In the first half of the year, 36 pharmaceutical companies got together and listed on the market, and the financing of innovative drugs ushered in a climax?

In recent years, the reason why the pharmaceutical track has become a hot investment is mainly due to the continuous surge in sub-sectors such as vaccines, innovative drugs and CXO (pharmaceutical R&D and production outsourcing), coupled with the strong demand for financing of emerging Biotech, which makes the second The secondary market has attracted many pharmaceutical companies to go public in batches

In particular, since both the Science and Technology Innovation Board and the Hong Kong Stock Exchange allow unprofitable pharmaceutical companies to go public, these two major markets have become important financing channels for pharmaceutical companies in recent years

In the first half of 2021 alone, 36 pharmaceutical companies will be listed on the Hong Kong Stock Exchange and the Science and Technology Innovation Board, showing a blowout trend.

In the first half of the year, pharmaceutical companies' IPOs showed a blowout trend.

According to statistics, the initial funds raised by these 23 pharmaceutical companies totaled 18.

From the perspective of stock price performance, medical device and vaccine companies are more favored by capital

Hong Kong Stock Exchange

In the first half of 2021, 13 pharmaceutical companies went public in Hong Kong, of which 8 were "pharmaceuticals and biotechnology" companies, and 4 were "medical and healthcare equipment and services" companies

In terms of share price performance, three companies rose more than 130% on the first day of listing, namely Nuohui Health-B (+215.

In comparison, more pharmaceutical companies went public on the Science and Technology Innovation Board in the first half of this year, and most of the pharmaceutical companies’ stock prices have risen quite impressively

However, although only half of the number of pharmaceutical companies listed in Hong Kong on the Sci-tech Innovation Board, the amount of funds raised by Hong Kong stocks IPOs is much higher than that on the Sci-Tech Innovation Board

22 medical device companies get together to go public and raise over 24 billion IPO funds

As mentioned above, most of the companies that went to the Sci-tech Innovation Board and the Hong Kong Stock Exchange for IPO in the first half of this year were medical device companies, whose main business scope concentrated on orthopedics, medical optical imaging, rehabilitation medical devices, in vitro diagnostic instruments and reagents

Let's look at it concretely

Among the many "upstarts" of medical device companies, there are many industry leaders

For example, Weigao Orthopedics is a core subsidiary of Weigao, a Hong Kong-listed company, and one of the leading companies in China's orthopedic equipment industry.

From the perspective of operating performance, Weigao Orthopedics achieved total revenue of 1.
824 billion yuan in 2020 (ranking first among all listed AH femoral orthopedics companies) and net profit of 558 million yuan.
The compound growth rates of total revenue and net profit in the last four years were respectively It was 19.
12% and 28.
76%
.
The IPO of the Science and Technology Innovation Board raised 1.
5 billion yuan, and the main investment institutions behind it include Shandong Finance Group and General Technology Group
.

In addition, Xiangyu Medical is the leader in the field of rehabilitation medical equipment in China.
At present, it has formed a rich product structure of 20 series and more than 400 kinds of self-owned products, and covers rehabilitation assessment, training, physical therapy and other businesses
.
In 2020, the total revenue will be 496 million yuan, and the net profit will be 196 million yuan.
The compound growth rate of total revenue in the last four years is 19.
7%, and the net profit CAGR is as high as 44.
8%
.

According to wind data, the market share of Xiangyu Medical, Weiss Medical, and Pumen Technology in the rehabilitation medical device industry in 2020 will be 3.
97%, 3.
02%, and 1.
31%, respectively
.
However, since the total market share of the top three leading brands is only 8.
3%, the remaining 91.
7% of the market share is divided by domestic and foreign competitors, indicating that there is still huge room for improvement in the concentration of China's rehabilitation medical device industry
.

Let's look at the situation of the Hong Kong Stock Exchange's IPO
.

In the first half of 2021, 6 medical device companies went public in Hong Kong, and the total amount of initial funds raised reached 14.
113 billion Hong Kong dollars
.
At the same time, the total IPO funds raised by 22 medical device companies in the two markets exceeded 24 billion yuan in the first half of the year
.

Take Hillhouse Capital as an example of Angel of the Times as a major shareholder
.

Time Angel is known as the most prestigious new stock in the Hong Kong stock market in the first half of this year, and the total amount of actual initial funds raised reached 2.
722 billion Hong Kong dollars
.
At the same time, the IPO received 2079 times oversubscription, second only to Nuohui Health-B, which was listed in February this year and received 4133 times oversubscription
.
Moreover, the stock price of Time Angel once rose to 490 Hong Kong dollars on the first day of listing, an increase of more than 180%.
The winning lot can earn nearly 60,000 Hong Kong dollars, which is worthy of being the strongest new stock
.

The reason why Time Angel was able to become the second-largest "explosive model" during the year was mainly due to the low penetration rate and the early outbreak of the invisible orthodontic industry, which made it extremely high-growth and has a market share of 41.
3%, and has swept the world.
The international giant Align Technology (Average Technology/Invisibility) competed in court to form a duopoly competition pattern
.

From the perspective of operating performance, Time Angel’s revenue in 2020 is 820 million yuan, a year-on-year increase of 26.
4%; net profit is 150 million yuan, a year-on-year increase of 163%.
The compound growth rate in the last three years is as high as 56% and 86%, respectively, and the profitability is equivalent.
Strong
.
This is mainly due to the company's continuous improvement in gross profit margins in recent years, which were 63.
8%, 64.
6%, and 70.
4% in 2018-2020
.

14 biomedical companies raised over 20 billion in IPO  funds

In addition to medical devices, biopharmaceutical companies also had a dazzling IPO "transcript" in the first half of the year
.

According to statistics from Fonghuashun i asked for money, in the first half of 2021, 7 biomedical companies have landed on the Sci-tech Innovation Board, and the initial fundraising amounted to 5.
641 billion yuan
.
Among them, Baike Biotechnology and Haoyuan Pharmaceutical raised funds of 1.
501 billion yuan and 1.
209 billion yuan respectively
.

The main business of Baike Biology is the research and development, production and sales of human vaccines.
The main products are human rabies vaccine, freeze-dried live attenuated nasal flu vaccine, and live attenuated varicella vaccine
.
Among them, in 2020, varicella vaccine will achieve revenue of 1.
107 billion yuan, accounting for 76.
83% of total revenue; nasal spray flu vaccine will achieve revenue of 333 million yuan, accounting for 23.
08%
.

It is worth mentioning that Baike Biotechnology is the second largest core subsidiary of Changchun Hi-Tech after Jinsai Pharmaceutical
.

In 2020, Changchun High-tech achieved total revenue of 8.
577 billion yuan, of which Jinsai Pharmaceutical's revenue was 5.
803 billion yuan, accounting for 67.
66% of the company's total revenue; Beike Bio's revenue was 1.
433 billion yuan, accounting for 16.
71%, and the two companies totaled 8.
437 billion.
The high percentage of% supports the performance of Changchun Hi-tech
.

In addition, Olin Biotech is a vaccine company like Beike Biotech.
The main products are mainly adsorbed tetanus vaccine, Hib conjugate vaccine, and tetanus toxoid concentrated stock solution.
Among them, the amount of adsorbed tetanus vaccine issued in 2020 will be 3,137,900.
, Realized income of 62.
136 million yuan, accounting for about 98% of the company's total revenue
.

It is precisely because Olin Bio is highly dependent on a single species, which makes the performance growth volatile in recent years
.

The financial report shows that from 2018 to 2020, the company's total revenue was 76.
33 million yuan, 179 million yuan, and 320 million yuan, respectively, up 423%, 134.
6%, and 78.
7% year-on-year, and the growth rate continued to decline
.
In the same period, the deduction of non-net profits realized RMB -22.
74 million, RMB -36.
64 million and RMB 27.
34 million respectively
.

In addition, in recent years, vaccine products have suffered large returns, which is also an important reason for the poor performance of Olin Biological
.

For example, in 2019, some CDCs had deviations in predicting market demand, resulting in orders larger than actual inoculations.
At the same time, major customer Hualan Bio returned vaccines; due to the impact of the new crown epidemic in 2020, Beijing CDC also returned the company 18,000 sticks of adsorbed tetanus vaccine that have not been vaccinated
.

Relatively speaking, since the Hong Kong Stock Exchange allows unprofitable pharmaceutical companies to list, small and medium-sized Biotech innovative drug companies with strong financing needs have become the main force for listing in the Hong Kong stock market
.

In the first half of 2021, 7 biopharmaceutical companies went public in Hong Kong, and the initial fundraising amounted to HK$17.
291 billion, which was nearly three times the amount raised on the Sci-tech Innovation Board in the same period
.
At the same time, the 14 biopharmaceutical companies in the two markets in the first half of the year raised a total of over 20 billion yuan in IPO funds, which can be described as another upsurge in innovative drug financing
.

The drug safety evaluation leader Zhaoyan New Drug and Li Ka-shing's Hutchison Medicine went public in Hong Kong, with funds raised up to 6.
292 billion Hong Kong dollars and 3.
95 billion Hong Kong dollars, respectively, to win one or two
.

The Hong Kong Stock Exchange is the third capital market on which Hutchison Medicine is listed.
It has previously been listed in the United Kingdom and the United States
.
With the blessing of Li Ka-shing, Hutchison Pharmaceuticals soared by more than 110% on the first day of listing, and the total market value once exceeded HK$70 billion
.

Although Hutchison Pharmaceuticals, as a well-known veteran pharmaceutical company established in 2002, did not launch the first new anti-cancer drug Fruquintinib until 2018, the company has continued to increase R&D investment in recent years, which has accelerated the R&D progress
.

According to the financial report, the total revenue of Hutchison Medicine from 2018 to 2020 was 214 million US dollars, 205 million US dollars, and 228 million US dollars, respectively, and net profits were -71 million US dollars, -104 million US dollars, and -116 million US dollars, respectively.
The total of the last three years The loss of US$291 million (approximately RMB 1.
88 billion) was mainly due to the continuous increase in R&D expenditures
.

Up to now, Hutchison Medicine has built a R&D team of about 500 people, and has a rich product pipeline of 2 products on the market and more than 10 drug candidates under development, of which 10 innovative drugs have entered the clinical stage
.

Pharmaceutical companies with good growth expectations are  more favored by the capital market

From an investment perspective, after the cruel baptism of the Hong Kong stock market, the biopharmaceutical companies with the highest growth rates since their IPOs in the first half of the year are all Hutchison Pharmaceuticals (+50.
37%), Jianbei Miaomiao (+23.
33%), and other companies with good growth expectations.
Zhaoyan New Drug (+16.
19%)
.

For one thing, Hutchison Medicine has Li Ka-shing's blessing behind it, and it can continue to obtain high research and development funds.
In the second half of this year, a number of blockbuster new drugs are about to be approved for listing
.

Second, Jianbei Miao, whose main business is the promotion and distribution of branded Chinese medicines and consumer healthcare (branded medicines and health care products), has maintained steady growth in recent years, and is therefore more favored by the capital market
.

Source of performance of Jianbei Miaomiao in previous years: Straight Flush

Conversely, the biopharmaceutical companies that have been listed in Hong Kong in the first half of this year have fallen significantly since Zhaoke Ophthalmology-B (-30%), Modern Chinese Medicine Group (-21.
19%), Saisheng Pharmaceutical (-20.
74%), and Keji Pharmaceutical Industry-B (-7.
16%)
.

The total net profit loss of Zhaoke Ophthalmology in the last three years has reached 886 million yuan.
As of the end of 2020, the debt-to-asset ratio has risen to 160.
82%
.
Although the company has blessings from well-known investors such as Aier Ophthalmology, Hillhouse Capital, TPG, and Zhengxingu Capital, no commercial products have been approved for sale, and the stock price is naturally affected
.

Similarly, Keji Pharmaceutical-B, which has lost as much as 1.
329 billion yuan in the last two years, is a CAR-T cell therapy company that is on the hot track and focuses on the treatment of solid tumors and hematological malignancies, but it faces targets.
Many problems such as serious gathering of dots, high product commercialization costs, and fierce competition in the industry have also made investors cautious about such companies
.

Concluding remarks

In summary, in the first half of 2021, pharmaceutical companies once again set off a climax of listing and financing
.
Among them, medical device companies account for a larger proportion of the number of IPOs on the Science and Technology Innovation Board and the Hong Kong Stock Exchange
.

In addition, from the perspective of stock price performance, the "upstarts" of pharmaceutical companies on the Sci-tech Innovation Board have seen even higher gains
.
Although the number of pharmaceutical companies listed on the Hong Kong Stock Exchange is relatively small, the amount of IPO funds raised is relatively higher
.
At the same time, the Hong Kong stock market also favors the fundamentals and growth expectations of pharmaceutical companies
.