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Chen Qiyu: Stimulating Market Vitality with the System, Promoting Rapid Development of the Biopharmaceutical Industry with Innovation

Hong Kong Exchanges and Clearing Limited’s (HKEX) Biotech Summit 2022 came to a successful conclusion on 1 September. The summit attracted more than 36,000 corporate representatives and investors from the healthcare industry to jointly explore the future of the global healthcare and biotechnology industries.

Four panel discussions were held at the summit, and a number of industry experts discussed on topics such as how healthcare can connect China and the world,  opportunities and challenges in capital markets, and the latest developments in the healthcare industry.

Chen Qiyu, Co-CEO of Fosun International, as the Rotating Chairman of China Healthcare Investment 50 Forum (“H50”, managed by the China Pharmaceutical Enterprises Association, and  the Equity and Venture Capital Professional Committee of the Investment Association of China) was invited to join the summit and deliver a keynote speech.

Chen Qiyu analyzed the development of the healthcare industry over the years, by means of timelines. He mentioned that:

Prior to 2018, the correlation between the HKEX and biopharmaceutical innovation was not high enough. At that time, most of the biopharmaceutical companies listed on HKEX were mature domestic biopharmaceutical companies. As time went by, HKEX launched Chapter 18A in April 2018 to allow pre-revenue innovative biopharmaceutical companies to be listed on HKEX, which has greatly promoted the development of China's biopharmaceutical industry, and has also made the HKEX the second largest innovative biopharmaceutical listing platform in the world. Following HKEX’s launch of Chapter 18A, the establishment of the Shanghai Stock Exchange’s Science and Technology Innovation Board (SSE STAR Market) in 2019 has further promoted the pace of listing of biopharmaceutical companies in the innovation process in China. At the same time, the front-end investment and financing capabilities of biopharmaceutical industry have also been greatly strengthened. After HKEX's implementation of Chapter 18A, a number of VC funds investing in innovative biopharmaceutical companies that aim to be listed on HKEX, have been established in China. HKEX’s implementation of Chapter 18A marks a milestone in the innovation of China's biopharmaceutical industry and has brought new vitality to the development of the biopharmaceutical industry.

More than four years after HKEX’s implementation of Chapter 18A, China's biopharmaceutical industry has undergone substantial changes. Thanks to the state's support for innovation, the adjustment of medical insurance policies and the timely inclusion of innovative products, etc. In the past, it took a very long process for innovative drugs of Chinese biopharmaceutical companies to be included in the medical insurance. After listing on HKEX, products of many biopharmaceutical companies, which were in the research and development process before listing, have been approved for launch in China. In addition, some products have been approved for launch in the United States and globally. Such a move has also attracted the influx of a large number of talents, which has not only led to a quantitative increase in China's biopharmaceutical innovation, but we are also delighted to see that the quality of China's biopharmaceutical innovation has improved very quickly.

Recently, we often hear about the "involution" of China's biopharmaceutical innovation, the crowded industry, and the frustration of products getting approvals overseas, which greatly affected the market capitalization of innovative biopharmaceutical companies. However, after such process, China's innovative biopharmaceutical companies will surely move towards a higher-quality of development, follow the path of global development, and take the road of connecting their products with global mainstream biopharmaceutical companies. There will be more capital market momentum in the Hong Kong capital market and biopharmaceutical stocks.

Under Chapter 18A, not only a number of small and medium-sized companies have emerged, but large-cap biopharmaceutical companies, and companies with billions or even tens of billions of dollars have emerged as well. In the future, the Chapter 18A in Hong Kong will very likely spawn and incubate innovative biopharmaceutical companies that are based in China with global ambitions and a market capitalization of tens of billions of dollars or even hundreds of billions of dollars. These listed companies have the characteristics of innovation and internationalization from the beginning: many innovative biopharmaceutical companies are founded by teams of returning Chinese scientists from overseas, forming very international and global entrepreneurial teams with global ambitions from the first day of R&D achievements. Among the 18A listed companies, there are already quite a few companies whose products are active in global markets such as the United States and Europe through BD and license-in/out, and have formed ties with the world's mainstream innovative pharmaceutical companies. In the future, innovative biopharmaceutical companies listed in Hong Kong will inevitably develop, jointly develop, merge and reorganize in the global innovative pharmaceutical market just like global innovative pharmaceutical companies.

Chen Qiyu also mentioned that organizations such as H50 are active and major investment organizations supporting Hong Kong-listed innovative biopharmaceutical companies, bringing together China's first-class investment institutions and investors to support biopharmaceutical innovation. Most of the biopharmaceutical companies listed in Hong Kong are backed by investment teams and investors from H50.

Chen Qiyu said that HKEX has become the "preferred platform" for many Chinese innovative biopharmaceutical companies to undertake initial public offering (IPO), "this is mainly due to the continuous improvement, evolution and progress of the capital market system in Hong Kong, which allows a more inclusive, quicker and convenient acceptance of these listed companies.  I sincerely wish the Hong Kong biopharmaceutical market a mature, sustainable and rapid development.”

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