondary market, because the price fluctuation is not so immediate and violent But with the promotion of financing rounds and IPO, investors are often eager to cash in I don't know how difficult it is to find the next truly reliable excellent enterprise The head enterprise of the subdivided track has been listed, and the growth of the 3-5 enterprises without listing is not as good as the head enterprise It seems that the nature of LP funds and the duration of funds determine the limitations of investment actions, but in fact, what is more important is the self-cultivation and mentality of investors, and a firm understanding of the industry and the depth of the company If you believe that Hengrui and Meirui are growing like perpetual motion machines in the span of 20-30 years, with more than 30% IRR of certainty every year, you will spare no effort and choose to use different financial instruments, different types of funds, or even leverage to invest and buy, and never want to exit or sell, but human nature is to make an investor think that he has rich earnings The psychological barrier of choosing to quit complacently and then to pursue is too big As a medical investor, what kind of money to use to design products has become an important thing Buffett's solution is hard for most people to copy He disbands the limited partnership fund, buys a company and transforms it into an insurance company, and then uses the long-term capital brought by insurance to invest in the excellent targets he selected from the ultra long-term perspective of decades to make real long-term investment It is said that China lacks long-term capital In fact, under the background of the slowdown of national economic growth and the difficulty of RMB capital outflow, a high-quality and definite investment direction is a very good choice Even the dollar capital with free global capital flow is also trying to enter China's high-quality medical and consumer assets In the real environment, from VC, PE to the secondary market, if there is no favor of a small number of evergreen capital, we should choose different stages of funds, long-term and sustained investment in a small number of the most core medical and health assets that can continue to grow We are often disturbed and disturbed by drastic changes in policies, technological progress and changes, management changes, financial data changes, capital markets, macroeconomic and valuation fluctuations and changes in the pharmaceutical industry But just like the Beijing scene seen on the Boeing plane is different from that seen on the ground, if you take a look up the sky, you may suddenly see something: the long-term macro industrial pattern, the change of global industrial chain, the long-term population structure, the disease untreated, the breakthrough of medical basic science, the entrepreneurial pattern vision, governance structure and management system of excellent companies The long-term moat formed over the years, and the evolutionary power of self-adapting to the changes of the times, these are the main growth lines through the clouds So, let's list a few new and long-term problems that can be concerned about the growth of the medical and health industry: (1) 30 years later, the overall pattern and global positioning of China's pharmaceutical industry; (2) The formation of global bipolar of pharmaceutical innovation + manufacturing between China and the United States; (3) The breakthrough of basic medical science and the attack of major diseases drive the prolongation of human life; (4) The profound influence of interdisciplinary new technology on medical and health industry; (5) After China became a powerful country in the world, its economic structure and pharmaceutical manufacturing innovation have been upgraded to lead Different types of pharmaceutical industry practitioners feel different in China at present: once profitable pharmaceutical enterprises in the general sense are falling into a thorough manufacturing industry, which, like other industries, is also facing the general trend of supply side reform And a large number of returnees "double thousand" scientists set up Biopharmaceutical Enterprises, returned to the motherland with their dreams and technologies, and were sought after and helped by the government and the capital market In today's China, you see a large number of 5-10 times P / E ratio and 100 times P / E ratio, and a round of capital market with a valuation of more than 1 billion What will be the pattern of China's pharmaceutical industry in the next 30 years? What kind of enterprise will win? At present, it seems that all industries in China are not easy to lose the situation of gold everywhere in the past, but there are also a few enterprises growing larger and stronger A few years ago, looking for the target investors of M & A in the United States often found it so difficult to find a pharmaceutical company with a net profit of $100 million The pharmaceutical industry in the United States is full of huge pharmaceutical companies with profits of more than 10 billion US dollars, and the rest are a large number of small biotech companies in places like California and Boston Such an industrial landscape has its logic behind it: the large pharmaceutical enterprises occupying various advantages in capital, marketing and technology are becoming stronger and stronger In order to reduce the cost and the risk of new drug research and development failure, the large pharmaceutical enterprises continue to merge and acquire Finally, the number of large pharmaceutical enterprises is becoming larger and smaller The R & D and innovation efficiency of giant pharmaceutical companies is low They have a large number of R & D teams, but the most popular blockbuster drugs are almost all purchased Many excellent scientists will choose to start a small biotech company if they have the technology that is most likely to become a heavyweight drug Due to the developed VC market and professional investors in the United States, the real good scientists will not worry about finding funds Pipeline continues to promote until NASDAQ goes public, refinances in the secondary market, and then most biotech companies Will be acquired by giant pharmaceutical companies Such a story seems to have been staged in China since two or three years ago The top design of the pharmaceutical industry of the Chinese government can be said to be farsighted and full of wisdom Under the great policy of supply side reform, a large number of low-quality and repetitive generic pharmaceutical enterprises in the middle are transformed, restructured and eliminated by various policy combinations The essence of this industry should be continuous innovation and research and development to improve the quality of human life, rather than sitting in a comfortable area and enjoying high profits At the same time, China's long-term policy direction has given great support to the healthy development of new drug innovation, whether it is the professional and efficiency improvement of new drug approval, or the strong support and investment of local governments, industrial funds, VC institutions for biomedical enterprises A large amount of capital investment has generated many bubbles, but it has brought fertile soil to China's pharmaceutical innovation, and is spread over the economic development zones of the second tier city Suzhou and Shanghai Zhangjiang of the Yangtze River Delta may become the world's bio pharmaceutical innovation base in the future The infrastructure construction of China's biomedical industry is constantly improving, and global cro and cdmo enterprises led by Wuxi apptec, kailaiying and KANGLONG Huacheng are constantly building pri-r & D, A complete set of rich and perfect new drug R & D service system, from pre clinical R & D to clinical research: a top scientist in the world can start a business in Suzhou Industrial Park and Zhangjiang, Shanghai, with the investment of professional pharmaceutical VC and government industrial fund, and always achieve clinical phase 1 and phase 2, and then can be listed in 18a of Hong Kong stock exchange or science and innovation section of Shanghai Stock Exchange On the fertile soil of biomedicine, there will also be the world's leading first in class, best in class, and even the world's leading biotechnology innovation enterprises with new targets It can be clearly predicted that the bipolar structure of China's biomedical industry in the next 30 years is forming: one is a large-scale comprehensive pharmaceutical enterprise, a leading enterprise of subdivided specialized track, and the other is a very innovative small biotechnology company Under the prospect of such a large pattern, the general trend will be determined What should investors in the medical and health industry do? Sometimes, medical investors do not lack the judgment of medical professional technology What they lack is the imagination and firmness of the development space and speed of enterprises under the large pattern When Hengrui medical and Mindray medical valued at 50 billion yuan a few years ago, few people imagined today's 400 billion yuan and 200 billion yuan It can be predicted that in the next 10-30 years, China's pharmaceutical industry will become a giant