Financial Services Association, October 24 (Reporter He Fan) Is “Pharmaceutical Brother” about to go public in Hong Kong? There was news yesterday evening that Hengrui Pharmaceutical (600276.SH) is considering going public in Hong Kong for the second time next year. The news attracted widespread attention. A Financial Services Association reporter sought evidence from Hengrui Pharmaceutical on this matter, and the company responded that it “does not comment.”

Although Hengrui Pharmaceutical did not respond positively to the news, it still attracted a great deal of attention. Some industry insiders told the Financial Federation reporter that making innovative drugs requires a large amount of capital. The main purpose of going public in Hong Kong for the second time is financing, but due to the relatively low valuation level of the Hong Kong stock market and potential capital diversion issues, etc., it may put some pressure on A-share prices. Meanwhile, the company's A-share price closed down 4.3% this morning.

There was a market rumor yesterday evening that Hengrui Pharmaceutical may go public for the second time on the Hong Kong Stock Exchange in 2025 and may raise at least 2 billion US dollars. Furthermore, media reports say that according to people familiar with the matter, the company is currently discussing stock issuance matters with consulting agencies. The scale of financing will depend on market conditions, and may be carried out as soon as next year.

“A large amount of capital has been invested to make innovative drugs, but the benefits are uncertain.” In an interview with a reporter from the Financial Association, a private equity source said that Hengrui Pharmaceutical plans to go public in Hong Kong mainly for the purpose of financing. Raising capital through issuing shares will help strengthen its financial strength. At the same time, listing on the Hong Kong Stock Exchange can attract more international attention, thereby increasing the company's influence overseas and promoting the company's innovative drug development and market development process.

Currently, Hengrui Pharmaceutical is vigorously developing innovative drugs. According to semi-annual reports, the number of innovative drugs that the company has marketed and is currently developing is among the highest in the country. Fourteen self-developed innovative drugs, 2 innovative drugs introduced collaboratively have been approved for marketing in China, and more than 90 independent innovative products are undergoing clinical trials. In the first half of this year, 13 innovators independently developed by Hengrui Pharmaceutical entered the clinical phase. Drug types include small-molecule chemicals, antibodies, and ADCs, covering the treatment of various diseases such as tumors, self-immunity, and respiratory diseases. In the first half of this year, the company's innovative drug revenue was 6.612 billion yuan (tax included, not including foreign licensing revenue) and 0.16 billion euros in foreign licensing revenue. The sum of the two innovative revenues already accounted for more than half of the total revenue.

In contrast, Hengrui Pharmaceutical's R&D expenses have also “soared”. The semi-annual report shows that the company's R&D investment in the first half of the year reached 3.038 billion yuan, an increase of 30.30% over the same period last year.

In the secondary market, Hengrui Pharmaceutical's recent stock price performance has not been as good as expected. Since October 8, the decline has exceeded 16%. In early trading today, the company's stock price fell by more than 5.58%. By the midday close, the stock price had dropped 4.30%.

“There are more institutional investors, few retail investors, and there is not enough liquidity in A-shares.” Regarding this, the private equity sources mentioned above believe that if listed on the Hong Kong Stock Exchange, the stock price may be cheaper than A-shares, which will put some downward pressure on A-share prices, causing A-share prices to face adjustment problems. Furthermore, after listing in Hong Kong, some shareholders of the company may use the stock prices of the two markets to carry out arbitrage operations. Another second listing may cause capital diversion. In particular, some international institutions prefer to participate in the Hong Kong stock market, and capital investment in the A-share market will decrease.