Let me tell you something horrible today: please see the "progress bar" of 2018 which is about to reach 1/3. Does everyone feel the same way as me that they have just "recovered" from the Spring Festival? Joking apart, many big things have happened during the past 1/3 of 2018, and the listing of the CRO giant WuXi AppTec could be definitely counted one thereof. Today, I want to analyze the pharmaceutical enterprises that have successfully been listed and those that failed in 2018.

Pharmaceutical enterprises that have applied for listing in China in 2018

 (Source: eastmoney.com, excluding medical device companies, by April 16, 2018)

There have been 4 pharmaceutical enterprises that have applied for listing in China so far, wherein, Gan & Lee Pharmaceuticals and WuXi AppTec have succeeded in the submission (of listing application to the Issuance Review Committee of China Securities Regulatory Commission), while the future of Beijing Konruns Pharmaceutical and Hainan Zhonghe Pharmaceutical is unclear.

Gan & Lee Pharmaceuticals finally succeeded in the second submission

According to the prospectus of Gan & Lee Pharmaceuticals, the company plans to publicly issue not more than 40.20 million shares on Shanghai Stock Exchange and plans to raise fund of about RMB 2.519 billion, wherein, RMB 558 million will be used to supplement the working capital, and the rest will be invested in marketing network construction project, registration and marketing of the recombinant insulin glargine product in the U.S., insulin industrialization, and other four projects.

Gan & Lee Pharmaceuticals is a high-tech biopharmaceutical enterprise that focuses on the biosynthetic insulin analogs, with the growth of the main business income mostly from insulin preparations, with single product structure. According to data, the sales revenue of insulin preparations separately accounted for 85.9%, 95.02%, 95.72% and 96.76% of the main business income of the company in 2014, 2015, 2016, and January-June 2017.

It is worth mentioning that this will not be the first IPO of Gan & Lee Pharmaceuticals. It applied for IPO early 4 years ago, however, the review was terminated, and the submission failed because the company was reported by internal employee in 2013 for suspected bribery. And it finally succeeded this time, which can be called "after suffering comes happiness".

The unicorn WuXi AppTec was marvelously quick in passing the submission

Unlike Gan & Lee Pharmaceuticals’ listing full of twists and turns, the listing of the unicorn WuXi AppTec in China can be called plain sailing: it only took 50 days from application to submission, which was marvelously quick. According to the prospectus of WuXi AppTec, it plans to publicly issue not more than 104.1986 million shares on Shanghai Stock Exchange, accounting for not lower than 10% of the total shares after the issuance, and plans to raise fund of RMB 5.741 billion.

Established in 2000, WuXi AppTec is deemed as a potential "unicorn" in the bio-medicine field, and it is the largest small molecule pharmaceutical R&D service enterprise in China, and the well-deserved CRO (contract research organization) leader in China, ranking 11^th in the world, mainly providing "R&D outsourcing" business to pharmaceutical giants, with its top 10 customers all of famous pharmaceutical enterprises in the world, including J & J, GSK, Roche, Pfizer, Vertex Pharmaceuticals, Novartis, and Eli Lilly, etc.

Details about this submission passing of WuXi AppTec can refer to my previous article "RMB 5.741 Billion to Raise! The Second Unicorn This Year—CRO Dominant Wuxi AppTec to be Listed on Shanghai Stock Exchange".

Too single products of Beijing Konruns Pharmaceutical lead to the listing road full of haze

According to the prospectus of Beijing Konruns Pharmaceutical, the company plans to issue not more than 40 million shares on Shanghai Stock Exchange, with the total shares to not exceed 160 million shares after the issuance, and plans to raise fund of RMB 1.64 billion.

The reason for the voting deferred of this submission of Konruns Pharmaceutical is in my opinion too single products. According to its annual report, the main source of income and profit of Konruns Pharmaceutical is "Suling". The 2017 operating income of the company was mainly the main business income generated from sales of "Suling", with the main business income accounting for 100.00%. "Suling" has become a representative product on the Chinese hemostatic market since marketed. According to an analyst, Konruns Pharmaceutical that competes by depending only on "Suling" will face huge competition, with the market saturation and gradual improvement of product and R&D levels of competitors.

Multiple factors of Hainan Zhonghe Pharmaceutical lead to an unclear future

According to the prospectus of Hainan Zhonghe Pharmaceutical, the company plans to issue not more than 40.10 million shares, with the total shares to not exceed 400.10 million shares after the issuance, and plans to raise fund of 560 million.

Established on April 17, 1995, Hainan Zhonghe Pharmaceutical Co., Ltd. is a Chinese high-tech enterprise earliest in being specialized in chemically synthesized polypeptide research and realizing industrialization thereof, mainly engaging in R&D, production, and sales of polypeptide and nucleoside drugs. According to its annual report, Zhonghe Pharmaceutical achieved operating income of RMB 703 million in 2017, largely growing compared to the RMB 498 million in 2016, wherein, the thymopentin product contributed 45.25% operating income, which is a drug for hepatitis B.

According to an industry analyst, Zhonghe Pharmaceutical has the following four important issues: firstly, its key product thymopentin ranked first in sales rankings of like products in China in 2017, but was followed closely by products of SL Pharm and Beijing Sciecure, with not significant leading edge; secondly, the production and sales of its thymopentin slowed down in 2017 in terms of year-on-year growth, and the rate of production and sales even slightly declined; thirdly, the polypeptide drugs of Zhonghe Pharmaceutical had suffered regulation trouble; fourthly, Zhonghe Pharmaceutical favors marketing over R&D. Those issues show that the future of the listing of Hainan Zhonghe Pharmaceutical will be unclear and full of ups and downs.

About the author: Caicai, a Master of Pharmacy from Shanghai Jiaotong University, ever worked in an institute for scientific and technical information, currently a practitioner of the drug administration system, good at interpreting industry regulations and latest drug research dynamics, etc.

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