High valuation of the capital market!

Pharmaceutical Network, July 5, July 2, Hong Kong-listed company Luye Pharmaceutical issued an announcement that the company has submitted a proposal to the Hong Kong Stock Exchange to implement the spin-off of Shandong Boan Biotechnology Co.
, Ltd.
(hereinafter referred to as "Boan Bio" ) And listed it independently
.
Boan Bio is a comprehensive biopharmaceutical service provider dedicated to the development, production and commercialization of therapeutic antibodies, focusing on the fields of tumors, autoimmune diseases, pain and endocrine diseases
.
In fact, the outbreak and prevalence of the new crown pneumonia epidemic since 2020 has attracted the attention of capital to the biomedical industry.
Industrial investment in sub-sectors is extremely hot, and many listed pharmaceutical companies are actively preparing for capital changes
.
Facing the temptation of "high valuations" given by the primary and secondary markets, in just over a year, more than ten companies including Tasly, Baiyunshan, Hualan Biological, Livzon Group, and Kelun Pharmaceutical have successively issued announcements and proposed assets.
Spin-off plan
.

High valuation accelerates capital operation
Boan Biotechnology was established in 2013.
Its antibody discovery activities are carried out around four platforms, namely, fully human antibody transgenic mouse phage display technology, bispecific T-cell Engager technology platform, and antibody coupling (ADC) technology Platform, Nanobody platform
.
In December 2019, Luye Pharma announced the acquisition of Boan Bio-Bio for US$200 million, enriching the portfolio of products under research and accelerating global business growth
.
In recent years, Luye Pharma has invested heavily in the preparation of small molecule chemical drugs.
Facing the current global biopharmaceutical trends and opportunities, it has deployed Boan Biology.
The broad development prospects have also attracted more and more capital attention
.
In January of this year, Boan Biotechnology received an investment of 195 million yuan from investment institutions such as CCB International and Star Company.
The post-investment valuation of the financing was 5.
6 billion yuan
.
According to the latest announcement, Luye Pharma indirectly owns 74.
50% of the registered capital of Boan Biotech
.
Not long ago, the first R&D achievement of Boan Bio-Boyounuo (bevacizumab injection) was officially launched, and it was jointly promoted in 21 provinces, cities and autonomous regions of China in counties and regions with AstraZeneca.

.
In addition, Boan Bio has developed more than 10 innovative antibodies and a variety of bio-similar drugs with international intellectual property protection, and is actively deploying around the cutting-edge technology fields such as cell therapy
.
With the transformation and upgrading of China's pharmaceutical industry and the integration of China's pharmaceutical market with the world, pharmaceutical companies continue to invest in innovation and advanced technology, whether it is mergers or acquisitions or spin-offs, which are all phased strategic choices for industrial capital deployment
.
The capital market reacted strongly to the spin-off.
On July 2, Luye Pharmaceutical opened slightly higher, then quickly pulled up, with the highest increase approaching 7%, and then rushed back and closed at HK$5.
21, with a full-day increase of 1.
96%
.
With academia and industry to disease scientific knowledge deepening, biotechnology continuous improvement, bio-medicine will be the pharmaceutical strategic high ground of the market, biopharmaceutical capital market heat is constantly higher
.
The industry generally expects that for a long period of time in the future, biopharmaceuticals will be a brand-new field focused on by the domestic pharmaceutical industry
.
"After the outbreak" Time to speed up the pace on the one hand it can be split to market directly to broaden the financing channels, on the other hand also enhance the corporate brand value and market influence, especially at this stage pharmaceutical companies generally high valuation of nodes, For enterprises, the related benefits are also greater
.

　　Innovation risks attract attention.

Spin-off and listing is an important means for the capital market to optimize the allocation of resources, and it has a positive effect on straightening out the business structure of parent and subsidiary companies, broadening financing channels, and optimizing corporate governance
.
In December 2019, the China Securities Regulatory Commission officially issued the "Certain Provisions on the Pilot Domestic Listing of Subsidiaries of Listed Companies Spin-off", giving A-share listed companies more opportunities to spin-off and list directly in the Mainland without changing their control rights
.
Since the outbreak of the new crown epidemic, the capital valuation of the domestic pharmaceutical market has continued to rise.
During this period, it will be split and listed, and financing can be obtained at high stock prices to supplement research and development funds
.
In the past year, the “spun-off” of listed pharmaceutical companies has become a trend.
Livzon Group, Kelun Pharmaceutical, Changchun High-tech and other pharmaceutical companies have successively announced plans to spin-off subsidiaries: On February 27, 2020, Dean Diagnostics issued an announcement and decided Introduce investors to increase the capital and shares of the holding subsidiary Hangzhou Kailaipu Precision Medical Testing Technology Co.
, Ltd.
and start the process of spin-off and listing
.
On March 10, 2020, GenScript Biotechnology announced that it hopes to spin off its subsidiary, Legend Bio, which is its main cell therapy business, to go public in the United States
.
On March 25, 2020, Yan'an Bikang issued a spin-off plan, intending to spin off its holding subsidiary Jiangsu Jiujiu Technology Co.
, Ltd.
("Jiujiujiu") to be listed on the Shenzhen Stock Exchange's Growth Enterprise Market
.
On April 3, 2020, Liaoning Chengda issued a spin-off and listing plan to spin-off Chengda Bio, which is responsible for the biological products business, to the Science and Technology Innovation Board
.
On April 21, 2020, Hualan Biological issued an announcement that it intends to spin off its subsidiary Hualan Vaccine and list it on the GEM
.
On May 8, 2020, Tasly released a plan to spin off Tasly Bio to the Science and Technology Innovation Board
.
On June 11, 2020, Changchun High-tech announced that it intends to spin off its subsidiary Beike Biotech and list it on the Science and Technology Innovation Board
.
On August 10, 2020, Livzon Group announced a plan to spin off its subsidiary Livzon Reagent A shares
.
From the perspective of financial data, some of the listed pharmaceutical companies to be spin-off have maintained a growth trend in recent years
.
From 2017 to 2019, the net profit of Baike Biotech was 94 million yuan, 134 million yuan, and 223 million yuan; Hualan Vaccine's net profits were -77 million yuan, 270 million yuan, and 375 million yuan in the same period; Chengda Biologics during the same period Net profits were 555 million yuan, 627 million yuan and 720 million yuan respectively
.
When the time comes to 2021, from the perspective of the pharmaceutical industry as a whole, the spin-off boom of pharmaceutical companies is still unstoppable.
In addition to Luye Pharmaceuticals, many pharmaceutical companies have also announced spin-off plans: March 18, Baiyunshan announced Announcement, the proposed spin-off subsidiary Guangzhou Pharmaceutical Co.
, Ltd.
, and the initial public offering of overseas listed foreign shares (H shares) and listing on the main board of the Hong Kong Stock Exchange has been accepted by the China Securities Regulatory Commission
.
On June 1, Weigao Orthopedics received the China Securities Regulatory Commission’s "Approval for the Approval of the Initial Public Offering of Shandong Weigao Orthopedic Materials Co.
, Ltd.
".
Prior to that, Weigao Orthopedics had just completed the distribution of shares from the parent company Weigao.
Demolish
.
On June 17, Kelun Pharmaceutical announced a plan to spin off its subsidiary Yili Chuanning Biotechnology Co.
, Ltd.
to go public on the GEM
.
Statistics show that as of the first half of this year, more than 80 A-share companies have disclosed their intentions or plans for spin-offs, of which the split to the Science and Technology Innovation Board and the Growth Enterprise Market accounted for the majority, and the rest are planned to be split into Hong Kong stocks.
Biomedical It is a popular capital track in many subdivisions
.
At the same time, with reasonable institutional guarantees, in the future, Chinese local pharmaceutical companies, especially traditional pharmaceutical companies, will become more and more keen to spin off the innovative drug business segment
.
As biomedical innovation and R&D generally have the characteristics of high risk and high return, once the core R&D pipeline product fails, it may affect the basic market of listed companies
.
Capital market sources pointed out that from the perspective of the spin-offs of pharmaceutical companies in recent years, the business segments of the spin-offs mainly involve bio-innovative drugs such as diagnostic reagents and vaccines.
Pharmaceutical companies split up high-risk subordinate R&D units and retain controlling rights.
A more rational way to isolate risks
.