Ding Lieming, a member of the National Committee of the Chinese People's Political Consultative Conference and chairman of Betta Pharmaceuticals, has long focused on the development of China's innovative drug industry. This year, he is concentrating on the reform of the investment and financing system for innovative drugs during the Two Sessions. He believes that to promote the sustainable development of China's innovative drug industry, it is crucial to build a more comprehensive capital support system, including expanding industrial investment funds, facilitating listing and merger channels, and developing multi-level capital market mechanisms such as S funds.
So, what stage is the Chinese innovative drug market currently in? What structural problems does the industry face? How should the future investment and financing system be reshaped? Regarding these questions, a reporter from Southern Weekend interviewed Ding Lieming.
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Ding Lieming, member of the National Committee of the Chinese People's Political Consultative Conference and chairman of Betta Pharmaceuticals. Photo provided by the interviewee.
<h4>&#34;High investment, long cycle, high risk&#34;</h4>
Southern Weekend: By 2025, the number of innovative drugs approved for listing in China is expected to reach 76, and the scale of external licensing transactions is expected to reach approximately $130 billion, both setting historical highs. How do you view these two records?
Ding Lieming: This fully demonstrates that the level of pharmaceutical innovation in our country is continuously improving, gaining international recognition, and gradually growing into an indispensable value contributor and source in the global pharmaceutical innovation ecosystem.
This achievement is due to both endogenous motivation and the continuous optimization of the institutional environment: first, the domestic pharmaceutical market is vast, with strong clinical demand, providing ample space for the research and transformation of innovative drugs; second, the review and approval system has been continuously optimized, significantly improving the efficiency of new drug research and listing; third, local companies' research and development capabilities are continuously improving, accumulating experience in international registration and global cooperation.
Of course, innovative drugs are a typical long-term industry, and true value reassessment requires a continuously stable policy environment, a more complete payment system, and a healthier capital ecosystem to jointly promote it. As long as innovative capabilities continue to accumulate, there is still significant growth potential for China's innovative drug industry in the future.
Southern Weekend: Your suggestion this year continues to focus on innovative drug research and development, recommending the improvement of the biopharmaceutical investment and financing system. Is this issue becoming more urgent this year?
Ding Lieming: The research and development of innovative drugs inherently involves high investment, long cycles, and high risks. It generally takes about 10 years and an investment of $1 billion for an innovative drug to go from early research to final listing, with a success rate of less than 10%. However, in reality, the capital market often focuses more on short- to medium-term returns. Currently, the investment cycle for domestic pharmaceutical investment funds is generally 5 to 8 years, making it difficult to provide full-process support. Under exit pressure, they prefer later-stage mature projects and avoid early-stage high-potential projects, which affects source innovation. Many projects face funding chain breaks due to capital withdrawal midway, impacting the transformation of results and preventing industrialization and commercialization. This mismatch restricts capital from gathering in the field of pharmaceutical innovation.
In recent years, affected by the macro environment and fluctuations in the capital market, the overall financing environment for the biopharmaceutical industry has tightened, and some companies in the early research and development stage are facing significant financial pressure. Without long-term stable funding support, many potentially original projects may struggle to reach the results transformation stage, which will impact the entire innovation ecosystem
Therefore, I recommend adopting multiple measures to optimize the innovation ecosystem, strengthen the investment and financing system that aligns with the characteristics of the biopharmaceutical industry, cultivate and expand &#34;patient capital,&#34; vigorously develop industrial investment funds and private equity secondary market funds, provide enterprises with full lifecycle technology financial services, encourage investors to invest more boldly, and empower innovators to innovate more courageously, fully stimulating the role of enterprises as innovation entities.
<h4>&#34;S Funds Can Play an Important Role&#34;</h4>
Southern Weekend: What contradictions still exist between the current domestic investment and financing system and the development laws of the innovative drug industry?
Ding Lieming: A prominent issue in the current biopharmaceutical investment and financing landscape is that the exit channels for investment funds are still not smooth enough. This year's government work report also proposed expanding the exit channels for private equity and venture capital funds. The R&amp;D cycle for innovative drugs is long and requires significant investment, often taking more than ten years from early development to product launch. However, many private equity funds and venture capital funds have relatively clear duration limits. If there is a lack of smooth exit channels, it can easily affect the willingness of capital to continue entering this field.
In this context, S Funds (private equity secondary market funds) can play an important role. As an important means of follow-up investment, S Funds primarily acquire fund shares or equity from investors, providing a smooth exit path for private equity venture capital funds, which is beneficial for achieving a win-win situation among new and old investors and the invested parties.
The State Council's General Office has clearly proposed encouraging the development of S Funds in the &#34;Guiding Opinions on Promoting the High-Quality Development of Government Investment Funds.&#34; Under the dual influence of policy promotion and market demand, the domestic S Fund market is becoming increasingly active, with enormous development potential. The establishment of S Funds by state-owned assets can revitalize existing capital, optimize the efficiency of fiscal fund usage, meet the needs for value preservation and appreciation, and avoid the risk of capital outflow. It is recommended to focus on the regional equity market as a key platform for S Fund transactions, support local innovations in piloting the transfer of private equity venture capital fund shares, fully leverage the core functions of the regional equity market in &#34;cultivation + financing + trading,&#34; and continuously work on aspects such as transfer rule formulation, information openness standardization, and transaction decision-making efficiency improvement, making S Funds a &#34;booster&#34; for new productive forces and a &#34;companion&#34; for the innovation ecosystem.
Southern Weekend: BeiGene received strong support from state-owned capital at a critical moment in its development. What role should government capital play in biopharmaceutical industry funds? Compared to VC and overseas capital, what advantages does state-owned capital have in supporting the innovative drug industry? What disadvantages exist? How can we leverage strengths and mitigate weaknesses?
Ding Lieming: Government capital is more suitable to play the roles of &#34;guide&#34; and &#34;long-term supporter&#34; in industrial funds. The R&amp;D of innovative drugs is characterized by high investment, long cycles, and high uncertainty. In the early stages of industrial development, without the support of long-term capital, many original projects find it difficult to persist. This long-term, stable financial support is crucial for enterprises to focus on innovation.
Compared to VC or overseas capital, state-owned capital has clear advantages in supporting the innovative drug industry. First, its funding sources are relatively stable, with longer durations, making it more capable of supporting long-term R&amp;D projects. Second, government capital is highly aligned with national strategic directions and has stronger policy coordination capabilities in promoting key core technology breakthroughs and cultivating emerging and future industries
Third, government capital can leverage social capital through funds, creating a magnifying effect and attracting more market-oriented funds into the biopharmaceutical field. However, it should also be noted that state-owned capital still has room for improvement in terms of market-oriented investment experience, professional judgment, and decision-making efficiency compared to some mature market-oriented venture capital firms. If investment decisions are too conservative or the process is too lengthy, it may also miss some innovative opportunities.
In January 2025, the General Office of the State Council issued the &#34;Guiding Opinions on Promoting the High-Quality Development of Government Investment Funds,&#34; emphasizing the improvement of a hierarchical and classified management mechanism to enhance the level of specialized market-oriented operations. It is suggested to leverage the synergistic advantages of various types of capital. Government capital can take on more roles as &#34;guiding&#34; and &#34;patient capital,&#34; attracting professional venture capital to participate in investments through mother funds or industrial funds, with market-oriented teams responsible for project selection and post-investment management, and improving long-term assessment and fault tolerance mechanisms in the system. This can not only leverage the driving role of state-owned capital but also utilize the professional capabilities of market-oriented institutions to jointly promote the healthy development of the innovative drug industry.
<h4>&#34;Invest Early, Invest Small, Invest Long-Term, Invest in Hard Technology&#34;</h4>
Southern Weekend: According to your vision, what should be the investment direction for establishing a long-term industrial fund for the biopharmaceutical industry in the future?
Ding Lieming: The long-term industrial fund in the biopharmaceutical field should emphasize &#34;invest early, invest small, invest long-term, invest in hard technology.&#34; Many original breakthroughs in the biopharmaceutical industry often come from early research teams and start-up companies, but this stage has high technical risks and long R&amp;D cycles, making social capital relatively cautious. Therefore, it is even more necessary for long-term industrial funds to play a guiding role. There should be increased support for early innovative projects and start-up companies, helping research results with original potential to make the critical leap from laboratory to clinical research. In addition, it is essential to focus on &#34;hard technology&#34; fields with core technological barriers, such as the discovery of new targets, cutting-edge treatment technology platforms, and breakthroughs in key core technologies, to promote the growth of projects with genuine source innovation value.
Southern Weekend: Does the current assessment and evaluation system for government guiding funds hinder their participation in innovative drug projects that have long cycles and high risks? How can the contradiction between the long-term assessment goals of state-owned assets and the short-term profit demands be balanced?
Ding Lieming: The research and development of innovative drugs typically requires more than ten years, during which multiple rounds of clinical trials and technical validations must be conducted, leading to high uncertainty. However, many guiding funds still focus on short-term indicators such as stage return rates during assessments, which to some extent affects the role of guiding funds in supporting original innovation and leveraging social capital. It is recommended that government guiding funds establish an assessment mechanism that better aligns with the objective laws of technological innovation, and for government guiding funds and state-owned background industrial funds, improve a comprehensive assessment mechanism covering the entire cycle of &#34;raising, investing, managing, and exiting,&#34; implementing &#34;long cycle, total accounting&#34; assessments, and weakening annual or short-term profit assessments; regarding fault tolerance and exemption, it is suggested to clearly delineate the boundaries between investment risks and decision-making errors, and for funds investing in start-up companies, set different gradient &#34;loss tolerance rates&#34; for exemption to alleviate concerns
The goal of government-guided funds is not only to obtain investment returns but also to leverage social capital, cultivate and grow emerging industries and future industries. If the assessment mechanism places greater emphasis on long-term value and industrial benefits, and takes the lead in being &#34;patient capital,&#34; it will better support fields such as biomedicine that require long-term investment, promoting the formation of a healthier and more sustainable innovation ecosystem.
Southern Weekly: Currently, we are still in the leading position of the global second tier. If the Chinese innovative drug industry can rise in the next decade, what is the most critical reform? What role will the transformation of the investment and financing system play?
Ding Lieming: Among the 76 innovative drugs approved for listing in China by 2025, only 11 are first-in-class drugs, accounting for 14%. In contrast, the United States approved 22 first-in-class drugs during the same period, accounting for 48%. This data comparison shows that we still have a significant gap in original innovation. The key bottleneck that needs to be broken is to enhance our original capabilities, including strengthening basic research, continuously exploring and discovering new targets and mechanisms, and enhancing the integration of industry, academia, and research to promote the transformation of results.
I suggest that various innovative entities always focus on addressing unmet clinical needs, placing the starting point and endpoint of drug development on &#34;patient-centered&#34; approaches, and proactively layout original innovation. Encourage scientists to focus on international frontier fields to strengthen basic research and continuously explore and discover new targets. Encourage clinical doctors to dig into new targets and new indications from the essence of diseases, participating in drug design and optimizing clinical trial plans. Support leading enterprises in creating a collaborative innovation ecosystem, strengthening the integration of industry, academia, and research, and promoting the further transformation of disruptive technological achievements.
Of course, in this process, the investment and financing system will play an important supporting role. We look forward to establishing a financing mechanism that better aligns with the characteristics of the biomedicine industry, providing full-chain and full-lifecycle financial services for technological innovation. Only by forming a more stable and sustainable investment and financing ecosystem can we provide solid guarantees for original innovation and continuously achieve new breakthroughs in China's innovative drug industry

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National Committee member Ding Lieming proposed the establishment of a long-term special fund for pharmaceutical innovation to promote the development of China's innovative drug industry. He emphasized that building a comprehensive capital support system is key, including expanding industrial investment funds and facilitating channels for listings and mergers and acquisitions. Ding Lieming pointed out that although China's innovative drug market is gradually gaining international recognition, a stable policy environment and a healthy capital ecosystem are still needed to support long-term research and development

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National Committee Member Ding Lieming: Proposes that the government guide funds and state-owned capital to establish a long-term special fund for pharmaceutical innovation