Biomedical industry is entering a period of opportunity, with financial innovation helping enterprises seize the commanding heights of competition

The biomedical industry is experiencing significant development opportunities.

　　On June 29, SDAX Capital announced the launch of a US\$400 million dedicated China healthcare fundFund("SDAX Capital China Healthcare Fund V"). This fund will continue SDAX Capital's investment logic in China's healthcare sector, further investing across the entire industry value chain, focusing on key disease areas, and establishing a comprehensive Chinese healthcare ecosystem. The fund will focus on early-stage investment opportunities in China's healthcare industry, covering four sub-sectors: new drug R\&D, medical devices and diagnostics, healthcare services, and medical IT/digital healthcare.

　　"The reason for establishing another dedicated healthcare fund for the Chinese market is our strong belief in China's innovation capabilities and the enormous investment opportunities presented by the increasingly mature Chinese healthcare market. SDAX's global ecosystem and resource network, including our sister fund in the US, F-Prime Capital, will provide full support to this newly established fund." - said Ou Bode, Senior Managing Partner and Global Head of Venture Capital at SDAX Capital.

　　Currently, SDAX Capital has invested in over 50 companies in China's healthcare sector, covering the entire healthcare industry value chain and forming a synergistic ecosystem around key disease areas. Globally, SDAX Capital's investment team spans China, Japan, India, Europe, and the United States, and has invested in over 200 healthcare companies worldwide, including 34 listed companies.

　　On June 25, Yan Qingmin, Vice Chairman of the China Securities Regulatory Commission (CSRC), publicly stated that support will be given to science and technology innovation enterprises in high-end equipment manufacturing, information technology, new energy, new materials, biomedicine, and energy conservation and environmental protection through the STAR Market, ChiNext, and the select layer of the NEEQ. Support the development of private equity funds, encourage private equity funds to invest in small and early-stage technology companies in Fujian, further optimize the allocation of technological resources, stimulate the vitality of innovative entities, and leverage the role of government-guided venture capital funds and technology transformation funds. Give full play to the role of listed companies in industrial leadership, help to achieve technological and capital integration and innovation, and create industrial chains and supply chains with stronger innovation capabilities, higher added value, and greater safety and reliability.

　　"Biomedicine is receiving increasing attention from regulators and various sources of capital, which will bring more benefits to biopharmaceutical companies in Suzhou Industrial Park and has further strengthenedIndustrial Bank"confidence in exploring new models of technology financial services in Suzhou Industrial Park." - said Li Zheng, Deputy General Manager of Industrial Bank's Suzhou branch.

　　Biomedical Industry Landmark

　　On November 3, 2020, Xu Kunlin, member of the Standing Committee of the Jiangsu Provincial Committee of the CPC and Secretary of the Suzhou Municipal Committee, stated at the 2020 China Biotechnology Innovation Conference that Suzhou will make the biomedical industry its "number one industry" and make every effort to build a world-class biomedical industry landmark. As the core area of Suzhou's biomedical industry and the main battlefield for the city's transformation and innovation, the park is increasingly becoming a leading international biomedical innovation park in China, with the highest concentration of high-end resources, the most favored top talent, the most active outstanding enterprises, the richest high-quality achievements, and the most excellent industrial ecosystem.

　　In 2020, the Suzhou Industrial Park continued to improve the energy levels of its biomedicine, nanotechnology application, and artificial intelligence industries, achieving an output value of 102.2 billion yuan, 101 billion yuan, and 46.2 billion yuan, respectively, with year-on-year growth of more than 20% for many consecutive years. The biomedical industry has initially formed a characteristic industrial cluster represented by innovative drug research and development, high-end medical devices, and biotechnology. In the past three years, five indicators—the number of innovative enterprises cultivated, the scale of national high-level talents, the number of approved 1.1 category biological drug clinical batches, the total production capacity of biological macromolecular drugs, and the total amount of enterprise financing—have all accounted for more than 20% of the national total.

　　At the above-mentioned conference, the "2020 Evaluation and Analysis Report on the Competitiveness of China's Biomedical Industrial Parks" released by the National Center for Biotechnology Development, Ministry of Science and Technology, showed that Suzhou Industrial Park ranked second in comprehensive competitiveness among China's biomedical industrial parks and first in industrial competitiveness and talent competitiveness among all biomedical parks in China.

　　In the first half of 2021, the "capital map" of Suzhou Industrial Park continued to expand, with the addition ofGentix Bio(GRCL.US),Haoubo(688656.SH),Kangzhong Medical(688607.SH), Beikang Medical (2170.HK),Tianyan Pharmaceutical(NASDAQ:ADAG),Ailong Technology(688329.SH), andNamwei Technology(688690.SH) 7 listed companies. As of now, the park has more than 1,800 high-tech enterprises, 512 gazelle and gazelle cultivation enterprises at various levels, 102 unicorn and near-unicorn enterprises at various levels, and 50 domestic and overseas listed enterprises, including 12 on the STAR Market. The park gathers more than 1,800 biomedicine-related enterprises, with a cumulative of 19 listed companies and more than 40 enterprises in the listing pipeline.

　　"The park is an important supporter and participant in the development of technology enterprises, as well as an important leader in technological innovation. The healthy development of technology enterprises requires the park to provide convenient supporting services that are comprehensive, multi-level, and multifaceted to promote the rapid development and growth of park enterprises. At the same time, the science and technology industrial park will also select high-quality technology-based enterprises to gradually form a large-scale industrial cluster effect; and continuously optimize the business environment of the industry, attracting and gathering more high-quality enterprises to continuously improve the market influence and Brand effect of the park, achieving a win-win situation." - said He Haitao, director of the Suzhou Industrial Park Industrial Innovation Center Office, indicating that in recent years, Suzhou Industrial Park has made great efforts to promote technology finance, providing comprehensive financial support at multiple levels for technology innovation and entrepreneurship enterprises at different stages of development.

　　Building a Technological Financial Ecosystem

　　"The financial needs of technology companies are diverse, and the needs also have a certain degree of innovation and pertinence. Traditionalcreditis mostly based on mortgages and guarantees, with few credit methods; while technology companies, especially those in the initial stages of establishment, are generally light-asset companies, but their investment and demand for funds in the initial stages of establishment are generally greater." - said a member of Kangzhong Medical's management team, stating that in the early stages of company development, there was a large amount of continuous research and development investment, and the scale of sales revenue was relatively small. Following the traditional credit model, it was difficult to obtain financing support. Under these circumstances, the Suzhou branch of Industrial Bank actively contacted Suzhou Industrial Park Rongfeng Ke Credit and successfully issued a 2 million yuan technology loan to the company, which timely alleviated the company's funding gap and helped the company's products successfully enter the market. The company subsequently received a syndicated loan led by Industrial Bank, laying a solid foundation for further seizing market share.

　　With the support of funds, Kangzhong Medical's products successfully entered the market, and sales revenue showed a steady growth trend. While the sales revenue scale grew steadily, profitability also gradually improved, and profits were quickly achieved. Subsequently, IndustrialBankSuzhou branch also jointly launched with Shanghai Pudong Development BankSilicon Valley BankTo provide enterprises with a syndicated loan of 16 million yuan, laying a solid foundation for enterprises to further seize market share.

　　With the continuous development of Kangzhong Medical, its demand for financial services has become increasingly diversified. Shanghai Pudong Development Bank Suzhou branch has therefore formulated a comprehensive financial service plan. Because the company's overseas business has maintained a good growth momentum in recent years, and the demand for international business is high, Shanghai Pudong Development Bank Suzhou branch, considering the impact of market exchange rate fluctuations on the company, provided the company with foreign exchange hedging and foreign exchange facilitation services, and also provided the company with several foreign currency loans, which to a certain extent reduced the company's financing and operating costs. In February 2021, Kangzhong Medical successfully landed on the STAR Market, and Shanghai Pudong Development Bank Suzhou branch also provided the company with fund raising special account storage and third-party supervision services, further deepening the bank-enterprise relationship.

　　Providing comprehensive financial services to Kangzhong Medical is just a microcosm of Shanghai Pudong Development Bank Suzhou branch's services to technology companies. Since 2010, Suzhou has focused on the development of biotechnology and new pharmaceuticals as emerging industries. Shanghai Pudong Development Bank Suzhou branch has been providing financial products and services to emerging industries such as biomedicine. Starting from the first batch of "Ke Daotong" businesses in 2010, it has cooperated with governments at all levels and guarantee companies to establish a supermarket of various risk-sharing technological financial products, providing corresponding technological financial products for technology companies at each stage of development, from start-up, growth, maturity to listing. By the end of the first quarter of 2021, Shanghai Pudong Development Bank Suzhou branch served nearly 700 biopharmaceutical companies, with a total credit line of nearly 6 billion yuan. Shanghai Pudong Development Bank Suzhou branch actively supports Suzhou's technology companies in seizing the commanding heights of technological competition and future development through financial innovation.Insurance) company cooperation, established various risk-sharing technological financial product supermarkets, for technology companies from the initial stage, growth, maturity to listing, each stage of development has corresponding technological financial products to provide services. By the end of the first quarter of 2021, Pudong Development Bank Suzhou branch served nearly 700 biopharmaceutical enterprises, with a total credit line of nearly 6 billion yuan. Pudong Development Bank Suzhou branch actively supports Suzhou technology enterprises to seize the commanding heights of technological competition and future development through financial innovation. By the end of May 2021, Pudong Development Bank Suzhou branch has developed nearly 20 technological financial products, which is the commercial bank with the most technological financial products in Suzhou, with outstanding loans to technology companies exceeding 18 billion yuan, accounting for nearly one-third of the total corporate loans.

　　On June 29, the 2021 China Potential Unicorn Enterprise Report, guided by the Suzhou Municipal People's Government and jointly organized by Great Wall Strategy Consulting and the Suzhou Industrial Park Administrative Committee, was released at the release conference of the 2021 China Potential Unicorn Enterprise Report.Research Report》 shows that in 2020, a total of 425 companies were listed, and Suzhou ranked third in the country with 39 companies, second only to Beijing and Shanghai. Suzhou's potential unicorn companies are mainly distributed in innovative drugs and medical devices, digital medicine, integrated circuits, new energy and smart cars, and Pudong Development Bank has served 70% of the above 39 potential unicorns.

　　In building a professional technological financial operation system, Pudong Development Bank has formed an integrated technological financial service network covering the head office and branches. Similar to the Suzhou branch, Pudong Development Bank has 5 other key technological financial branches in Hangzhou, Nanjing, Wuhan, Changsha, and Qingdao, and 6 technological financial centers in Beijing, Shanghai, Tianjin, Shenzhen, Guangzhou, and Xi'an. Pudong Development Bank has been committed to exploring new models of technological financial services, giving full play to the "home court" advantage of Shanghai's construction of a global science and technology innovation center, and the overall advantages of group operation, helping to cultivate high-quality technology companies with market competitiveness, and promoting the high-end development of domestic industries. Pudong Development Bank has established a full life cycle, "equity, debt, and loan" integrated technological financial ecosystem service model, and has created a professional organizational structure, business model, innovative product system, and digital service platform.

　　By the end of 2020, Pudong Development Bank served more than 40,000 technology companies, with outstanding loans to technology companies exceeding 240 billion yuan. More than 70% of the listed companies on the STAR Market are customers served by Pudong Development Bank. It has provided cross-border business support to more than 200 new economic enterprises, provided free trade FT account services to nearly 700 technology companies, and provided cross-border two-way RMB fund pool services to nearly 140 multinational technology groups.

　　Building a multi-level technological financial ecosystem

　　"Currently, the proportion of debt financing in China exceeds 90%, and the proportion of direct financing is low." A general manager of a primary branch of a joint-stock bank said that the high proportion of debt financing will inevitably lead to a high leverage ratio for enterprises, and deleveraging also requires increasing the proportion of direct financing. Technological innovation also provides more opportunities for the development of the capital market, because innovation mostly has very high requirements for light assets and technology.

　　In order to further support the development of technology enterprises in Suzhou Industrial Park, the park has now gathered 811 private equity funds with a total scale of 250 billion yuan. The number of financing events and the total amount of financing in 2020 accounted for more than 60% of the city, and the construction of the technological financial system is complete and highly active.

　　The park establishes a venture capital guidance fund, attracting social capital to invest in early-stage technological projects through methods such as fund participation, follow-up investment, and allocation investment, expanding its "circle of friends" and creating a synergistic and interactive development pattern of "entrepreneurship, innovation + venture capital." According to He Haitao, the guidance fund has cumulatively participated in 35 sub-funds, with a sub-fund scale of nearly 8.6 billion yuan, cumulatively invested in 148 projects in the park, with a cumulative investment of 2.104 billion yuan. Preemptively deploying leading technological direct investment funds, making policy-based investments in the earliest excellent technological innovation and entrepreneurship projects and talents, cooperating with the investment promotion department to jointly introduce high-end talents and jointly create an innovative environment, with a cumulative investment of 102 projects, with a scale of 372 million yuan, of which 90% are first-round investors.

　　The park has gathered large-scale social capital through an efficient and innovative operation model, including the establishment of a parent fund by Yuanhe Holdings, a state-owned investment holding company under the management committee, the establishment of sub-funds, and the introduction of the concept of Dongshahu Fund Town, giving full play to the leverage effect of government-guided funds and guiding social capital to focus on technology enterprises. Yuanhe Holdings (including market-oriented platforms) has directly invested in more than 900 projects, with a cumulative investment of 398 projects in the park; through the VC parent funds it manages, it has invested in 119 sub-funds, with a total scale of over 120 billion yuan. Through the above equity investment platforms, it has cumulatively cultivated more than 130 listed companies.

　　The park's various government departments cooperate with 22 bank-like financial institutions. Through risk-sharing, they cooperate with financial institutions to develop 9 innovative products at the provincial, municipal, and district levels (Su Ke Dai, Ke Ji Dai, Yuan Ke Dai, Za Gen Dai, Zhi Shi Dai, Miao Pu Dai, Guan Zhu Rong, Green Zhi Zao Dai, Advanced Manufacturing Dai), cumulatively helping more than 1,400 enterprises solve loan needs of 30 billion yuan. An early-stage policy-based small loan platform is established to provide loans, investment, and guarantees and other comprehensive financial services to small and micro technology enterprises in the park that are in the seed and start-up stages.

　　Focusing on direct financing, indirect financing, and ecological environment construction, the park has introduced a series of technological financial policies, involving technological guarantees, insurance, financing leasing, equity investment, and loan interest subsidies. Through the implementation of technological financial policies, more financial institutions are attracted to settle in the park, and financing guarantees and insurance institutions are encouraged to increase their support for technological innovation and entrepreneurship enterprises, forming a good financial industry. Exploring the "allocation and investment combination" approach to support the implementation of major innovation projects enables scientific and technological teams to obtain a large amount of "first pot of gold" for technological research and development in the early stage based solely on excellent technological innovation and entrepreneurship project plans, and at the same time, it is agreed that the corresponding support can be realized through the transfer of original shares or capital increase when the project obtains market pricing.ConversionThe income after the project exits can be used to support other technological innovation projects.

　　Technology-based companies relying on the development of industrial parks can fully enjoy various policy support and preferential treatment under the leadership of the park, obtain the industrial dividends generated by the scale effect of the park's industrial clusters, and effectively utilize the convenient and complete infrastructure and services of the park, ensuring that companies focus on business operations and production, and promoting steady and rapid growth. Therefore, the park's support for the growth of technology-based companies is multifaceted and profound, including but not limited to: policy support, industrial leadership, and infrastructure and service support; it is one of the key factors promoting the development and growth of enterprises." said a manager of a technology company in Suzhou Industrial Park.

Source: Economic Observer Network