Here are selected highlights from the roundtable discussion:

Since 2022, the biopharmaceutical industry has undergone significant changes as the market continues to digest the valuation bubble from 2021. Many biotech companies have attracted investments from investors originally active in non-pharmaceutical sectors, further driving up their valuations—though these valuations are now proving unsustainable, given that clinical-stage data often fall short of justifying such lofty figures, leading to a corresponding decline in industry indices. We believe it may take some time before valuations fully stabilize. From a capital markets perspective, several factors—including liquidity challenges in Hong Kong stocks, rising U.S. interest rates, the reevaluation of listing standards on the STAR Market, and stricter anti-corruption policies in the healthcare sector—are converging to create short-term volatility in the commercialization of biopharmaceuticals. Meanwhile, the pace of primary-market investment in the biotech sector is slowing down, with funding levels declining accordingly—particularly in Series B and pre-IPO rounds.

Since 2014, the industry's understanding of pharmaceuticals has undergone a fundamental shift. Previously, many "new drugs" were essentially generic versions—products that had already been approved elsewhere but hadn’t yet entered the domestic market. However, after 2014, the perception of new drugs began to evolve. Unlike generics, which resemble traditional manufacturing-based products, these newer innovations are increasingly tied to cutting-edge technology, requiring significant capital investment and often spanning longer development cycles. Globally, the U.S. leads the way in developing biotech-driven new drug industries. Meanwhile, European nations like the UK and Germany boast world-class scientific research capabilities—but they often struggle to secure robust capital-market support, prompting most of their innovative companies to ultimately list on U.S. exchanges instead. In contrast, China boasts a massive, untapped market potential, coupled with a series of supportive government policies aimed at nurturing its burgeoning pharmaceutical sector. Can China’s emerging new drug industry truly become a high-tech powerhouse? And will it carve out a distinct global niche for itself? We believe it can—but achieving this goal may take time. High-tech industries typically require extended periods of sustained support and incubation, encompassing critical factors such as market demand, talent development, and unwavering government backing. While China already excels in certain areas—like cultivating top-notch talent, advancing foundational research, tapping into a growing consumer market, and aligning regulatory frameworks with industry needs—it still has room to strengthen other key components, such as fostering innovation ecosystems and enhancing access to international capital.

In the current environment, beyond expertise and experience, the requirements for founders and their teams have become more diverse—ranging from the ability to commercialize drug candidates, to quickly acquiring new knowledge across various fields, as well as strong judgment skills and leadership capabilities.

Secondly, locally trained professionals today are advancing faster in their careers compared to their overseas counterparts of the same age, with more robust leadership development opportunities. In China, individuals aged 30 to 40 may already be leading teams of dozens of people—something that isn’t necessarily true in the U.S. As a result, homegrown talent is increasingly gaining attention.

Over the past few years, domestic mergers and acquisitions in China haven’t occurred frequently, nor have deal prices been particularly high. As a result, M&A is not yet the primary exit strategy for investors. When it comes to overseas M&A, companies must carefully consider both international investment restrictions and their own ability to compete on the global stage. Developing innovative drugs requires participation in fierce global competition, yet currently, there are relatively few Chinese pharmaceutical firms that possess the true international competitiveness needed to successfully navigate clinical trials, secure global product registrations, and ultimately bring their innovations to market. Moreover, if a company focuses solely on the Chinese market, its valuation will inevitably align only with domestic expectations—leaving little room to justify the significant upfront risks and substantial capital investments required during the early stages of drug development. This mismatch is one of the reasons why acquisition deals involving Chinese pharmaceutical companies remain relatively rare. Additionally, even established generic drug manufacturers face challenges when trying to integrate or “digest” innovative drug companies, as the latter often come with inflated valuations from earlier rounds of financing. Currently, the most dynamic M&A market remains the U.S. Nasdaq, where companies with strong international competitiveness can find an ideal platform to achieve a successful exit through an IPO.

While license-out deals aren’t yet widespread, they could potentially become mainstream in the future. There are two key factors to consider: first, innovation in corporate structures, and second, tax implications. In the U.S., some companies structure their projects entirely within subsidiary entities—so when a license-out occurs, they can simply sell the entire subsidiary to the acquiring company. This process often results in cash distribution to investors within just two weeks. Looking ahead, China may also have opportunities to develop similar innovative models. However, taxation remains a significant challenge and will likely be one of the primary concerns for license-out transactions in the years to come.

In the short term, biomedical investment in the second half of this year will likely require a wait-and-see approach, as it depends on IPO policies, anti-corruption efforts in the pharmaceutical sector, and the approval standards set by the Center for Drug Evaluation. As a result, the industry may continue to face near-term challenges. However, looking ahead, we remain firmly optimistic about China’s biopharmaceutical sector—especially in the innovative drug space. Currently, among China’s trillion-dollar pharmaceutical market, the share of truly novel drugs remains remarkably low, at just 10%, compared to 85% in the U.S. and 60–70% in Japan and Europe. This highlights that China’s new-drug segment still has significant room for growth.

In terms of investment strategies, some institutions are placing greater emphasis on metrics such as revenue, profitability, and valuation for their investment projects. Others focus on whether a company or product possesses global competitiveness and has already reached a certain stage of development. Meanwhile, some institutions are adjusting their strategies and exploring new market opportunities in response to policy changes and shifting market dynamics—considering sectors like consumer healthcare catering to self-funded needs, companies leveraging cutting-edge technologies such as AI/ChatGPT, the digitalization and automation of biodesign products, and identifying promising blockbuster offerings in specific disease areas.