As a mage, I just want to pursue the truth

Chapter 16 Lei Jun's Advice

The success rate of innovative drug R&D is very low, and the cost investment is huge. The average R&D cost of a new drug is between $10 billion and $20 billion. This cost includes the average cost of failed R&D pipelines.

The cost of drug development has risen dramatically over time: a systematic study in 2011 showed that the cost of developing a new drug rose from $60 million in the 9200s to $8.84 million in the early s.

Among them, domestic pharmaceutical companies have developed relatively few new drugs. Hisun spent 2.25 million yuan on Hezemib tablets, Hengrui spent 5.2 million yuan on Pyrotinib, 1 million yuan on PD-1.55 (application for production), less than 3 million yuan on Alisartan Medoxomil, and the cumulative R&D cost of Icotinib was about 1.5 million yuan. Moreover, the above cost is only the cumulative investment cost of this project, and does not include the investment in the failed R&D of other projects, as well as the time cost of funds.

Although endorphins are not new drugs, they have a wider range of uses and are expected to have higher future benefits.

5000 million RMB for 10% of the shares. This price is not low, but it is definitely not high.

Zheng Li continued, "Boss Lei, 50 million and 10% of the shares is my bottom line."

"The reason why we are looking for your venture capital is because you are a senior student of Jiangcheng University and we have basic trust in you."

"The concession I'm willing to make is that you can be in charge of the company's finances before the results of the endorphin clinical tests come out."

The finance department is appointed by Lei Jun, which means that the company's cash cannot be used at will by Zheng Li. This is also a condition generally proposed by strong angel investors.

Lei Jun agreed and said, "Okay."

The two parties reached an agreement that Lei Jun would invest 5000 million RMB and account for % of the company's shares, and Zheng Li would invest % of the shares with technology.

Lei Jun: "What I am going to say next is not as an investor, but as a senior entrepreneur and 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 am still somewhat talented."

"When I graduated from university, I worked for others first and then started my own business. Later, when I founded Dami, I went around looking for investors. When they heard that I wanted to make smartphones, they asked me how I could compete with Apple?"

"Almost all investors are not optimistic about rice. First of all, you can't compete with Apple. How can you make profits by relying solely on price-performance ratio?"

"I told investors at the time that I would replicate Steve Jobs' success, but the problem was that others didn't believe me. They thought that China didn't have the soil for innovation and that I couldn't become Steve Jobs."

"I formed a team of more than 200 people, more than half of whom came from Motorola, Microsoft, Kingsoft and Google."

“I spent four hours on the phone with Mr. Liu from Morningside Capital before I got the investment.”

"Finally, I obtained $4100 million in financing and successfully listed DaMi on the Hong Kong Stock Exchange."

“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 little by little.”

19 was a very difficult year for Lei Jun. After Dami was listed on the Hong Kong stock market in 18, the share price continued to fall. By mid-19, the share price was almost halved.

更要命的是大米在上市前跟前期的投资人签订了对赌协议，如果在19年12月13号之前市值不能突破750亿美元的话，小米需要按照发行价加上8%的应计利息加上已宣派但未支付股息。

At that time, the market value of Rice was only US$300 billion, a 40% drop from its issue price when it was listed.

Lei Jun was under tremendous pressure at the moment. The high-end brand could not break through. The high-end was occupied by Apple and Huawei. The mid-to-low-end Honor was competing with Xiaomi. OV and Vivo were making Xiaomi breathless. Zheng Li nodded: "Starting a business is indeed not easy. There are too many variables that you cannot control. Each variable may lead to your failure."

“Many entrepreneurs, whether they succeed or fail in the end, don’t know why they succeed or fail.”

Lei Jun nodded and said, "Your understanding is quite profound. It is becoming increasingly difficult to start a business in China now."

"You have the technology. Technology is your moat. Others can't easily break through. I don't know much about medicine."

"I still have a say in the Internet industry because I have been in this industry for so many years."

"The Internet is now more like a competition for existing resources. The incremental services that the Internet provides to society, enterprises and individuals through the high-frequency flow of information have been almost divided up."

"Nowadays, more people are sinking to the grassroots and dismantling previous organizational relationships to start their own businesses, whether it is Didi or Pinduoduo."

“Every track is packed with players.”

Lei Jun recalled: "I previously invested in a company called Vancl. You may not have heard of it since you are only 18 years old."

"What does Vancl do? Vancl was founded in 2007 and is an online e-commerce company specializing in selling clothing."

"Vancl is a typical venture capital-funded company. It completed four rounds of venture capital in just three years, and all the investors were well-known institutions, such as IDG Capital, Softbank, Lianchuang, Tiger Asia Fund, etc."

"In 2010, Vancl sold 3000 million T-shirts, shocking China's clothing industry because this sales volume was five times the annual sales volume of the largest clothing brand at the time."

"Where is Vancl now in 2019? It's dead! Why? It didn't know what it wanted to do. It started as a company selling T-shirts and shirts, but ended up with more than 19 categories of goods piled up in its warehouse."

"We are being dragged down by inventory. Internet companies can be either light or heavy, but they cannot accept high inventory."

"I'm telling you this because I will invest in your company. Your early planning is very good. Endorphins are valuable new drugs with broad market prospects."

"Your business can thrive just on endorphins. It's not uncommon for a drug to support a business."

“Endorphins are a constant cash cow.”

"But you are too young. Being young means you have many things you want to do and endless ideas."

"Besides, you are a genius, so you will have many ideas that you want to realize, whether it is developing new drugs or starting a career in other fields."

“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, it should not launch all of them at once, but should first make plans for the development of one or two new drugs and take it step by step."

"The worst thing for a business is not having a clear main business and not having a mature idea plan."

Zheng Li nodded frequently and made his request: "I will remember everything you said. In addition, I need your help with something else."

"You also know that I am very young and don't have many connections. I may need your help to build the early entrepreneurial team, including the financial director, vice president, human resources and legal affairs."

“Legal affairs need lawyers who understand international patent law.”

(End of this chapter)