Capital Changes In Listed Pharmaceutical Companies: Get Together To Split Up And Seize The Overvalued Draught

The bio pharmaceutical industry is a sunrise industry, and Chinese bio pharmaceutical enterprises have the opportunity to break through. The key is to see whether all biomedical enterprises can seize this opportunity to fulfill their historical mission.

Under the epidemic, bio pharmaceutical investment is very hot. Many listed pharmaceutical companies are brewing capital changes.

In the first half of 2020, the process of spin off of listed pharmaceutical companies increased substantially. According to incomplete statistics, at present, the A shares biopharmaceutical sector has proposed 7 assets to be split and listed. For example, the pharmaceutical company of columbine intends to split up the business platform of the antibiotic intermediates of the company to launch the gem, and further expand the biological financing channels of Tsing Ning to meet the financial needs of its existing and future business development. In addition, TSE, Hua Lan, Changchun hi tech, Liaoning Cheng Da, Hua Bang health, Yanan Bikang (Wei Quan) also announced the spin off.

"Post epidemic" era has welcomed a wave of new financing upsurge for biomedical enterprises, and accelerated the pace of splitting and listing. On the one hand, it can directly expand the financing channels, and on the other hand, it also promotes the brand value and market influence of enterprises. Especially at this stage, the nodes with high valuations in pharmaceutical enterprises are of greater relevance to enterprises. A medical analyst of a medium-sized brokerage firm in Shenzhen said on twenty-first Century economic report.

According to incomplete statistics, at present, the A shares biopharmaceutical sector has proposed 7 assets to be split and listed. Figure GREEN

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Spin off is an important means to optimize the allocation of resources in the capital market. It plays a positive role in rationalizing the business structure, widening the financing channels and optimizing corporate governance.

In addition, spin off is also a way to change state-owned enterprises. Spin off will provide a platform basis for state-owned enterprises to introduce strategic investors, implement equity incentives and make mixed changes, which will help stimulate endogenous motivation of subsidiaries.

In December 2019, the China Securities Regulatory Commission formally issued the "Regulations on the listing of subsidiaries of Listed Companies in China" (hereinafter referred to as the "rules for separation"), which provided policy support for A share companies to split subsidiaries to domestic listing, and listed companies would have more opportunities to directly split in the mainland without changing control rights.

Since the beginning of this year, a number of biopharmaceutical plates have proposed plans to spin off subsidiaries. In particular, under the outbreak of the new crown pneumonia, the stock prices of many vaccine companies have reached a record high. Many listed companies have plans to separate the companies from the epidemic. Other biopharmaceutical companies have not missed the storm.

In April 3rd, Liaoning Cheng Da announced a plan to split up the stock market and split the big biological products responsible for Biologics business to the science and technology board. At present, IPO has entered the inquiry stage. The new three board listed company, a new third board, was launched in December 31, 2014. It is a biotechnology enterprise focusing on the development, production and sale of human vaccines. The company's core products include Purified Hamster Kidney Cell Rabies Vaccine and JE inactivated vaccine.

According to its prospectus, Liaoning listed company has 60.74% stake in the listed company, and it is known as the first case of "A dismantle A". In the prospectus, the company said that Liaoning's Cheng Da and Cheng Da biology conform to the relevant requirements of the division rules for the listed companies to spin off their subsidiaries in the mainland.

In April 21st, Hua Lan bio also issued a notice to split the company's Hua Lan vaccine to the gem. According to reports, in June 30th, there has been new progress in the work of splitting up the Hua Lan vaccine. The Henan Securities Regulatory Commission announced on the same day that the Hua Lan vaccine is being accepted by Huatai Securities and has been coached in Henan securities regulatory bureau.

Hua Lan biological company's business includes blood products, vaccine products and other businesses. And Hua Lan vaccine is mainly engaged in vaccine research and development, production and sales. Hua Lan Bio said in the announcement that its subordinate enterprises are different from the main business of the Hua Lan vaccine. After splitting, they will not cause too much impact on the two sides' business plates. At the same time, it has made a series of commitments to avoid possible competition in the industry after the spin off.

In May 8th, Tian Shi Li released a preplan to distribute the material of the kingdom to the board of science and technology. The main business of Tian Shi Li pharmaceutical group involves three major plates: Modern Chinese medicine, biological medicine and chemical medicine. The company's nature is a biopharmaceutical plate, but its business area and operation mode remain highly independent with other businesses of the company.

The announcement said that the spin off would not have a substantive impact on the continued operation of other business segments of the company. On the contrary, through this separation, the development and innovation of Tian Shi Li biology will further speed up, and help to enhance the overall profitability of the company in the future.

In May 11th, Fuxing medicine announced that the International Cooperation Department of the China Securities Regulatory Commission had no objection to the previous company's splitting of Gland Pharma listing overseas. It is reported that in December 2019, the third provisional shareholders' meeting of Fosun medicine examined and approved relevant issues related to the splitting of Gland Pharma and its overseas listing scheme, and the Gland Pharma of the controlling shareholder is going to be listed on the India stock exchange and the Mumbai stock exchange.

Gland Pharma, founded in 1978, is headquartered in Hyderabad, India. It is mainly engaged in the development and production of small molecule injection generic drugs. It is the first manufacturer of injectable drugs approved by the US FDA in India, and has obtained GMP certification from the major laws and regulations in the world. In October 2017, Fosun purchased a stake in Gland Pharma 74% of India's generic drug company for 1 billion 91 million US dollars (about 7 billion 200 million yuan). At present, Gland Pharma has become the core subsidiary of Fosun medicine, with its net profit of 2018 and 2019 rising by 29.02% and 52.2% respectively.

In March 10th, Kingsy announced that he wanted to split the legendary biological products of the company's main cell therapy business to the United States. In June 5th, the legendary creature landed on NASDAQ on the market, issuing a price of 23 US dollars / share. So far, the legendary stock price is 42.56 U.S. dollars / share, the market value of about 5 billion 500 million U.S. dollars, has exceeded the parent company Jin Sirui biotechnology 305.6 Hong Kong dollar market value.

It is reported that the legendary creature was founded in 2014 and is an innovative company dedicated to oncology and other indications of new cell therapies. In 2017 and 2018, legendary creatures became famous for their breakthrough in the field of CAR-T. In 2018, they won the first CAR-T clinical approvals in China.

In June 11th, Changchun high tech announced that it was going to spin off the company's bio products to the board. After the completion of the split, Changchun's high and new shareholding structure will not change, and it still has the controlling power over 100 grams of organisms. Before this spin off, Changchun high and new technology is the largest shareholder of 100 grams of biological products, with a shareholding ratio of 46.15%. After the separation and listing, the shareholding ratio of 100 grams of biological products will remain above 40%.

The main business of biotech is the development, production and sale of biological vaccines. The main products are varicella vaccine, Purified Hamster Kidney Cell Rabies Vaccine, nasal spray influenza vaccine, and maintain highly independent relationship with other Changchun high and new business sectors. Therefore, splitting will not have a substantial impact on the continued operation of other sectors of the company.

In June 24th, Sichuan columbine pharmaceuticals announced that it was going to spin off its controlling shareholder's tannin biology to the Shenzhen Stock Exchange's gem. After the completion of the split, the ownership structure of the pharmaceutical company will not change, and it will still maintain control over the organism. It is understood that the Cologne pharmaceutical division of tannin biological to gem, mainly to further broaden the biological financing channels, and deal with its existing and future business development needs of funds.

Crisis coexist

However, whether it is splitting the market, breaking through the science and creating the board or going to the us to attack the Nasdaq, it is a crucial step for the biopharmaceutical enterprise.

Many pharmaceutical industry investors told the economic news reporters in twenty-first Century that the high threshold of bio pharmaceutical enterprises made their investment professional attributes stronger. Enterprises need to form a channel for core competence, technology and capital. In the light of the current development trend, the future development trend is that the market is more simplified, but the actual valuation and profitability after listing will return to the enterprises themselves. Innovation ability. The bio pharmaceutical industry is a sunrise industry, and Chinese bio pharmaceutical enterprises have the opportunity to break through. The key is to see whether all biomedical enterprises can seize this opportunity to fulfill their historical mission.

In April 2018, the HKEx issued new regulations to allow unprofitable biopharmaceutical companies to list on the market, attracting many biological and pharmaceutical enterprises such as song Li Li to Hong Kong. However, there are polarization phenomena in Hong Kong listing, and breakage has become the norm.

In March 2019, allowing non profit companies to go public, allowing companies with different voting rights to go public, allowing red chips and VIE framework companies to go public, and releasing the positive information of the science and technology board, providing more financing options for biomedical enterprises. "The past industry is proud of going to the US stock market," a Shanghai pharmaceutical brokerage analyst at a medium-sized brokerage firm told the twenty-first Century economic report. "But there are not many examples of successful listing. But the core value of the biopharmaceutical industry lies in its ability to sustain development and fight.

The threshold of biomedicine industry is very high. A very professional person is required to immerse himself in this field for a long time and a large extent, focusing on the development and commercialization of innovative drugs. Medical research and development cycle is very long, invested heavily. Data show that the average R & D period of a fully innovative drug is 12 years, with a total investment of US $2 billion.

At the same time, with the continuous support of the capital market, biopharmaceutical enterprises need good institutional system and active investors to support. In recent 5 years, under the guidance of national policies, the pharmaceutical industry has undergone tremendous changes. Since last year, the launch of the science and technology board has greatly shortened the integration time between the pharmaceutical industry and the capital side.

From the enterprise level, because of the high barriers to the industry, there will be some challenges for China's bio pharmaceutical enterprises to open up the international market, but there will be great opportunities for China in the future. Based on China's 123 line cities, population development characteristics and market demand, under the scale of China's population of 1 billion 400 million, the market of bio pharmaceutical industry is very large. Especially in the case of high incidence of cancer, the market has strong appeal for new drugs and special drugs. The market prospect of innovative drugs and high-end generic drugs is very broad.

But on the other hand, there is no real global pharmaceutical company in China at present, and in the capital market, it will also be closer to the mature market.

Since 2017, Hong Kong stocks and A shares have opened the door to unprofitable biopharmaceutical companies. After that, there are many discussions on how to assess the value of biomedical enterprises and the one or two tier market valuation.

A very important reason is that the bio pharmaceutical enterprises listed in Hong Kong have concentrated on breakage: first, the first day of listing on the first day of listing, the company rose to HK $14.9 per share, and then dropped to HK $13.66 per share. The opening day of Baiji Shenzhou fell to HK $103 / share, and the listing of Hua Ling pharmaceuticals fell to HK $8.28.

In response, a private pharmaceutical industry in Shenzhen told reporters on twenty-first Century economic report: "for the science and technology board, because most of the innovative pharmaceutical companies have not yet realized profits, the reporting difficulty is relatively large. In addition, compared to the Hongkong market, the risk of breakage is relatively small. Although there are plenty of short-term funds, there are certain worries in the long run. Registration system is a change in the game. In terms of valuation, it seems that the whole group is still cautious. The valuation of some biopharmaceutical companies in the primary market is much higher than the scale of their fund-raising. In the long run, it is necessary to test whether the requirements of innovative enterprises really conform to the requirements of innovative enterprises.

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