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Sunday, March 10, 2019

CEIBS MBA Healthcare Investment Forum

March 10, 2019. Shanghai – The 2019 CEIBS MBA Healthcare Investment Forum took place today with a full house at the CEIBS Petrochemical Auditorium on the Shanghai Campus. The event was jointly sponsored by the MBA Healthcare Club and the Finance & Investment Club and attracted a professional crowd of over 300 attendees, with 10 industry speakers sharing valuable insights during the 6 hour event.

Dr. John Cai, Director of the CEIBS Centre for Healthcare Management and Policy, presented the opening speech at the forum. Dr. Cai shared his views on the healthcare industry and depicted how key drivers including an aging population will contribute to excellent industry growth prospects by 2022. In addition to the opportunities, he also pointed out some potential challenges to be overcome, such as sub-standard doctor qualifications, the inverted pyramid structure of hospital organisations, and lastly capturing the right innovation and investment moments.

The first topic, Entrepreneurship in Different Domains, was presented by the founder of Orange Dental, Zhaojun Gao. Gao shared his entrepreneurial journey taking Orange from an initial failure to an eventual success. Orange focused on the somewhat neglected children’s dental segment in public hospitals. Turning a typical clinic into a playground, young guests find attending the Orange clinic a fun experience where things are under their control. Gao noted that discovering industry pain points is the key to start ups. Even without powerful marketing and operational teams, the success rate is greatly increased when operating in the right domain with one player only.

The second speaker was Mr. Olivier d’Arros, the China representative of Robocath. His topic was Innovations in Robotics in the Cardiovascular Field. Robocath provides direct robot solutions for vascular surgeries, assisting surgeons by enhancing precision and providing more stable treatment for patients. Olivier shared the development and prospects of surgery robots. According to research, 72% patients found robot assisted operations were more efficient and convenient, 93% doctors agreed that the new technology improved the safety of intrusive treatments and hospitals have increased their capacity by 29% after utilising robots. This is only the start of robotics in healthcare.  Robocath highly values the Chinese market and is currently seeking partners with common interest.

The third topic of the day was Healthcare Companies’ M&A and Investment Strategies presented by the Investment Principle from Medtronic China Venture, Dr. Hu Ye. Dr. Ye reviewed the company’s mission and history to show how Medtronic developed itself from a garage-based medical device repair shop into the world’s largest medical device company. Medtronic serves a highly prioritised Chinese market utilising various global resources. The company launched its China venture fund to invest in local innovation in 2016 and is expecting to launch its Shanghai-based Medical Innovation Accelerator later this month.

The fourth guest speaker was Tianjiao Jiang, Director of Healthcare Sector in Industrial Finance Department at Founder Securities. His topic was Avoid the Trap of Medical Investment and M&A from Macro and Micro Perspective. Healthcare M&As are recent investment hotspots, however, investors need to value the target companies’ future growth with care since many companies are more inclined to seek IPOs rather than to exit via acquisition. Jiang summarised common investment mistakes as macro directional errors, timing errors under correct directions, and selection errors on a micro scale. Based on glucometer, medical cosmetology, and artificial knee replacement cases, Jiang shared his insights on estimation errors of penetration rates and limitations in focus areas.

The fifth speaker John Wang, Executive Partner of GTJA Investment, who spoke on the topic of the Current Situation and Trends of Healthcare Investment in China. Wang discussed the recent changes in policy making and financing in the healthcare industry. Policy-wise, he explained, the key drivers have turned from domestic industry protection to providing higher value treatments. Finance-wise, although the hot topic in 2018, many healthcare IPOs occur in the medicine segment. Furthermore, he said he expects to see another round of M&As of listed companies in the future. Wang noted that strategical and VC/PE investors have very different timeline focus and that, consequently, strategic thinking is more important than tactical moves for M&As.

Eason Kwok, VP of Haoyue Capital, was the seventh speaker of the day. He shared his views on The Replicability and Endogenous Growth Logic of the Medical Service Industry. In his presentation, he noted that the China healthcare service industry has passed important milestones driven by government policy. Examples include the rapid expansion of public hospitals after 1985, the influence on medical payments by the public medical insurance scheme in 1997, the promotion of privately owned hospitals in 2009, and the fee schedule scheme from 2012. Additionally, Kwok pointed out that healthcare is a demanding industry, that there is a severe supply shortage problem in our domestic market, that value chain consolidation is more about people than technology, and that the technology and business model innovation in healthcare service segment is also of significant importance.

Dr. Harry Chen, VP of Investment from Zhen Fund, presented the seventh talk on the topic How to Evaluate a Healthcare Investment Opportunity. Dr. Chen started with a background introduction of the drug R&D process from which he emphasised the importance of assessing the potential to meet the underlying demand and relevant validation when evaluating investments. On an investment note, Dr. Chen said he values a good target company with entrepreneurship, experience in the industry, and matching talents for each stage of growth. Finally, he argued that new medicines should be developed to service humans, rather than to seek profit, but that profit follows when patients are well serviced.

Vivian Han, VP of Pingan Ventures was the eighth speaker of the day. Her topic was the Qualification of Professional Healthcare Investors and Career Development Paths. Healthcare investments, Han said, are rewarded with generous long term returns rather than short term arbitrage profit. Consequently, patience and empathy – along with devotion and commitment – are essential for professionals in this highly specialised industry. As a result, investment professionals will be cultivating the sharpness to understand and invest, to coordinate and exit successfully with aligned vision and resistance to turbulence.

The last presenter of the day, Dr. Cathy Fang, VP of Yitu Healthcare, gave a speech on The Future of AI Lies in Healthcare. She said that AI is key to healthcare’s big data, that only AI-processed and knowledge-mapped data can be used to help diagnosis assistance applications, and that only treated data can add value. Dr. Fang also shared the application and future of the cutting-edge medical AI technology by introducing Yitu’s pulmonary nodule solution.

The co-hosted event was an eye opener for CEIBS students as a communication platform that crossed both healthcare and investment industries. The atmosphere also continued in post-event online discussion groups and further extended beyond the conclusion of the event.

Frances FAN MBA2020
Michael Thede
Michelle YU MBA2020