With around CNY 18 billion total in transactions, China's healthcare PE accounted for around 20% of the total PE investments in China in the Q2 of 2019. The growth of biotechnology and health services has led to the trend.
The healthcare industry led PE transactions for the second quarter of 2019 in China, with around CNY 18.8 billion in transactions in total. Even as Chinese primary market investments have lost their upward trend since 2016, the healthcare industry remains an exceptional field that has retained its attractiveness for many investors.
Healthcare was followed by the Information Technology (IT) and Internet fields, with CNY 17.3 and 11.5 billion, respectively. Healthcare PE also boasted the highest average transactions for the same period, PEdaily reported.
Chinese healthcare PE analysts refer to the industry as the “Evergreen Industry” (长青行业). However, the viability of this statement may be even beyond China: Global healthcare PE activity rose to record levels yet again in 2018. The total disclosed value of deals reached USD 63.1 billion, the highest recorded since 2006, and the deal count grew to 316 from 265 in 2017, according to Bain & Company.
During the first half of 2019, investor attention was drawn towards Chinese healthcare services with a medical aesthetic company's IPO submission in the US, So-Young Int. (SY: NASDAQ). There are several more firms from China's health scene that are rumoured to be considering filing in the US.
Shanghai-based drug developer, I-Mab Biopharma, and Medical AI developer Yitu Technology are two other companies that said to be preparing to file in the US; neither company explicitly rejected the speculations.
During the first half of 2019, JD.com Inc. (NASDAQ: JD) subsidiary raised over USD 1 billion from CPE China Fund and CICC Capital in its Series A financing round, marking one of the largest transactions of the period.
Changing demographics and continuously reforming social policies are bringing about a feasible ground to cultivate new fields within healthcare services. China is catching up in several businesses with the world leaders, that are the European countries and the US in healthcare.
"China’s Medicare or Healthcare Insurance sector is simply primitive and inefficient, which will be regulated by the government for better. We are closely following and actively engaging in those data-driven healthcare insurance companies to seize this very critical industry. It is critical because the rest of the Healthcare industry is tied to Medicare." said Sun Wei, partner of a Shanghai-based healthcare private equity.
Viable fundamental macro indicators one side, relatively higher returns on the other: China's healthcare private equity players are operating in an optimistic atmosphere amidst global uneasiness of capital markets.