The success rate of innovative drug research and development is very low, and the cost investment is huge. The average research and development cost of a new drug is between 1 billion and 2 billion US dollars. This cost includes the average cost of failed development of the Lu pipeline.
Drug development costs have risen dramatically over time. A systematic study in 2011 showed that the cost of new drug research and development increased from US$92 million in the 1960s to US$884 million at the beginning of this century.
Among them, the number of new drugs developed by domestic pharmaceutical companies is relatively small. Hisun’s Haize Maibu tablets cost 225 million yuan, Hengrui’s pyrotinib cost 520 million yuan, PD-1 (reported for production) 155 million yuan, and allisartan medoxomil less than 300 million yuan, and the cumulative research and development expenses of icotinib are about 150 million yuan. Moreover, the above-mentioned cost is only the cumulative investment cost of the project, and does not include the investment in failed research and development of other projects and the time cost of funds.
Although endorphins are not a new drug, they are used more widely and have higher expected benefits in the future.
50 million yuan for 10% of the shares is not a low price, but it is definitely not high.
Zheng Li continued: "Mr. Lei, 50 million and 10% of the shares are my bottom line."
"The reason why we approached you as a venture capital investor is because as a senior of Jiangcheng University, we have basic trust."
"The concession I am willing to make is that you can assign the company's finances in the early stage before the results of the endorphin clinical test come out."
Finance is assigned by Lei Jun, which means that the company's cash cannot be used by Zheng Li at will. This is also a condition that strong angel investors generally raise.
Lei Jun agreed: "Okay."
The two parties reached an agreement that Lei Jun would invest 50 million RMB to account for 10% of the company's shares, and Zheng Li would invest 90% of the shares with technology.
Lei Jun: "The next words are not told to you as an investor, but as a senior entrepreneur, a senior from Jiangcheng University."
"Starting a business is a very difficult thing, but it can also bring you the most extreme feedback. The emotional feedback you get when you succeed in starting a business is unimaginable for ordinary office workers."
"How old are you?"
Zheng Li: "Eighteen years old."
Lei Jun said with emotion: "It's great to be young. Seeing you reminds me of my days at Jiangcheng University many years ago."
"I may not be as talented as you, but I can still be considered a little talented."
"When I graduated from college, I first worked for others and then started my own business. Later, when I founded Dami, I went everywhere to find investors. When people heard that you were going to make a smartphone, they asked what would you do to compete with Apple?"
"Almost all investors are not optimistic about rice. First of all, you can't compete with Apple. Where will the profits come from based entirely on cost performance?"
"What I told investors at the time was that I would copy Steve Jobs's success. The problem was that others didn't believe it. Others felt that China didn't have the soil for innovation, and you couldn't become Steve Jobs."
"I have formed a team of more than 200 people, more than half of which are from Motorola, Microsoft, Kingsoft and Google."
“I spent four hours on the phone with Mr. Liu from Morningside Capital before I got the investment.”
"In the end, I received US$41 million in financing and successfully listed rice on the Hong Kong stock market."
"What I want to tell you is that starting a business is a very difficult thing, and there will be many things that need to be overcome bit by bit."
2019 was a very difficult year for Lei Jun. After Rice was listed on the Hong Kong stock market in 2018, the stock price continued to fall. By the middle of 2019, the stock price was almost halved.
What's even more terrible is that Xiaomi signed a gambling agreement with early investors before going public. If the market value cannot exceed US$75 billion before December 13, 2019, Xiaomi will need to add 8% of the accrued interest based on the issue price. Dividends have been declared but not paid.
At this time, Rice's market value was only US$30 billion, a 40% drop from the issue price when it was listed.
Lei Jun is under huge pressure at this time, and high-end brands cannot break through. The high-end is occupied by Apple and Huawei, the mid-to-low-end Honor is close to Da Mi, and there are OV two that make Da Mi breathless.
Zheng Li nodded: "It is indeed not easy to start a business. There are too many variables that you cannot control. Each variable may cause you to fail."
“Whether many entrepreneurs fail or succeed in the end, they don’t know why they succeeded or failed.”
Lei Jun nodded and said: "Your understanding is still very deep. It is getting more and more difficult to start a business in China."
"It's because you have technology. Technology is your moat. Others can't easily break through. I don't know much about medicine."
"I still have a relatively strong say in the Internet. I have been in this industry for too many years."
"The Internet is now more like a stock competition. Through the high-frequency flow of information, the Internet has become an incremental service for society to empower enterprises and individuals. It has been almost divided up."
"Now more and more people are going down to the bottom and breaking down the previous organizational relationships to start a business. This is true for Didi and Pinduoduo."
“Every track is packed with players.”
Lei Jun recalled: "I have invested in a company called Fanke before. If you are only eighteen years old, you may not have heard of it."
"What does Fanke do? Fanke was founded in 2007 as an online e-commerce company specializing in selling clothing."
"Vancl is a typical venture capital-generated enterprise. It has completed four rounds of venture capital in just three years, and its investments are all from well-known institutions, such as IDG Capital, SoftBank, Lianchuang, Tiger Asia Fund, etc."
"In 2010, Vancl sold 30 million T-shirts, which shocked China's clothing industry because this sales volume exceeded the annual sales of the largest clothing brand at the time by five times."
"Where is Fancl now in 2019? Dead! Why? I can't figure out what I want to do. A company that started by selling T-shirts and shirts has accumulated more than 190,000 categories of products in the warehouse behind it."
"Internet companies can be light or heavy, but they cannot accept high inventories."
"I want to tell you that I will invest in your company. Your early planning is very good. Endorphin is a valuable new drug with broad market prospects."
"Your business can survive just on endorphins. It's not uncommon for a drug to support a business."
“Endorphins are a constant flow of cash cows.”
"But you are too young. Being young means that you have a lot of things to do and unlimited ideas in your heart."
"And since you are a genius, you will have many ideas that you want to realize, whether it is developing new drugs or starting a career on other paths."
“I would say don’t do too many things at once, but do the limited things you do well.”
"If a company wants to develop new drugs, don't rush to launch everything it wants to do. Instead, it should first make plans for the development of one or two new drugs and proceed step by step."
“The most taboo thing about a business is that the main business is not clear and there is no mature thinking and planning.”
Zheng Li nodded frequently and put forward his request: "I will remember everything you said. In addition, I still need your help with something."
"You also know that I am very young and have few connections. You may need your help to set up the early stage entrepreneurial team, including the financial director, vice president, human resources and legal affairs."
“Legal affairs need lawyers who understand international patent law.”
