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Hong Kong Pops A Pill

Hong Kong IPO

Image source: Tyler Olson, Fat Jackey - Shutterstock

What's going on?

China’s Hansoh Pharmaceutical raised $1 billion from its initial public offering on Thursday – Hong Kong’s second-biggest this year – valuing the company at over $10 billion.

What does this mean?

Hansoh’s drug portfolio spans six areas – that made up 63% of the entire Chinese pharmaceutical market last year – and includes medicines for cancer and diabetes. Last year, its revenue and profit both swelled compared to the year prior – by 19% and 25%, respectively.

Hansoh dispensed around 551 million new shares to investors at the very top of the price range it had previously prescribed. It plans to use a chunk of the cash to research and develop new drugs this year and next, boosting future profit if successful.

Why should I care?

For markets: Hong Kong’s waking up to 2019.

“Going public” in Hong Kong was hot last year, with companies raising a total of $37 billion. But this year’s been sleepier for the Pearl – companies have raised just $6 billion by listing on its stock exchange – while in the US, the likes of Uber, Lyft, and Pinterest have contributed bigly to the $27 billion raised there so far. Hong Kong is now stirring, however: its stock exchange recently relaxed rules on companies with several types of shares and on those with shares listed abroad (common among Chinese tech companies), which might bring Alibaba closer to home. The ecommerce giant went public in the US in 2014 but is reportedly considering raising a fresh $20 billion by selling new shares in Hong Kong.

The bigger picture: Encapsulating the cancer market.

About half of Hansoh’s 2018 sales came from its cancer drugs alone – a huge, metastisizing industry that’s estimated to be worth $177 billion globally by 2025. With the help of cutting edge treatments, cancer patients are living longer (and thus probably spending more on ongoing care), perhaps explaining why big pharma firms like GSK and Eli Lilly have swallowed up cancer-focused biotechs.

Originally posted as part of the Finimize daily email.

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