Capital Market Review and Outlook

Regarding to this report

Since 2018, biopharma companies become high-profile in the capital markets. In this report, we review the performance of the capital markets in the pharmaceutical and biotech Industry over the past period of time and look ahead to industry drivers.

Introduction

• 2018 is the bumper year of IPO for global pharmaceutical and biotech Industry with the value and volume both reaching a 10-year high according to the U.S., China and Hong Kong stock market data, and the momentum has not decreased since the beginning of 2019.
• The HKEX introduced new rules in early 2018 to allow pre-revenue biotech companies to go public in Hong Kong. This move, together with other new measures, has become the most significant reform in the HKEX in 20 years. Not come singly but in pairs, Science and technology innovation board (STI) was established at the end of 2018, and piloted the registration-based IPO system on the Shanghai Stock Exchange. STI encouraging companies in six industries, including biotech through the differentiated arrangements in terms of profitability and shareholding structure. The restructured listing rule of STI will provide more financing opportunities to pre-revenue biotech companies.
• A series of biotech companies engaged in the R&D of brand-name drugs have been able to listed on the biotech section of HKEX which has become the first sector on the main board of the HKEX to be tailed by industry attributes.
• Since 2018, along with the announcement of a series of huge M&A transactions by Takeda to acquire Shire and Bristol-Myers Squibb to acquire Celgene, the list of M&A transaction in the pharmaceutical and biotech Industry has been continuously renewed. M&A activities in the pharmaceutical and biotech Industry have entered an active period with a series of biotech companies making major breakthroughs in the fields of oncology, rare diseases, gene therapy, etc.
• In this context, we review the performance of the capital markets in the pharmaceutical and biotech Industry over the past period of time and look ahead to industry drivers. In the future, investment and financing activities in the pharmaceutical and biotech Industry will remain active in the securities market, and the Hong Kong market is expected to rise to the next level with the help of the new listing rule. The M&A market will also active through the increasing demand for branded drugs in pharmaceutical companies. We observed three trends:

1. The first-in-class drugs continue to receive attention from the capital market, whose can effectively reduce R&D risks and maintain global market exclusivity will be favored

2. Specialty drugs, orphan drugs, biologics and oncology in novel drugs will continue to be the tendency.

3. Diversified cooperation between large multinational biopharma companies and emerging biopharma companies (EBP) will lead to new excellent enterprises in the capital market.