Chinese drugmaker Hengrui raises billions in IPO: "A good day for the IPO market"

CGTN Europe interviewed Santosh Rao, Manhattan Venture Partners Head of Research

Transcript

00:00Shares in one of China's largest pharmaceutical companies, Jiangsu Hongrui, rose by 25% after its trading debut on the Hong Kong Stock Exchange.

00:10The company raised almost $1.3 billion, which will be used to support clinical trials and expand production capacity.

00:17The strong debut suggests that investor confidence in the firm's long-term prospects.

00:23Well, Santosh Rao is Head of Research at Manhattan Venture Partners. Good to see you again, Santosh. Welcome back.

00:27So we're looking at what is the largest healthcare IPO in nearly five years, aren't we?

00:33What does that say about investor confidence?

00:36Absolutely. I think this was a good day for the IPO market in general, but a great day for the Hong Kong IPO market.

00:43I think there's tremendous pent-up demand, and post the pandemic, healthcare and also positive policy initiatives have helped that whole space,

00:55the pharma and healthcare industry. So I think you will see a lot more.

01:00These are companies out there that have a number of clinical trials going on, a lot of commercial drugs, and they're profitable.

01:07This one is. So I think a tremendous interest, says a lot about everything, says a lot about the positive sentiment in there,

01:15the risk capital coming out, pent-up demand. And I think this is a great commentary on what's to come down the line.

01:21So do you think this is about this particular company being popular, doing well, or is it the pharmaceutical sector,

01:27the Chinese pharmaceutical sector more broadly?

01:31Yeah, I think it's the beginning. This one is a premier company.

01:35I mean, it has tremendous, the financials are good, and the outlook is good, and the company is a solid company.

01:41But I think what it does, it sets the trend, sets the pathway. It opens up the mindset and brings out the risk capital.

01:50If this can do well, which it did, I think you'll see a lot more behind it.

01:55And it shows that good policy, constructive policy, friendly policy helps.

02:01It's going to help the whole industry. So there are a lot of other companies behind it.

02:05I think China is a leader in the research going on in R&D, in the pharmaceutical sector.

02:11And in Asia, it's the biggest market, and it's a growth engine of the Asian, in the biomedical space and all that, health sciences.

02:19So I think all this is great. It's a combination of good company performance, good demand, good R&D work going on in China itself,

02:28plus good, positive policy initiatives by the government.

02:33I think it's a combination of both that's really producing good results.

02:37What about Hong Kong itself as a place to list? We know it perhaps hasn't been doing quite so well in that area.

02:43Do you see this as a turning point, perhaps, for IPOs on the Hong Kong Stock Exchange?

02:48Yes. I mean, one deal, two deals doesn't make a trend, but this is definitely a positive sign.

02:54Hong Kong is a great market. It has great – you saw this IPO itself.

03:00There was tremendous institutional interest in there. It was fully subscribed.

03:05So it shows that there is interest. Institutions are interested. International investors are interested.

03:11And that's the beauty of Hong Kong, that not only does it attract the Chinese mainland investors,

03:16it has a huge global input as well.

03:19So I think in that sense, Hong Kong is a big beneficiary, always was, sitting at a good, sweet spot of investments.

03:27So people coming in from international and locally.

03:30So it's really taking advantage of that.

03:33It's a great market. It needs more of these.

03:36And I'm sure you'll see, I think, the last I read, there are 80-plus companies in the pipeline to come this year,

03:41which is a great sign that things will pick up more as this – I think this one sets the trend going forward.

03:49And you also saw the battery company do very well.

03:51So NetNet, I think, is a great start for the year, and you will see more and more coming down the line.

03:57Santosh, great to talk to you as always.

03:59Thank you for coming on. That's Santosh Rao from Manhattan Venture Partners.