Fu Shan of Vivo Capital: Bullish on New Drug Assets in the Hong Kong Stock Market in the Long Run, China's System Integration Advantage is Booming | Exclusive Interview by 36Kr
Text | Hai Ruojing
"Investing is about investing in people." This well - circulated golden saying in the venture capital field seems to define a kind of belief.
However, in the view of Fu Shan, the managing partner of Vivo Capital, this common sense needs to be re - examined in the investment of innovative drugs. He believes that in the biomedical field, the most hardcore currency is assets - those molecules, technologies, and pipelines with great drug - making potential and commercial value.
"Ten years ago, we had a fierce internal discussion: Should new drug investment focus on people or assets?" Fu Shan recalled. "Finally, we made up our minds to invest in assets."
Spanning the Chinese and American capital markets allows Fu Shan to examine the changes in the innovative drug industry from a global perspective. He said that the traditional VC investment model for innovative pharmaceutical companies has shown signs of exhaustion, and the R & D of innovative drugs urgently needs a new organizational method to reduce the cost of trial and error.
The Vivo Accelerator is the new path they have chosen: to screen high - quality new drug assets globally and introduce them into China through the NewCo (New Company) model. By leveraging China's "system integration advantages" accumulated over the past 20 years - such as the engineer dividend, CXO platform capabilities, and clinical trial resources - they can conduct trial and error with the highest efficiency and lowest cost to verify the value of the assets.
In March 2025, Vivo Capital completed the fundraising of $740 million for its public market strategy; currently, the assets under management exceed $7.5 billion. Fu Shan believes that the greatest essence of Vivo Capital is "change".
Actively seeking change has enabled this investment institution, which has spanned three decades in the capital market, to achieve a series of results: Since 2021, 34 invested companies have completed pipeline BD transactions; many invested companies such as GenScript Biotech and RayzeBio have been acquired by multinational pharmaceutical companies; several companies such as Visun Therapeutics and Jingfang Pharmaceutical have successfully gone public.
Fu Shan told 36Kr that as early as the end of 2026, the Vivo Accelerator may produce results that attract industry attention and spawn star projects.
The Traditional VC Model Fails, Initiating the "Accelerator" Revolution
In the past two years, profound changes have taken place in the Chinese innovative drug capital market. According to the statistics of Pharmcube, in the first half of 2025, the total upfront payment of China's innovative drug license - out transactions was approximately $2.64 billion, far exceeding the total financing in the primary market (approximately $1.62 billion). The boom in the stock market and BD transactions has not reversed the hesitation of the primary market towards innovative drug investment.
In Fu Shan's view, the traditional VC model has failed in the biomedical industry. The previous way of rolling financing round after round and exiting through listing has not only failed to solve the problem of "resource misallocation"; it has also led to excessive dependence of new drug development on the capital market. Once the IPO gate is blocked and the liquidity in the public market is insufficient, many pharmaceutical companies will fall into trouble and even go bankrupt.
Different from the business model risks faced by industries such as the Internet and consumption, the core of innovative drug R & D comes from the dual risks of science and business: First, scientifically, the drug must be able to be developed and solve clinical pain points; second, commercially, it must be able to be sold and make money. Only when both are achieved can it be considered a real R & D success. During the clinical trial process, when a candidate drug shows signs of failure, the result is usually difficult to reverse. Therefore, "Fast try, Fast die" is the rational choice.
However, under the traditional VC incentive model, founders with high salaries and early - stage investors often prefer to keep the company running as long as possible to protect their own interests. This will instead lead to more consumption of funds and resources, thus magnifying the sunk cost.
Judging from the data, the cost of this misallocation is quite high. In the past decade, approximately $200 billion in funds have been invested in China's innovative drug industry; however, the annual sales of domestic innovative drugs in China in 2024 were approximately 60 billion yuan, less than $10 billion. It can be seen that there is still a huge gap between the input and output of new drug development.
Facing such "high - input, high - risk" investment, Fu Shan pointed out that there are three industries in the world - food, medicine, and aviation - where it is reasonable for the overall industry investment return to show a slight loss because of their huge social value. Therefore, he often advises investors outside the biomedical industry, "Don't come in just for the fun."
For a professional pharmaceutical investment institution, it must balance the risks in technology, supervision, and commercialization based on its own reserves in technology, resources, and talents.
"In innovative drug investment, should we invest in people or assets? Ten years ago, Vivo had a two - year debate on this issue. Finally, we made up our minds to invest in assets."
The "Vivo Accelerator" is the current manifestation of this "investment in assets" concept. Different from incubating companies from scratch, the Vivo Accelerator selects a wider range of assets, covering not only the discovery of the earliest targets and drug molecules but also pipelines in the mid - stage concept verification and clinical development stages.
Specifically, it will cooperate with global biotech companies, scientific research institutions, etc. to discover high - quality pipelines, separate these assets with development prospects, and establish NewCo companies. The original IP owners will invest in the form of asset rights, etc.; Vivo Capital will invest funds, match the appropriate team according to the asset development stage, and inject industrial chain resources; and use the resource and cost advantages in domestic pre - clinical development and clinical trials to obtain PCC (Pre - clinical Candidate Compound) and POC (Proof of Concept) more quickly.
"The NewCo company is responsible for developing the pipeline at the lowest cost and fastest speed. When it reaches a certain stage, it will sell the asset rights. If it doesn't perform well, it will stop in time."
The reason why it may be faster is that after 20 years of accumulation, by 2025, China has formed unique system integration advantages, including the engineer dividend, CXO infrastructure, and advantages in clinical trial cost and resources. If the NewCo company can efficiently allocate resources from all parties in the industrial chain, conduct rapid and large - scale trial and error, and reduce the cost of new drug R & D, it may achieve a multiplier effect.
So, how to decide the resources to be invested in asset development, and what are the criteria for the decision to move forward or shut down?
Fu Shan told 36Kr that in this process, pipeline assets need to go through five rounds of screening and evaluation: screening by the original technology company, screening by Vivo Capital, screening by the NewCo company's board of directors, screening by development partners, and finally screening by potential BD buyers.
In the judgment process, in addition to scientific issues such as pipeline R & D data, dynamic commercial market competition is also an important decision - making basis. If in the same target and indication, there is a new drug that is several years ahead of the in - development pipeline or a more economical new technology route, and multiple parties judge that its future commercial value has been greatly weakened, it is necessary to shut it down decisively to avoid resource waste and greater losses.
In this process, Fu Shan positions Vivo Capital as a "resource allocator", using capital to re - allocate resources and balance the interests of all parties. Facing key judgments, if there is a non - consensus situation, Vivo Capital needs to make a decision on "going forward or retreating" and bear the final risk.
Under the "investment in assets" strategy, Vivo Capital's strategy has gone through three iterations in the past decade: from the 1.0 version of investing in companies like Zai Lab through the license - in model; to the 2.0 version of establishing Visun Therapeutics (02561.HK) through the JV (Joint Venture) model in 2018; and then to the 3.0 version of establishing the "Vivo Accelerator" this year and allocating resources around assets in batches.
Finding "Helmsmen" for High - Quality New Drug Assets
In 2025, the representative companies established by Vivo Capital through the JV (Joint Venture) model in the early years made important progress: Visun Therapeutics successfully went public, becoming the first innovative pharmaceutical company to list on the Hong Kong Stock Exchange in 2025, raising approximately $100 million; the small nucleic acid drug company Viatris licensed its pipeline rights to Sanofi, receiving an upfront payment of $130 million and a maximum milestone payment of $265 million.
How to select suitable pipelines from global assets and allocate suitable teams for them? Fu Shan summarizes it into three core capabilities.
First, the ability to "explain clearly". This is a strategic judgment ability, which requires a clear understanding of what the unmet clinical needs are; whether it is feasible from a scientific and technological perspective; how large the market is and what the competitive landscape is.
Second, the ability to implement operations. To implement the strategic plan, different talents need to be matched according to the asset development stage. For example, in the biological mechanism exploration stage, biologists should take the lead; in the drug - making process, medicinal chemistry experts should be in charge; and in the clinical trial stage, the opinions of PIs should be valued more.
Third, BD ability. In the early stage of new drug development, the team should plan the future asset exit path, and finally realize the value through pipeline rights license - out, being acquired, or IPO.
"This is a very complex systematic project that requires at least three types of talents to cooperate. The first type is the people who put forward requirements. They often have a medical background and understand new drug development, and their primary consideration is what the market lacks." Fu Shan explained. The second type is the people who realize the requirements, that is, R & D scientists and domain experts; the third type is business development talents and sales teams after product listing.
Although the logic of this strategy is clear, the biggest challenge is to find the best candidates in the real world. The drug R & D cycle is long, and there are high barriers in each link. In the previous biotech company systems, there were often situations of resource misallocation and laymen leading experts. For example, a company founded by biological scientists may not be able to match the most suitable small - molecule medicinal chemistry experts and give them sufficient decision - making space.
Fu Shan believes that the judgment of people is often highly contextual, and it is difficult to summarize a one - size - fits - all methodology, which can be called a kind of "mental method".
"Investment itself is a paradox: all due diligence is based on the past, while all investment decisions are bet on the future. To bridge the gap between the past and the future, we can only rely on two things: the understanding of the 'people' who do things and the understanding of the objective laws of the 'things'."
This is particularly obvious in the selection of the CEO. When looking for the CEOs of companies such as Visun Therapeutics and Viatris, Fu Shan defines this role not as a traditional entrepreneur (Founder) but as a "helmsman" (Driver) who leads the company's direction.
The key characteristics of such candidates are not the persistence or even stubbornness of scientist founders towards the technical route, but the international vision and resource integration ability cultivated in multinational pharmaceutical companies. They must be able to balance the demands of technology providers, investors, the board of directors, etc. in a complex multi - party governance structure and put the pipeline development plan into practice.
Take Lu Anbang, the CEO of Visun Therapeutics, as an example. He has been working in the biomedical industry for more than 30 years and once served as the President of Takeda Pharmaceutical Greater China. During his tenure, Takeda's sales revenue in China increased by more than 10 times. In a previous media interview, Lu Anbang said that a leader should be the "thread - threading" soul figure, connecting the talented people in the team like pearls and letting all kinds of "experts" shine. This style fits the above characteristics.
The joint development model of Visun Therapeutics originated in 2018. Vivo Capital joined hands with its invested company Ascendis in Europe and the United States to jointly establish Visun Therapeutics around three high - quality new drug assets. Visun Therapeutics did not pay a high upfront payment and milestone fees but exchanged equity for the Greater China rights of three endocrine new drugs. This model starts from the unmet clinical needs and market potential in China, deeply binds the technology provider, the operator, and the capital provider, and reduces the dependence on the external capital market. After the drug is launched, the continuous accumulation of sales will bring continuous returns to all parties.
The Hong Kong Stock Market Has an Asset Foundation, Optimistic about the Long - Term Trend
After a sharp rise in the past six months, the current Hong Kong Stock Exchange innovative drug sector has entered a correction period. In response, Fu Shan said that he is optimistic about the long - term trend of the Hong Kong stock market.
"The recovery of the Hong Kong stock market this year is a process of restoring the reasonable price of assets based on the current asset quality. Although the rise was too rapid some time ago, it is far from the so - called bubble. The current Hong Kong Stock Exchange Biotechnology Index is about 60% of the peak in June 2021, but compared with three years ago, the asset quality of listed companies has significantly improved. I think the long - term upward trend remains unchanged, and this round should be a major cycle lasting three to four years."
At the same time, he also mentioned that during the rapid rise, there were situations of good and bad assets mixed in the asset side. A short - to medium - term correction is actually beneficial to the healthy development of the market.
As early as last year, Fu Shan predicted that the Hong Kong stock market would start to improve from the first quarter of this year. In action, it meant accelerating the listing preparation of the invested company Visun Therapeutics. He believes that the value of China's innovative drug assets has been recognized globally this time, mainly thanks to four factors, which are also the foundation for his long - term optimism about China's new drug assets.
First is regulatory alignment. Ten years ago, the Chinese government aligned the review and approval standards for innovative drugs with international standards, establishing the two themes of "internationalization" and "innovation", eliminating backward production capacity, and making the quality of Chinese clinical trial data globally credible. Second, a large number of overseas returnee experts have returned to China, bringing back international new drug R & D concepts, enterprise management models, and resource organization methods, magnifying China's local engineer dividend.
Third, the rise of professional service platforms such as CRO and CDMO represented by the WuXi Group has provided efficient infrastructure for new drug development. Finally, the large - scale capital investment of up to $200 billion has provided key fuel for industrial innovation.
"More than 70% of the massive funds invested in innovative drugs come from China, so we should thank the Hong Kong Stock Exchange 18A market, the Science and Technology Innovation Board, and many investment institutions." Fu Shan believes that these factors together constitute the "system integration advantages" of China's innovative drug industry, which is also the asset guarantee for the recovery of the stock market this year.
The high - frequency and large - value BD licensing transactions this year indicate the recognition of China's new drug assets by global multinational pharmaceutical companies and directly catalyze this wave of "bull market" for new drugs on the Hong Kong stock market. In the first three quarters of 2025, the total amount of China's innovative drug license - out reached $92 billion, and the upfront payment was approximately $4.55 billion.
Regarding the purchasing power of multinational pharmaceutical companies (MNCs) and the future BD trend in China, Fu Shan also has a clear judgment.
He provided a set of buyer data: currently, the available funds of global multinational pharmaceutical companies are approximately $1.2 trillion. In the next ten years, the sales revenue lost due to patent expirations will be approximately $300 billion; therefore, multinational pharmaceutical companies are eager to fill the gap through external mergers and acquisitions and the introduction of pipelines.
The strong purchasing desire and power of MNCs have created opportunities for domestic innovative pharmaceutical companies. In the past few years, BD transactions mainly involving small molecules, ADCs, bispecific antibodies, etc. are in line with China's innovation advantages and are a concentrated manifestation of the industry's 20 - year efforts.
"But there are not many high - quality assets available for sale in China. Two years later, the BD process may slow down." He emphasized that "the core of investment now is to prepare assets for the next wave."
The Essence of Mergers and Acquisitions: Integrating the Market and Eliminating Excess Capacity
The popularity of BD transactions is essentially a way to realize the value of enterprises. And "exit" is the key to realizing the value of investment institutions. During the more than three - year capital winter in the biomedical field, the listing channels in the Chinese capital market have shrunk sharply, making Chinese venture capital institutions realize the risk of over - relying on IPO exits.
As an investment institution spanning the Chinese and American markets, Fu Shan believes that Vivo Capital is in a good position. "For us