Twelve months seems to have passed in the blink of an eye. However, investors found enough time to inject a few million dollars into the healthcare industry. 

The US-China trade war made headlines all over 2019, with the US imposing tariffs over Chinese goods to a value of over USD 550 billion, while China responded by applying tariffs on US goods to the tune of USD 185 billion; this was projected to have a severe impact on Chinese economic growth. Moreover, China's economic slowdown, the most abrupt in recent decades, has been called a result of the tariffs imposed by Trump administration. Moreover, we have seen continuous threats by some multinationals firms to move their manufacturing to other countries with low labor costs, like Vietnam. 

Nevertheless, when it comes to the healthcare industry, which requires a massive amount of capital, investors are not stepping down, despite all the skepticism hampering the market. 

2019's uncertainty didn't hinder capital flows into the healthcare sector

2019 started with Guangdong-based biotech company Thousand Oaks Biopharmaceuticals (澳斯康) completing a CNY 300 million (USD 43 million) funding round on January 1, led by New Alliance Capital (联新资本). The clinical-stage biotech firm focuses on the development and research of therapeutic proteins. Other biotech companies, like the Shanghai-based biopharma Antengene Corporation (德琪医药) and Beijing-based cancer drug developer Innocare (诺诚健华) managed to raise significant amounts – USD 120 million and USD 160 million, respectively.

Healthcare firms during the first month of 2019 raised a war chest in the private market, with a total amount of USD 644 million. However, the proceeding three months experienced a slight decrease, which might be due to trade war escalation and uncertainty in the market. 

As more companies adopted advanced technology like artificial intelligence and machine learning to develop and accelerate the manufacturing process, and manage patient's data, a small 'window' of opportunities took the attention of venture capitalists for whom capital is not an 'issue,' but returns are crucial - high yield requires high risks.  

May and November were the busiest and most promising months for startups, with record investments worth more than USD 1.5 billion and USD 1.1 billion. These funding events brightened the healthcare industry and were mostly injected into biotech- and medical devices-related companies. Besides, companies like JD Health (JD健康) raised USD 1 billion from its parent firm JD.com (JD: Nasdaq) and Zhejiang-based medical service provider Taimei Technology (太美医疗科技) received a funding round Series E of USD 211 million. When compared with 2018's data, a 23.3% year-on-year increase topped the total funding to nearly USD 7 billion from USD 5.6 billion.

Beijing-based medical firms received most of the investments

2019 was undoubtedly the year that investors chose to land their capital into companies headquartered in Beijing. The capital of China received over USD 2.7 billion in financing events (39.41% of total funding), with JD Health receiving USD 1 billion from its parent company, JD.com, and Tencent Doctorwork attracting USD 250 million from Tencent Holdings (TCEHY: OTC) and Sequoia Capital China. 

After Beijing, Shanghai ranked the second with USD 1.4 billion (19.8%) as a result of the considerable amount raised by pharmaceuticals companies like Haihe Biopharma (海和生物, USD 145 million), Antengene Corporation (德琪医药, USD 120 million) and Elpiscience  (USD 100 million). 

LBX pharmacy (老百姓大药房), a Jiangsu-based biopharma company, went through an extraordinary financing event that saw it pocket USD 557 million, the highest in the region. Additionally, medical device platform Peijia Medical (沛嘉医疗) snagged USD 100 million in its funding round Series C, ranking the Jiangsu region the third on the list, representing 13.3% of total funding raised in 2019.

Healthcare companies located in Southeast China, particularly in Guangdong province, also landed a significant amount of funding in the last year. Companies such as medical devices maker MGI Tech (华大智造) raised USD 200 million and Burning Rock Biotech, an NGS (Next-Generation Sequencing) diagnostics solutions provider, bagged CNY 850 million, which was equivalent to USD 126 million. In total, USD 720 million was brought into the region. 

Finally, who invested in these healthcare companies?

Analysis shows that by the number of financing events, Chinese Venture Capital funds are the ones who are backing these firms by streaming millions of dollars into the industry.

Qiming Venture Partners (启明创投), the well-known venture capital firm, led the funding rounds by injecting colossal amount of capital in ten medical companies, followed by Lilly Asia Ventures (礼来亚洲基金) and Matrix Partners China (经纬中国) with nine companies invested each while Legend Capital (君联资本), IDG Capital (IDG资本) and Tencent Holdings held five financing events each.

China's healthcare industry indeed boomed during the year 2019 as investments continued to increase in the biotech and medical device-related firms. More capital will be needed to accelerate this industry, and R&D will be the focus of these companies.

Technology like AI and machine learning is expected to continue to rise and accomplish what was unimaginable years ago. For instance, AI tools powered by Googles’s DeepMind algorithm were proven to be at least as effective as human experts at finding the correct cancer diagnosis, even when two doctors worked together on the same images. More healthcare companies will likely be powered by AI and machine learning in the future.