The market value has evaporated by nearly 400 billion, and the break has become the norm. Will the medical IPO be no longer in 2021?

"Is it winning the lottery or is it being shot?" After suffering a new losing streak at the end of 2021, an investor seemed a little helpless
.

In the domestic capital market, the deformed law of "new shares not dying" has no underlying logic and has lasted for a long time
.

Therefore, when Kefu Medical fell 4.

It is true that in 2021, when various dividends at home and abroad are coming to an end and capital is more market-oriented, the appreciation of market value is no longer something that can be easily achieved
.

In 2021, 98 new medical stocks from China will land on the global capital market, 25 will break, and 75 will experience negative growth in the first trading year of the IPO

There are still rich myths
.

In late June, Nano Micro Technology was listed on the Shanghai Stock Exchange's Science and Technology Innovation Board, with an increase of up to 1400%.

Still an innovator's paradise
.

At the beginning of the year, Nuohui Health landed on the Hong Kong Stock Exchange, and its market value has soared to nearly 30 billion, pushing the popularity of early tumor screening to the extreme

At the same time, medical AI manufacturers are also intensively embarking on the IPO journey after obtaining product registration certificates one after another
.

In March, June and September, Keya Medical, Inference Technology, and Shukun Technology submitted their prospectuses respectively

The original intention is still there, and the details of the ups and downs can be pondered, but if we go down, we must delve into the causal relationship behind it
.

A year of reinvention for healthcare IPOs

A year of reinvention for healthcare IPOs

It must be admitted that in 2021, the IPO macro environment of medical companies has been irreversibly changed compared with 2020
.

The first is the narrowing of options in the capital market
.

On the one hand, the economic uncertainty brought about by the spread of the global new crown epidemic and the policy red line caused by the tightening of data supervision have caused most medical companies to temporarily give up the option of listing in the United States

In 2021, the Hang Seng Index and Hang Seng Technology Index, which represent the overall Hong Kong stock market and Hong Kong technology stocks, will drop by 13.
7% and 32.
7% respectively, becoming the world's largest annual bear market
.

In this context, 14 of the 35 new medical stocks listed on the Hong Kong Stock Exchange broke on the first day, and the break rate was as high as 40%.

According to statistics, domestic capital will account for no more than 20% of the funds traded on the Hong Kong Stock Exchange in 2021
.

This means that on the Hong Kong Stock Exchange, the stock pricing power is controlled by 80% of the funds that will flow in the global capital market

The time-sharing trend of a medical Hong Kong stock on the day of its debut

In other words, there is a high probability that the destination of the IPO of medical companies needs to be selected from A shares
.
The conclusion of 2021 can show that most of them have chosen the Science and Technology Innovation Board, but the most profound changes are taking place on the Science and Technology Innovation Board
.
First, a certain percentage of new shares will break, which will become the norm on the Sci-Tech Innovation Board
.
In September 2021, with the introduction of new regulations such as the Implementation Measures for the Issuance and Underwriting of Stocks on the Sci-tech Innovation Board of the Shanghai Stock Exchange and the Guidelines for the Application of the Issuance and Underwriting Rules of the Sci-tech Innovation Board of the Shanghai Stock Exchange No.
1 - Initial Public Offering of Shares , the pricing mechanism for new shares on the Science and Technology Innovation Board has been released
.
In the past, entering the top 10% would be excluded as invalid pricing.
In order to ensure that they can grab new shares, investment institutions often made downward quotations or group quotations, leaving room for the stock price to rise after listing
.

According to the latest price inquiry rules, the proportion of the highest bid proposal has been increased to 3%, thus breaking the original "buyer's market" of offline investors, supporting lead underwriters (ie investment banks) to better exercise their independent pricing power, and allowing investment banks to ""buyers' market").
Dare to set high prices and earn more underwriting fees
.

The number of medical IPOs in various capital markets in 2021 In fact, the five medical IPOs in 2021 on the Sci-Tech Innovation Board occurred after the new regulations on inquiry
.
For example, Chengda Bio, the first new medical stock on the Sci-Tech Innovation Board, raised the issue price per share by 110 yuan from 50 yuan when it was first listed for trading in October, and raised funds from 2.
04 billion yuan to 4.
582 billion yuan, a 27.
27% increase.
closing down
.
This is exactly the same as the later break of the Southern Model Creatures and Hualan Creatures
.
Prior to this, Novozymes, Yiqiao Shenzhou, Aladdin, and Titan, which are also upstream "water sellers" in the biotechnology industry, have become popular star stocks sought after by investors
.

Among them, Yiqiao Shenzhou and Novizan rose by 68% and 55% respectively, setting the tone for the increase in valuation for the hottest trend of the year
.
However, the price-to-earnings ratio (PE) of Nanmo Biotechnology based on the initial price is 100 times, which is much higher than the average level of its peers, laying the groundwork for a break
.
Hualan Co.
, Ltd.
, as one of the earliest leading companies in China to provide medicinal rubber stoppers for high-end injection drugs, has performed well
.
According to the prospectus, Hualan expects to achieve operating income of about 570 million to 700 million yuan in the first three quarters of 2021, a year-on-year increase of 88% to 130%; net profit attributable to the parent is 160 million to 200 million yuan, a year-on-year increase of 217% to 288%
.
This year's second "big meat sign", behind the IPO break, is also a PE as high as 101.
4 times
.
Second, it is more difficult to break through the science and technology board
.
In February 2021, the China Securities Regulatory Commission issued the "Guidelines for the Application of Regulatory Rules - Information Disclosure of Shareholders of Companies Applying for IPOs", which clearly requires the extension of the lock-up period for new shareholders and emphasizes the completeness and accuracy of information disclosure
.
This reduces the enthusiasm of those private equity investors who enter the pre-IPO round of the company in a short period of time and gain quick profits.
It increases the difficulty of the company's IPO preparation work in the short term, but it ensures the stability of the company's equity structure and is more conducive to long-term operations
.
In April, the China Securities Regulatory Commission issued the revised "Guidelines for the Evaluation of Science and Technology Innovation Attributes (Trial)", and the evaluation index of science and technology innovation attributes became "4+5", which further strengthened and quantified the technological and innovative nature of the requirements of the Science and Technology Innovation Board.
This has caused companies that do not meet the standards to retreat or be rejected directly
.
According to incomplete statistics from Arterial.
com, nearly 20 medical companies will terminate their listing on the STAR Market in 2021, nearly half of which are unprofitable innovative pharmaceutical companies, and the number of companies applying for listing on the STAR Market has decreased by more than half compared with 2020
.
In fact, even if unprofitable innovative pharmaceutical companies are successfully listed, they may face the risk of delisting if they do not have the ability to industrialize in the future
.
In December 2020, the "strictest" new regulations for delisting from the Science and Technology Innovation Board clearly stipulated that within 4 years from the date of listing, the company's revenue must reach 100 million yuan, otherwise it will be delisted
.
For most companies aiming for a long-term business, IPO is an unavoidable growth node, but the future of overseas listing is uncertain, the science and technology innovation board is becoming more stringent, the Beijing Stock Exchange is still new, the GEM is not active enough, and the threshold for the main board is still high At the moment, it is not unfortunate that medical companies are being forced to practice their internal skills
.

Behind the evaporating of nearly 400 billion in new stock market value

Behind the evaporating of nearly 400 billion in new stock market value

After talking about the relative retreat of liquidity and pricing, let’s return to the enterprise value itself
.

An investor once admitted in an interview with the media that for more companies with particularly serious breakouts, a common feature is that their performance is declining
.
In his view, the company's unsatisfactory fundamental performance is another key to the IPO breaking
.
According to the interpretation of China Merchants Securities’ third quarterly report, the performance growth rate of the industry in which the shares are broken has slowed in general, and the company’s third quarterly report is less than expected
.
Take Kefu Medical, which is the first to break the A-share market in 2021, as an example.
Its operating income in the first half of 2021 and the third quarter of 2021 will drop by 10.
50% and 2.
51% year-on-year, and the net profit attributable to the parent company will drop by 20.
97% and 8.
13% respectively.
Near the end, profitability has become the sword of Damocles hanging over the new medical shares
.
Among the medical stocks IPOs in 2021, innovative pharmaceutical companies (15 deals), high-value consumables (15 deals) and biopharmaceuticals (including generic drugs and APIs, 14 deals) are the most popular tracks
.
Among them, similar to the previous year, the average market value of innovative drug IPO projects is still the highest, followed by the IPO of high-value consumables represented by vascular interventional and orthopedic consumables
.
The number of IPOs of biopharmaceutical companies with an average market value of only 1/4 of innovative drugs and 1/2 of high-value consumables will emerge in 2021, and the change in market value is slightly higher than the average (-24.
75%)
.

The situation of the TOP3 sub-sectors in the number of medical IPO events in each capital market in 2021

Among the 15 innovative pharmaceutical companies that will IPO in 2021, 8 are not yet profitable, 6 are high-value consumables, but only 1 biopharmaceutical company is not profitable.
These unprofitable biotech companies contributed to the annual evaporation.
The vast majority of the 400 billion medical new market value
.
Take Kunbo Medical, the first unit of pulmonary intervention, as an example
.
In terms of sales volume, Kunbo Medical ranks first with a market share of 43.
2%; in terms of sales revenue, Kunbo Medical ranks second with a market share of 37.
5%, but it has not yet achieved profitability
.
On the day of the company's debut, the stock price fell 19.
7%.
As of press time, the market value has evaporated by 43.
4%, which is representative of its performance in the capital market
.
The capital market's concerns about Kunbo Medical may also come from not very good growth expectations
.
According to the prospectus, in 2019, the average selling price of each navigation system of Kunbo Medical was US$127,900, and 49 units were sold; in 2020, it dropped to US$119,900, and only 18 units were sold; To $84,900, only 10 were sold
.
The interventional pulmonology market selected by Kunbo Medical is still untapped and small, but with a high growth rate
.

Regarding the navigation system, according to Frost & Sullivan data, in 2020, the market size of China's interventional pulmonology navigation equipment is only 6.
9 million US dollars, or about 44.
6 million yuan, and the sales volume of China's interventional pulmonology navigation platform is only 27 units
.
Growing at a CAGR of 68.
9% from 2016-2020 and expected to reach $189 million by 2025, the ceiling is not high enough
.
The same plot is also being staged in the IPO of innovative drugs
.
The products of Zhaoke Ophthalmology, which was spun off and listed by Li's Pharmaceutical Factory, are basically in the early stage of research and development and clinical testing
.

Among them, there is only one product expected to be commercialized by the end of 2021 - cyclosporine A eye gel, which is an innovative drug for the treatment of dry eye
.
However, the competitive environment of this drug is not optimistic.
Its target product, Restasis2, was launched globally in 2003, and the domestic Xingqi ophthalmic drug "Zirun", a similar product, will also be launched in 2020.
In addition, there are also Heplatinum on the market.
Followers of Medicine, Hengrui Medicine, Weiming Medicine,
etc.
In contrast, the progress of Zhaoke Ophthalmology is not fast
.
On the day of the IPO, Zhaoke Ophthalmology’s share price fell 14.
76%.
As of press time, the market value had shrunk by 63.
6%
.
On the other side of the coin are biopharmaceutical companies IPOs in 2021
.
A common background of these companies is the production capacity of one or more APIs.
With the support of the MAH system and centralized drug procurement, these companies that had little right to speak in the industry chain gradually became stronger and extended downstream.
Sustained profitability and stable management >
.
Take Huiyu Pharmaceutical as an example
.
In November 2018, the state organized the “4+7” drug centralized procurement with volume.
As the only product that passed the consistency evaluation, Huiyu Pharmaceuticals pemetrexed disodium defeated the original manufacturer Eli Lilly with a price reduction of 65%, and won the bid exclusively; And won the bid for centralized procurement in the alliance area
.
So far, Huiyu Pharmaceutical's performance has begun to grow explosively
.
The prospectus shows that in 2018, Huiyu Pharmaceutical's total revenue was only 50.
8975 million yuan; after entering 2019, its performance suddenly exploded, achieving a total revenue of 655 million yuan, an increase of 22.
6 times; by 2020 again A year-on-year increase of 1.
89 times, revenue reached 1.
236 billion yuan
.
In just three years, it has jumped from a ninth-class pharmaceutical company to a medium-sized company
.
Among them, the single product of pemetrexed disodium is the core engine of Huiyu Pharmaceutical's performance, and its revenue from 2019 to 2020 will account for more than 90%
.
In 2020, sales reached 1.
236 billion yuan, accounting for 91.
02% of total revenue
.
Shares of Huiyu Pharmaceutical rose 1.
9% on the day of listing
.
From concept to practice, the sinking of the tuyere is sometimes painful, but it is also a kind of tempering for the enterprise itself
.
In October 2021, Sun Piaoyang, who reappeared after the market value of Hengrui Medicine had evaporated by nearly half, said on a research and development day, "I am purely interested in doing medicine, and I do not pay much attention to the capital market
.
" This statement Although it is sharp, it speaks to the voice of some entrepreneurs
.

At the end of December, with the failure of the Phase III clinical trial of the new crown drug Prokluamide in the United States and its peers to distance themselves from each other, the share price of Kintor Pharmaceuticals fell off a cliff
.
On the same day when the stock price fell back to a year ago, Tong Youzhi, chairman of Kintor Pharmaceuticals, posted a circle of friends.
He said that the next Kintor Pharmaceuticals would be Kintor Pharmaceuticals, and emphasized that Kintor Pharmaceuticals still has two items for non-hospitalization.
International multi-center clinical trials with hospitalized patients are advancing with full force, appearing firm and confident
.

go upstream

go upstream

If we have to talk about the highlights of medical IPOs in 2021, it must focus on the upstream of the biotech industry chain that is stuck
.

Upstream IPOs and market performance of the biotech industry chain in 2021

At the end of June, Nano-Micro Technology was listed, and the first domestic nano-microsphere was born
.
Yiqiao Shenzhou, which focuses on providing a wide range of recombinant proteins, went public in August; Bepsis, which also focuses on recombinant proteins, went public in October, and the domestic enzyme giant Novizan, which IPOed in November, has completed its first IPO against the trend in the capital market.
performance
.
Behind the pursuit of capital are commercial orders that are sufficient to continuously expand production capacity, and technological breakthroughs that have finally been achieved after being stuck for many years
.
Take the microspheres provided by Nano-Micro Technology as an example.
The raw materials required for this reagent are smaller than the diameter of a human hair.
Nano-microspheres usually refer to microspheres with a particle size of 1 to 100 nm.
At this scale, its properties will change.
There are significant changes
.
Precise preparation of microspheres, precise control of particle size, pore size and surface properties of microsphere materials all require very sophisticated technologies
.
After the precision reaches the nanometer and micrometer level, high-performance microspheres are as difficult to manufacture as chips, and it is difficult to achieve technological breakthroughs in a short period of time.
The long-term technological monopoly of overseas companies has resulted in a high degree of monopoly on product supply
.

Previously, domestic biopharmaceutical companies, nuclear power plant water treatment and other fields required microspheres also basically relied on imports
.
Nano Micro Technology is mainly engaged in the localized provision of high-performance microspheres, and the performance is comparable to imported products, so the demand can be imagined
.
What Yiqiao Shenzhou and Novozymes provide are also the urgent needs of downstream innovative drugs and IVD companies
.
For example, at present, Yiqiao Shenzhou produces and sells more than 47,000 kinds of spot products, including more than 6,000 kinds of recombinant proteins, including more than 3,800 kinds of recombinant proteins expressed by human cells, and can also provide about 13,000 kinds of antibodies, of which the number of monoclonal antibodies About 4600 species
.
Its products cover many fields of life science research, providing "one-stop" procurement of biological reagent products and related technologies for basic scientific research directions such as molecular biology, cell biology, immunology, developmental biology, stem cell research, and innovative drug research and development.
channel of service
.
If we go back to the starting point in 2021, the popularity of innovative drugs and high-value consumables above the tuyere will decline.
Some people may guess, but the upstream Nanowei Technology, Yiqiao Shenzhou, and Novozymes have grown rapidly and become medical IPOs throughout the year.
The bright spots outside the gloom are unexpected
.
In 2021, the market value of medical IPOs will evaporate by nearly 400 billion.
The signal to be conveyed is actually the deep digging of real demand and the tempering of product and service supply strength
.