Release of 2018 white paper on investment and financing in China's medical sector

Source: in the past year of April 24, 2018, under the background of financial industry consolidation (especially the strict restrictions on various asset management products and Internet Financial platforms), the entire equity investment industry has been significantly affected We see that the investment heat, including the medical industry, has been greatly reduced, as well as the keen expectation of the capital market for the era of precision medicine (the successful listing of BGI and the soaring market value), as well as the continued enthusiasm in the field of tumor immunotherapy brought about by the approval of the first car-t drug (kite and Juno were respectively acquired at a high premium) With the opportunity of jointly issuing the 2018 white paper on investment and financing in China's medical field, cicri and Xiantong capital, which focuses on biomedical investment, have made in-depth research and Analysis on the characteristics, investment logic, investment and financing status and typical cases of domestic medical industry with their unique advantages, professional and rigorous research style and professionalism We hope that this research report will provide valuable help and reference for the investment and financing of medical industry Highlight 1: summarize the overall characteristics and trends of China's medical industry 1 The proportion of domestic medical expenditure in GDP and per capita medical expenditure is far lower than that of developed countries There is room for improvement By comparing the average expenditure level of developed countries, China and OECD, there is still a lot of room for improvement in China's medical and health expenditure As one of the representatives of emerging markets, China will gradually become the second largest medical consumer market in the world in the next five years The proportion of GDP and per capita expenditure will further improve, and the growth space of medical industry is huge Figure 1 the per capita health expenditure in 2016 (US $) 2 The sales of medical devices in China account for a relatively low proportion There is a large room for improvement The sales of medical devices in China only account for about 21% of the total sales of medicine and medical devices, which is far below the global average of about 49% Low-end medical devices cannot help domestic enterprises obtain domestic high-quality customers 3 There is a huge gap between Chinese enterprises and international benchmark enterprises in the medical industry The revenue scale of the top ten Chinese pharmaceutical enterprises is between 1.2-2.3 billion US dollars, and the revenue gap with the top ten international pharmaceutical enterprises is about 20 times Table 1 Comparison of top 10 main business income of domestic and foreign pharmaceutical enterprises (billion US dollars) in 2017, the revenue scale of the top 10 Chinese medical device enterprises is between 1-1.2 billion US dollars, and the revenue gap between the top 10 international medical device enterprises is even greater Table 2 top 10 comparison of main business income of domestic and foreign medical device enterprises in 2017 (billion US dollars) 4 The proportion of medical service expense is lower than that of medicine and medical device expense Although China's medicine and medical devices have a good momentum of development, but the ability to charge for medical services has not been greatly improved In Beijing, only drugs and materials account for 61% of the total With the gradual advancement of medical reform, the separation of medicine will make the structure of hospitalization medical expenses more reasonable Highlight 2: summarize the focus of medical reform policy since 2015, the overall characteristics of medical industry policy is "both in and out" Among them, production and cost control of medicine and medical devices are the key tightening areas, while circulation and medical services are the key opening and development areas On the whole, the medical policy hopes to achieve the goals of reforming the supply mechanism of drugs and medical devices, ensuring the quality of products, reducing the cost of circulation, sinking the capacity of medical services, improving the coverage of medical services, and making efficient use of medical insurance funds Figure 2 key words of medical industry policy highlight 3: draw a map of medical industry, and clarify that the driving factors of medical industry are mainly composed of raw material supply, drug / device manufacturing, circulation and sales / service terminals In addition, cro and third-party diagnosis, as supplementary links of medical industry, play a huge role in drug research and development and terminal services Especially with the rise of precision medicine, the third-party diagnosis will be promising Figure 3 According to the Institute of investment in medical industry atlas, the key driving factors that determine the medical industry mainly include policy factors, socio-economic factors and technical factors Highlight 4: an in-depth analysis of the precision medical industry 1 The reason why precision medical development can attract market attention and has a wide development space is that it can solve the problems of "precision diagnosis, early diagnosis, drug testing" and "precision treatment, treatment of the same disease and different treatment" 2 The high-speed development of precision medical industry is driven by technological innovation and huge demand In terms of technological innovation, the progress of genome sequencing technology, biomedical analysis technology and big data analysis technology makes precision medicine more applicable to medicine In terms of demand, the demand of cancer treatment for precision medicine ensures its development space In addition, regulatory agencies have recognized the importance of precision medicine, and adjusted the characteristics of precision medicine through the approval mechanism 3 Investment in logical precision medicine includes diagnosis and treatment In the field of gene sequencing, if the enterprise can complete the trinity of "scale advantage + product quality + channel stickiness", it will win Figure 4 composition of gene sequencing industry chain 4 Opportunities and layout (1) the growth rate of sequencing market may be more reflected in the middle and lower reaches of the industry chain (2) Complete database and deep interpretation of data (3) Capture cell molecules and select appropriate application scenarios Highlight 5: summarize the characteristics and trends of the eight major investment and financing 1 The financing of the medical industry is gathering at the head, and the high-quality medical enterprises will have the opportunity to establish stronger scientific research capabilities, expand the market, and gradually form a strong and strong situation 2 Cro has become a hot financing area in the pharmaceutical industry, and projects involving precision medicine are more favored by capital 3 Whether in the pharmaceutical industry or the medical device industry, the project is mainly financed by VC stage These projects may become potential targets of M & A 4 Under the promotion of medical reform policy, the financing situation of social medical service has been greatly improved, but the compliance, replicability and quality consistency of medical service institutions are important limiting factors in the future exit 5 The IPO Exit return of Biopharmaceutical Enterprises is good, and the rise of car-t immunotherapy may promote more Biopharmaceutical Enterprises to go public 6 There are few high-end medical device IPO projects, and import substitution is the main trend of domestic investment in the future 7 M & A in the medical industry has slowed down in general, but with the improvement of the comprehensive strength of Chinese pharmaceutical enterprises, the potential target of M & A has begun to involve the original overseas pharmaceutical research enterprises with strong R & D strength At the same time, with China's accession to ICH, the demand of pharmaceutical enterprises for original research drugs will be greatly increased 8 In 2017, there was a lack of large-scale IVD M & A cases in medical device M & A, but in view of the rapid development of domestic IVD industry, IVD M & A will appear after the segmentation industry hits the bottleneck.