Hengrui Pharma’s HK$9.89 Billion IPO: A Strategic Move to Cement Global Pharmaceutical Leadership

IPO Details

• Purpose of IPO: Hengrui Pharma aims to raise up to HK$9.89 billion (US$1.27 billion) through its Hong Kong listing. The proceeds are allocated as follows:

  • Approximately 45% for funding clinical studies of innovative drugs and candidates.

  • Around 20% for developing new innovative drugs.

  • The remaining funds for constructing new production and R&D facilities in China and overseas, and for general corporate purposes.

• Oversubscription: The IPO has garnered significant interest, with cornerstone investors subscribing to a substantial portion of the offering.

IPO Placement and Outstanding Shares

• Shares Offered: 225 million shares globally, with 12.3 million shares allocated for Hong Kong retail investors.

• Price Range: HK$41.45 to HK$44.05 per share

• Expected Listing Date: May 23, 2025.

• Market Capitalization: Post-IPO market cap is projected to be around HK$273.7 billion.

Given the strong investor interest and the company’s robust financials, the IPO is likely to perform well on its first day of listing.

Institutional and Anchor Investors

• Cornerstone Investors: The IPO has attracted several prominent cornerstone investors, including:

  • GIC

  • Invesco Advisers

  • UBS Asset Management Singapore

  • Cordial Solar

  • Hillhouse

  • Millennium

  • Oaktree

These investors have collectively subscribed to shares worth approximately US$533 million.

Investment Banker, Underwriter, and Sponsors

• Joint Sponsors: Morgan Stanley, Citi, and Huatai International.

The involvement of these reputable financial institutions adds credibility and is likely to positively influence the IPO’s performance.

Company Overview

• Business Model and Industry: Hengrui Pharma is a leading innovative pharmaceutical company in China, focusing on R&D, production, and sales of high-quality drugs. The company specializes in therapeutic areas such as oncology, metabolic and cardiovascular diseases, immune and respiratory diseases, and neuroscience.

• Financial Health:

  • Revenue (2024): Approximately RMB 7.21 billion.

• Market Position: Hengrui Pharma is recognized as one of China’s most innovative pharmaceutical companies, with a strong presence in both domestic and international markets.

• Management Team: Key members include:

  • Cheng Liao – Vice President

  • Brahmaiah Kommanaboyina – Executive Director and Head of US Regulatory Affairs

  • Jerry Su – CEO of Suzhou Suncadia Biopharmaceuticals Co., Ltd.

6. Market and Economic Factors

• Sector Trends: The global pharmaceutical industry is experiencing significant growth, driven by increased demand for innovative treatments and an aging population

• Timing of IPO: The IPO is scheduled for May 23, 2025, aligning with a period of strong market interest in healthcare and biotech sectors.

• Economic Environment: Despite global economic uncertainties, the healthcare sector remains resilient, with continued investments in R&D and innovation.

• Risk Factors:

  • Regulatory challenges in international markets.

  • Dependence on the success of clinical trials.

  • Competition from other global pharmaceutical companies.

• Growth Strategy: Hengrui Pharma plans to utilize the IPO proceeds to fund clinical studies, develop new drugs, and expand its production and R&D facilities both in China and overseas.

• Ownership Structure: Post-IPO, the company’s ownership structure will include significant holdings by cornerstone investors, reflecting strong institutional confidence.

📊 Financial Metrics Comparison

📝 Notes:

• Market Capitalization: Jiangsu Hengrui Pharmaceuticals leads with approximately $47.3 billion, followed by BeiGene at $24.68 billion and Innovent Biologics at $8.51 billion.

• Profitability: Hengrui stands out with a positive net margin of 23.44% and a solid ROE of 14.02%, indicating strong profitability and efficient use of equity. In contrast, both BeiGene and Innovent Biologics are currently operating at a loss, as reflected in their negative net margins and ROEs.

• Valuation: Hengrui’s P/E ratio of 49.87 suggests that investors are willing to pay a premium for its earnings, possibly due to its consistent profitability and growth prospects. BeiGene and Innovent Biologics have negative P/E ratios, which is typical for companies that are not currently profitable.

• Revenue Growth: Hengrui reported a year-over-year revenue growth of 20.10%, showcasing its expanding operations. Revenue growth data for BeiGene and Innovent Biologics is not specified in the available sources.

• Leverage: All three companies maintain low debt-to-equity ratios, with Hengrui at 0.23, BeiGene at 0.32, and Innovent Biologics at 0.22, indicating prudent financial management and a lower risk profile.

Jiangsu Hengrui Pharmaceuticals demonstrates strong financial health with consistent profitability, solid revenue growth, and efficient use of equity. Its positive financial metrics and market leadership position it favorably among its peers. BeiGene and Innovent Biologics, while having significant market capitalizations, are currently operating at a loss, which is common in the biotech industry due to substantial R&D investments. Investors may view Hengrui as a more stable investment, whereas BeiGene and Innovent offer potential high-growth opportunities with higher associated risks.

IPO Allotment Result

The IPO has attracted significant interest from cornerstone investors, indicating strong demand and a positive outlook for the stock’s performance on its first day of listing.

Investment Recommendation and Price Estimate

Given the company’s strong market position, robust R&D pipeline, and substantial investor interest, the IPO appears to be a promising investment. The stock is expected to trade at or slightly above its IPO price range of HK$41.45 to HK$44.05 on the first day of listing.

11. Prospectus Download

The IPO prospectus can be downloaded from the Hong Kong Stock Exchange’s website:Reuters

• Hengrui Pharma IPO Prospectus

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