Over the past year, in an environment where the VC market as a whole was not optimistic, PCG Capital maintained good results in the three ends of the spectrum: 8 billion yuan of new fundraising, nearly 60 projects invested, 14 projects exited, and IRR of 42.27%. Compared with 2017, PCG not only has an advantage in the total amount of fundraising and investment, but also has a great leap in the quality of projects, and the proportion of star projects of strategic significance invested is more than 90%.
And in the medical big health field, which Qian Mingfei is proud of, there is also an outbreak. As of December 2018, the four phases of PCG Capital's medical fund were nearly 5 billion in size,**** counting more than 60 biomedical projects invested, and the exit IRR in 2018 alone reached 80%. Kanghua Biotech, Zejing Biotech, Sanyou Medical, Microcon Biotech, Jiahe Biotech, Purex ...... These heavyweight projects in the biopharmaceutical industry are all included in the PCG map. Among them, Zejing Bio and Purex realized partial exits in 2018, with IRRs of 58.92% and 157.51%, respectively.
The bright performance of healthcare funds has made Qian Mingfei more confident about investing in 2019. "Among similar funds in China that mainly invest in biomedicine, PCG's performance is considered to be at the front of the pack, which is of course an incomplete statistic. But we should have laid out all the heavyweight projects of strategic significance in the industry, and even some of them PCG has gotten the position of important shareholders." Qian Mingfei said to the investment community.
Qian Mingfei, Founder and Chairman of PCG Capital
Lighting the "undercard"
It is not an exaggeration to describe the investment in the field of medical and health care in 2018.
According to the report of Arterial Network, 1,410 investment and financing events took place globally*** last year, bottoming out in the consecutive decline in the number of investment and financing events in 2016-2017 and exceeding the historical high; the total amount of investment and financing was $38.801 billion, a year-on-year increase of 70.79%, which maintains the high-speed growth trend of the past few years.
There are a lot of entrants, and a lot of people who have folded. PCG Capital is one of the few organizations that can capture the headline projects in each segment.
PCG Capital's investment in healthcare began in 2014. At that time, China's healthcare spending accounted for only 5.56% of GDP, ranking 123rd out of 150 countries and regions in the world, with huge room for growth. Recognizing the opportunity, PCG Capital broke the initial mixed business model and gradually focused on healthcare as one of the key areas of layout, but only invested in a small number of scattered projects.
In 2015, Tiger Pharmaceuticals became the cornerstone shareholder of PCG Capital, a well-known domestic CRO enterprises both invested funds, but also brought a lot of resources, PCG began to carry out a full range of industrial chain layout. It is understood that PCG Capital grasps Tiger's entrance advantage in the biomedical industry, has set up a number of nearly 5 billion biomedical funds, and has invested in more than 60 projects, and in 2018 alone, it has bid on more than 20 projects. And in the three major tracks of biopharmaceuticals, medical devices and medical services that PCG Capital is betting on, some headline companies have been born.
Kanghua Biological is the world's second and China's only diploid human rabies vaccine producer, Qian Mingfei described as "mastering the core technology of the medical enterprise, is a project to benefit human health, but also a good investment". PCG Capital invested 230 million yuan in August 2016 to become an important shareholder, the company's profit that year was only 6 million yuan, the net profit in 2018 was nearly 200 million yuan, in 2019 or will break through to double.
PCG Capital invested in ZEJING Bio in April 2016, ZEJING Bio focuses on the research and industrialization of 8 new drugs for the treatment of tumors and hemorrhagic and blood disorders, and has successfully created two distinctive core technology platforms, and has undertaken 3 national "major new drug creation" projects, and obtained 40 invention patents authorized by the U.S., the European Union, and China. We have also obtained more than 40 patents from the United States, the European Union and China.
Microbiologics, a high-tech enterprise specializing in the research, development, production, application and service of probiotics and derivatives, owns a resource base of more than 3,000 strains of Chinese probiotic strains with independent intellectual property rights.
Build " entrance "
For today's PCG Capital, digging these quality projects based on the layout of the entrance. In Qian Mingfei's view, in the highly specialized field of medical investment, it is very crucial to grasp the "best entrance". The first thing you need to do is to get the best out of the market.
As we all know, a new drug from research and development to market is a long and complicated process, which must go through three stages: preclinical research/clinical study, clinical trial, and approval for marketing. PCG's entrance advantage in the biomedical industry is precisely through its investment in the layout of the three major entrances of the clinical CROs, SMOs (Clinical Trial Management Organizations), and the data statistics and registrations. Through a five-year process, PCG has introduced China's largest clinical CRO, Tiger Pharmaceuticals, as a cornerstone investor, strategically acquired a stake in the industry-leading SMO, Pricerite, and taken a controlling stake in Prudential Medical Technology, a leading provider of biopharmaceutical statistics and registrations.
Tigermed is a leading clinical CRO in China. Tigermed is mainly engaged in clinical research outsourcing for Chinese innovative pharmaceutical companies, and has more than 600 clients globally, accounting for 80% of the CRO market share of innovative pharmaceutical companies in China, making Tigermed the "largest entry point" to the clinical research stage. Through Tigermed, PCG can be the first to know which drugs have been developed and how effective they are, and then wait for the opportunity to strike.
Drug research and development is also the most important and costly part of the clinical trial stage, based on the logic of occupying the "entrance", PCG at the end of 2015, strategic investment in the domestic SMO (Clinical Trial Site Management Organization) enterprise Purex. "Purex is one of the better SMOs in China." Qian Mingfei introduced the company, which serves clinical trials, and multinational pharmaceutical companies Pfizer, Novartis, Roche, AstraZeneca, and international CROs Quintiles, Covance, Parexel, PPD, Icon, etc., have in-depth cooperation. With PCG's stake in Purexel, it has first-hand data on the efficacy, side effects, adverse reactions, etc. of the biopharmaceutical species under development, allowing PCG to make precise investments in the biopharmaceutical industry.
Finally, in the drug approval and listing process, companies must entrust third-party data statistics and drug registration organizations to perform, Prudential is the industry's head of the organization, PCG Capital is a huge investment to hold Prudential. "Through the three ways of strategic investment, equity participation and holding, the three head organizations of drug research and development (CRO), drug clinical research (SMO), and data statistics and registration are closely associated and synergistic, PCG has opened up the whole industry chain investment mode, and the biomedical investment circle is getting more and more mature, which has made PCG become the head organization of biomedical investment. "He added.
"We will not generalize to invest, with the information advantage of the entrance, PCG can be very focused on the pharmaceutical industry to do precise investment." Qian Mingfei mentioned that in the past four years, PCG has invested in 60 innovative pharmaceutical companies in China, and owns nearly 50% of the market share. "The three entrances are firmly grasped, then I will get the information earlier than the market and also have channels to invest in them." Qian Mingfei believes that this is the core reason for PCG Capital's outstanding performance in healthcare investment.
Investing in " innovation "
The movie "I am not the God of Medicine" has touched Qian Mingfei a lot.
"We invested in a company to treat lung cancer drugs, similar drugs if imported probably a course of treatment requires more than 60,000 yuan, but the same efficacy of the domestic products less than a quarter of the price, which is a huge contribution to reducing the cost of treatment for patients." He believes that directing more capital into the research of innovative medicines, in addition to bringing considerable commercial returns, is improving the overall health of the nation.
This belief has given rise to the logic of PCG's investments in healthcare, which puts the "people" at the forefront, i.e., the realization of import substitution for certain innovative medicines and medical devices that are relevant to the people's use of medicines and the reduction of costs.
PCG's $100 million investment in medical device company Han Yu Medical, the company's core product is a mitral valve interventional device ValveClamp, used for minimally invasive interventions for mitral regurgitation disease. At present, the only mature minimally invasive mitral regurgitation treatment device approved and marketed globally is Abbott's MitraClip, which has not yet appeared in China. And Han Yu Medical's ValveClamp successfully performed the world's first clinical procedure of transapical mitral valve clamping technology at Shanghai Zhongshan Hospital in July 2018, and completed the last exploratory clinical trial before the end of the year.
"The product has achieved a major breakthrough in the operation of China's self-developed mitral valve devices, and is expected to be the first approved mitral valve interventional therapy device in China." Qian Mingfei emphasized, "PCG chose to invest, first of all, the technology is very advanced, and second, the price is much cheaper compared with foreign countries."
Seek "future"
From the private background of the investment institutions, growth for the state capital, listed companies and financial institutions competing for shares, and *** with the head of the head of the asset management organization involved in the investment business, PCG with eight years. At present, PCG has become a mixed ownership enterprise with up to 30% participation by state capital and financial institutions.
In 2015, PCG Capital obtained the shares of four listed companies (real controllers/shareholders), namely Tiger Pharmaceuticals, Yongtai Science and Technology, Bailun and Dongfulong. 2016, a number of large financial institutions and listed companies became the LP of PCG, of which there are three pharmaceutical funds set up by Tiger Pharmaceuticals and its **** with them. 2017, banks such as Pudong Development Bank, Jinshui Group, Haiying Group and other banks and large state-owned enterprises strategically invested in PCG Capital, in 2018, PCG was once again favored by capital, Qingdao City Investment Group, Qingdao Global Wealth Center strategically invested in PCG Capital, and the two rounds of capital increase, Tiger Pharmaceuticals are once again increasing their holdings.
It is understood that the Industrial and Commercial Bank of China, the State Power Investment, Pudong Development Bank, Industrial Bank, Ping An Bank, Hangzhou Bank, Gansu Bank, Shanghai Trust, insurance companies and other financial institutions, as well as a number of local gold control platforms, government platform companies and so on, are the LP of PCG Capital.
Qian Mingfei has mentioned to the investment community that PCG now has no fund-raising department, only the fund management center. It is responsible for capital collection and fund establishment. It is indisputable that PCG Capital has access to a wide range of institutional funding sources.
Healthcare will continue to be a key focus for PCG, both in terms of fundraising and investment. "The new fund being raised will not only have Tag continue to join, but will also introduce banks, insurers and state-owned enterprises to participate. 2019 cumulative biomedical fund size may be able to do four, and the guaranteed size can be five billion." Qian Mingfei is very certain, "These jobs have been done almost."
In addition, PCG's core strategy for the future is internationalization, guiding more international first-class investors to participate in China's outstanding industries, and become an important force in China's economic development, and at this stage, we are actively expanding overseas LPs. "US dollar funds will be set up right away, and we have recently completed the fundraising of a $200 million biomedical fund. , large overseas institutional LPs, the world's top 500 companies are involved in the subscription of funds."
The reason why so confident, Qian Mingfei frankly said, "One is that the good projects in the past few years are laid in our hands; two from the exit situation, only in 2018 the exit IRR reached 80%. , this achievement is still very good."