What’s Going On Here?

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

Initial public offering is a company's flotation on the stock exchange.

What Does This Mean?

• Hansoh’s drug portfolio 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 grew 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, a chunk of cash from which it plans to use to research and develop new drugs, 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 – companies have raised just $6 billion by listing on its stock exchange compared to the US where Uber, Lyft, and Pinterest alone contributed to the $27 billion raised so far.
• Hong Kong is now stirring: its stock exchange recently relaxed rules on companies with several types of shares and shares listed abroad (common Chinese tech companies).

The bigger picture: Encapsulating the cancer market.

• About half of Hansoh’s 2018 sales came from its cancer drugs alone.

Cancer drug is a huge 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.

Content source: Finimize. (2019) Hong Kong Pops A Pill. Available from: https://www.finimize.com/wp/news/hong-kong-pops-pill/ [Accessed 12 June 2019]