As soon as the market condition improved a bit, the founder immediately raised the valuation.

In just a few months, the pharmaceutical field has transformed from being previously "ignored" to becoming the "darling" in the eyes of many today.

The booming BD (Business Development) transactions of innovative drugs in China have become the biggest driving force for changing investors' perceptions. From the $6.05 billion cooperation between 3SBio and Pfizer to the approximately $12 billion cooperation between Hengrui Medicine and GlaxoSmithKline, the huge wealth contained in BD transactions has made investors start to re - evaluate the value of Chinese innovative drugs.

Whether it is the over - subscription of Yinuo Biopharma by more than 5,300 times or the emergence of stocks such as Ascletis Pharma with a more than ten - fold increase, boosted by the surging BD transactions, the secondary market in the pharmaceutical field is getting hot, driving the primary market to gradually recover and quickly restoring the confidence of pharmaceutical investors.

So we can see that in July, Vettore Bio reached a cooperation worth a total of $175 million with Novartis; in August, Sequoia China and other buyers reached a cooperation with Lepu Biopharma, creating the first NewCo (new company) led by a Chinese fund, which is of a guiding significance.

When BD transactions can boost the speed of IPOs and provide an exit for investors through dividends, GPs who have delivered performance can then pass on their confidence to LPs, laying the foundation for the fundraising of new funds. At the same time, they also have sufficient motivation to increase investment in the primary market, ultimately forming a closed - loop.

Although the complex macro - environment still worries many investors, the improving biomedical field has excited more investors.

Investors "Urge" Investee Companies to Go Public

Seeing the enthusiasm in the secondary market of the pharmaceutical field, investors have started to get interested and take action. A friend in the venture capital circle told me that in recent months, many investors have started to frequently exchange experiences in subscribing for new pharmaceutical stocks.

I subconsciously thought that perhaps the relatively sluggish primary market had made "pretend - to - be - busy" investors determined to enter the secondary market. However, he immediately explained that it is an open secret that investors talk about stocks, but previously they didn't talk much about pharmaceutical stocks. "Now, getting a new stock subscription is almost like making money, with a price increase of at least 50%, or even doubling."

A set of data impressed me deeply. I originally thought that the over - subscription of Zhonghui Biotech by more than 4,000 times was hard to beat. However, four days later, Yinuo Biopharma froze about HK$370 billion in funds and became the "King of Over - Subscription" in the Hong Kong stock healthcare industry with an over - subscription of more than 5,300 times.

In a short period, the stock prices of these biomedical companies have increased exponentially, allowing many investors to make huge profits. Driven by the profit - making effect, it's no wonder that investors in the primary market have rushed to the secondary market. Li Hang, a pharmaceutical investor, revealed to me that the core logic is the explosion of BD transactions of Chinese innovative drugs, which has enabled the value of all biomedical companies to be re - evaluated.

According to incomplete statistics, there have been more than 50 BD transactions of Chinese innovative drugs in the first half of 2025, with a total amount exceeding $48 billion. In May, 3SBio reached a cooperation worth a total of $6.05 billion with Pfizer; in June, CSPC Group reached a cooperation worth a total of $5.3 billion with AstraZeneca.

Judging from the current market trend, the popularity of BD is still rising. In the second half of the year, after Hengrui Medicine announced a cooperation worth approximately $12 billion with GlaxoSmithKline, Jingtai Technology also reached a cooperation worth approximately $5.99 billion with DoveTree.

Regarding why the R & D strength of Chinese innovative drug companies has been globally recognized, Hu Xubo, the managing partner of Qiming Venture Partners, judged that since the second half of 2024, a series of impressive head - to - head clinical data of products have made the global pharmaceutical industry see that Chinese innovative drug companies can develop high - quality products. "This has directly attracted large overseas pharmaceutical companies to cooperate with Chinese innovative drug companies, and international investors have also started to turn their attention to Chinese innovative drug enterprises."

Finally, boosted by BD transactions, the stock prices of many biomedical listed companies have soared. In about a year, it has not only spawned stocks such as Ascletis Pharma, Delight Biopharma, and Harpoon Therapeutics with more than ten - fold increases, but also driven the Hang Seng Innovative Drugs ETF, which was listed at the end of March 2025, to rise by more than 70%.

From the 18A listing rule in Hong Kong stocks to the launch of the special listing route for technology companies, and the restart of the fifth set of listing standards for unprofitable enterprises on the Science and Technology Innovation Board of A - shares, after feeling the enthusiasm in the secondary market, a number of biomedical companies have embarked on the IPO path.

Looking at Hong Kong stocks first, in addition to more than 50 pharmaceutical companies applying for listing in Hong Kong in the first half of 2025, Tianchen Biotech, Dan Nuo Biopharma, and Haixi New Drugs have also recently submitted prospectuses to the Hong Kong Stock Exchange. Looking at the Science and Technology Innovation Board of A - shares, recently, not only has Heyuan Biotech successfully passed the review, but also Biberiatech has completed the registration process, and Tenormab has applied for listing.

Zhang Yu, who works in IR at a medical fund, told me that recently, securities firms have been extremely busy, and many biomedical projects that want to go public cannot be arranged. Zheng Hao, who is engaged in pharmaceutical investment, revealed to me that many biomedical companies have been actively looking for cornerstone investors since this year. "Currently, there may be at least hundreds of biomedical companies planning to list in Hong Kong."

Investors are also taking active action and have started to "urge" the investee companies in the biomedical field to go public. "They will at least discuss with the enterprises whether they should take action during this window period." Zheng Hao explained to me that currently, the cash flow of many innovative drug and medical device companies is difficult to support them for a long time. In a situation where the primary market is relatively sluggish and the company's operation depends on financing, IPO is actually a good choice.

I learned that in order to seize this rare listing window period, some investment institutions are preparing to hold internal training sessions to help the investee companies in the biomedical field go public better and faster.

State - owned LPs "Chase" to Invest in Funds

In addition to boosting the speed of IPOs and the rise of listed company stock prices, the surging BD transactions of Chinese innovative drugs have also brought potential exit opportunities for investment institutions.

My colleague once mentioned that after an innovative pharmaceutical company obtains cash through a BD transaction, investors will require a dividend in the terms to recover part of their investment costs. Zhu Pai, the managing partner of EFUNG Capital, once revealed that an investee company's BD transaction worth about $300 million has brought them a potential high - quality exit opportunity.

This situation has gradually become the norm. Li Hang told me that with the increase in the number of BD transactions, the current investment terms basically stipulate the requirement for dividends. "For example, after the enterprise receives a large advance payment, except for leaving three years of operating funds, the remaining money needs to be distributed according to the share ratio and other methods."

But the R & D of innovative drugs is a matter of large investment and long - term cycle. What if the enterprise wants to burn more money later? Regarding my doubts, Li Hang explained that investors definitely hope to distribute as much as possible, and the enterprise can then raise funds through financing to continue its R & D. "Now, BD dividends are basically discussed. As for how far the two parties can go in the negotiation, it depends on their respective abilities."

However, one thing is certain: the acceleration of IPOs and the warming - up of BD transactions enable pharmaceutical investors to prove themselves through exits. "The last investment peak in the biomedical field was five years ago. Investors need to deliver performance to provide more confidence to LPs, so that the latter can support the fundraising of their funds." Zheng Hao pointed out the key point.

From what I've learned, LPs' willingness to invest in funds focusing on the biomedical field is increasing. Many national and provincial funds have become active, and biomedicine is their main investment direction.

State - owned LPs in places such as Beijing and Shanghai have taken action. Previously, supported by the state - owned platform in Beijing, the first RMB healthcare M & A fund of Cormorant Asset Management completed its first - close of more than 7 billion yuan; the Shanghai Biomedical M & A Fund managed by Shanghai Industrial Investment (Holdings) Co., Ltd. has completed its first - close of 5 billion yuan, with investors including the municipal mother fund and the industrial agglomeration area guidance fund.

Meanwhile, medical funds with excellent performance are also being pursued by LPs. A friend told me that an investment institution that is raising a new - round medical fund has not only been "chased" by state - owned LPs to invest more money than their fundraising target but also has the state - owned LPs willing to pay a 2% management fee based on the committed amount due to its outstanding performance in BD transactions and exits.

In a situation where charging management fees based on the paid - in amount has become the industry mainstream, the actions of state - owned LPs are quite rare. Not long ago, my colleague surveyed 172 funds and found that although 83.72% of the funds still have a management fee of 2%, only 20.35% of them charge management fees based on the committed amount during the investment period.

There is also a fundraising detail of this investment institution that impressed me deeply. In a situation where it is generally difficult to raise US dollars, not only are Placement Agents willing to help them find US - dollar LPs, but also their US - dollar fundraising is progressing smoothly. As my friend put it, it's lucky that they caught up with this wave of BD transaction boom.

Top - tier Institutions "Compete" for Projects

As the biomedical field gradually improves, investors in the primary market are also taking active action.

In August, companies such as Zeling Biotech, Haichang Biotech, Pharmaron AI, Minghui Biopharma, Weicheng Biopharma, and Yanshengchao have all received financing, and the financing stages of these companies almost cover from the seed round to Pre - IPO.

Behind the frequent investment actions of Qiming Venture Partners recently is their continuous optimism about the long - term development of medical innovation. As early as last year, they began to increase their investment in the medical innovation field. According to Hu Xubo, from May 2024 to May 2025, they invested about $500 - 600 million in the medical innovation field, with a large part of it going to innovative drugs.

When the biomedical field was in a downturn, only a few investment institutions chose to take decisive action. Li Hang told me that in 2024, many medical funds were in a wait - and - see state, including some large - scale investment institutions. Some medical funds still had a lot of money left when approaching the exit period.

In 2025, the market has changed significantly, and innovative drugs have suddenly become the "sweethearts" in the eyes of many investors. A friend in a medical fund deeply felt this. "Many investors thought that innovative drugs were not investable last year, but this year they have started to actively look for investment targets."

In addition to the influence of the hot IPOs and BD transactions, the adjustment of valuations to a reasonable level is also an important reason why investors are willing to invest heavily in innovative drugs now. "Previously, the valuation of an innovative drug company that had completed Phase II clinical trials was two or three billion yuan, and some were even as high as five billion yuan." Li Yingjie, the executive director of INNO Angel Fund, observed that now the valuation of innovative drug companies that have completed Phase II clinical trials is basically between one and one and a half billion yuan.

However, after finding that the market is improving, some biomedical startups have started to increase their valuations. I learned that during the fundraising process of an innovative drug company, as soon as there were signs of market improvement, it immediately raised its valuation.

This situation tests the wisdom of founders and investors, and the final result depends on the bargaining chips and negotiation abilities of both parties. As long as both the buyer and the seller are satisfied and willing to reach a deal, it is a win - win business.

For high - quality pharmaceutical projects, there has been a situation where investors compete for shares. Li Hang revealed to me that some well - known top - tier institutions have become active. "They are not only investing this year but also competing for projects and driving up valuations very high, vaguely resembling the peak of pharmaceutical investment in 2021."

Facing the biomedical field whose value is being re - evaluated, expanding the investment team has also become the choice of some investment institutions. Not long ago, as an important shareholder of Lava Therapeutics, which was successfully listed in Hong Kong recently, Lighthouse Capital was publicly recruiting investors in the healthcare field, with positions including analysts and VPs.

However, for investors who have changed tracks or careers, it may not be easy to return to the healthcare field for investment. In Li Yingjie's view, although the market is gradually recovering, the relatively limited number of positions and the emphasis on investment and industrial experience mean that currently only a few people can get their desired positions.

Encouragingly, after a long winter, the pharmaceutical field has finally welcomed more and more warmth. Those pharmaceutical investors who have persisted for a long time can finally breathe a sigh of relief.

(Zheng Hao, Li Hang, and Zhang Yu are all pen names)

This article is from the WeChat official account "China Venture Capital News", author: Lu Zhigao, published by 36Kr with authorization.