50 health companies listed on the A-share market, the highest return on medical equipment

According to statistics on the IRR of the three industries in the medical network on March 30th, the medical device industry with the smallest total investment quotas is superior to the other two sub-sectors in both the IRR's median value and the highest specific value. The medical device company may not only win higher than the average level of the industry, but may also receive relatively high excess returns.

The average level of IRR for VC/PE investment in successful healthcare industry is not very different, but from the perspective of project, VC investment is more stable, and PE investment has more opportunities to gain high returns. In medical and health equity investment, it should also play a centralized investment. Principle, insist on sighting + high stock ratio, reject sprinkler investment.

In this paper, since the speeding up of trials in November 2016, as of November 1, 2017, there were 50 medical and health companies with independent A-share IPOs.

Among the 42 biomedical companies with VC/PE participation, there were a total of 241 investment activities disclosed in the prospectus, and 180 cases after the submission of incomplete information.

The research content of this article is based on these 180 investment behaviors.

Holding time: Refers to VC/PE investment in the biomedical company to the company's qualified IPO

VC investment: Investment behavior when the holding time is more than 5 years and the company's valuation is not more than RMB 500 million when investing in the company

PE Investment: Equity Investment Beyond VC Investments

Medium-low ratio investment: 180 investment behaviors when investing, the proportion of the company's equity is grouped from small to large; among them, the stock ratio less than 5% is called small-scale investment, and the stock ratio is 5-10%. The ratio is called the proportion of investment, the ratio of shares higher than 10% is called a high proportion of investment.

IRR: IRR is the annual rate of return on investment behavior. The investment cost is the price per share at the time of the investment. The equity price is equal to the stock price of all the statistical companies on the same day. Therefore, the equity price = investment cost* (1+IRR) ^holding time

Among all biomedical IPO companies, 84% of IPO companies have received VC/PE financing

—— The biomedical IPO companies supported by VC/PE have become the norm, and will remain at a high level in the current situation of hot investment.

Holding time: The arithmetic average of holding time is 5.38 years, the median is 5.71 years

- Considering that there is a one-year lifting period, the actual exit period needs to be at least 6-7 years, which reflects the longer period of equity investment in the healthcare industry.

IRR: Annualized IRR arithmetic average of all investment behaviors 41.99%, median 36.40%

- Based on the median, assuming that the holding period is 6 years, a successful biomedical investment can bring 5.44 times the return to the fund;

- On the basis of the average, assuming that the holding period is 6 years, a successful biomedical investment can bring 8.19 times the return of the fund.

Outliers in the IRR: Among the 180 investment behaviors, the IRR of 9 investment behaviors is lower than 10%, which is arguably a very unsatisfactory investment return, that is an abnormally low value; the IRR with 20 investment behaviors is higher than 80% is a very good level of return on investment, which is an abnormally high value.

Analysis of 9 abnormally low values ​​reveals that the unanimous characteristics of these unsatisfactory investment behaviors are:

1. High valuations, which have been hurt by high valuations. The valuations at the time of investment are all higher than RMB 5 billion, and there are even projects worth more than RMB 20 billion;

2. The holding time is too long. Under the premise of such a high valuation, these investment behaviors have been held for more than six years, and it is very likely that the listing commitments in the short period of time were frustrated;

3. In the industry, all are traditional pharmaceutical companies, especially API companies.

An analysis of 20 abnormally high values ​​reveals that these return-heavy investment behaviors are characterized by:

1. Satisfactory valuation: The valuations of the 20 investment activities were all less than RMB 1.5 billion, and the 15 investment valuations were less than RMB 500 million;

2. In Bo's high-valued investment behavior, most of the investment with low valuation and rapid exit constitutes the majority;

3. In the industry, medical services and medical device investment accounts for the majority.

Through the IRR analysis of VC/PE investment behavior, we can find:

1. The median of VC/PE investment is basically the same, ie, the IRR of VC/PE investment behavior in biomedical investment is not significantly different.

2. The IRR variance of VC investment behavior is less than the PE investment behavior IRR, ie, the annual return rate of successful VC biomedical investment projects is relatively more stable, which provides a new perspective for what we call 'PE investment is more robust'. - At least standing in the perspective of the IPO project, the situation is the opposite.

Divide the subject of 180 investment behaviors by industry medicine , medical instruments And medical services three major sub-sectors.

——In terms of investment quota, the total investment in the pharmaceutical industry was 8.542 billion yuan, the total investment in medical devices was 671 million yuan, and the total investment in the medical service industry was 2.079 billion yuan;

——In terms of the amount of investment, the pharmaceutical industry is undoubtedly far ahead.

After statistics on the IRR of the three industries, it was found that the medical device industry with the smallest total investment quota was superior to the other two sub-sectors both in the IRR median and the highest specific value.

- Investing in a good medical device company may not only win higher than the average level of the industry, but also may obtain a relatively high excess return.

To this point, summarize the following points of the author:

1, successful medical and health enterprise Accepting VC/PE investment has become the norm. In the future, this proportion will follow medical care. health 3. The industry is raising funds to rise further.

2. The average level of IRR of VC/PE investment in successful healthcare industry is not very different, but from the perspective of project, VC investment is more stable, and PE investment has more opportunities to gain high returns.

3, Good assets must have a good price, unless the fund does not care about the investment income but more concerned about the face of the portfolio.

4. In the three major sub-sectors (medical manufacturing, medical devices, and medical services), the medical device industry deserves special attention. Its average income level is significantly higher, and it is possible to obtain relatively high excess returns.

5. In the case of medical and health equity investment, it is also necessary to use the principle of concentrated investment, insist on sighting + high stock ratio, and reject sprinkler investment.