Frost & Sullivan, TradeGo, and LeadLeo jointly released the 'Blue Book on the Development of the Hong Kong Stock Market's 18A & Sci-tech Innovation Board Biotech Industry in 2023' (with full access available upon purchase)

Thank you to Cornerstone Pharmaceuticals, Yasheng Medicine, Peijia Medical, Yongtai Biotech, Beikang Medical, Yahong Medicine, Lepu Biotech, Shouyao Holdings, Sidimi Medicine, Bao'an Biotech, and Lvxu Biotech for their support of the "Blue Book on the Development of the Biotechnology Industry in Hong Kong's 18A & Sci-Tech Innovation Board Markets in 2023".

From right: Dr. Yang Jianxin, CEO and Executive Director of Cornerstone Pharmaceuticals; Ms. Liu Zheng, Head of Capital Markets at Lüzhú Biology; Ms. Cheng Xi, IR Manager at Beikang Medical; Mr. Mao Hua, Partner and Managing Director of Frost & Sullivan Greater China Region

The Hang Seng Hong Kong Listed Biotechnology Index (HSHKBIO.HI) selects listed companies in the biotechnology, pharmaceuticals, and healthcare equipment sectors of the Hang Seng Industry Classification, as well as companies listed through the Hong Kong Stock Exchange's Rule 18A, aiming to reflect the overall performance of Hong Kong-listed biotechnology companies.

Biotechnology includes three sub-industries under the healthcare category of the Hang Seng Industry Classification System: pharmaceuticals, biotechnology, and healthcare equipment. The index constituent stocks gather leading enterprises in the domestic biotechnology industry. As of 2022, the Hang Seng Hong Kong Biotechnology Index included a total of 66 constituent stocks, among which 22 biotechnology companies had the word 'B' at the end of their company names for identification. The Hong Kong Exchanges and Clearing Limited revised the Main Board listing rules in April 2018 by introducing new listing regulations for Biotechnology Companies (18A), allowing biotechnology companies that meet certain conditions and have no revenue or profit to list on the market. As a result, many innovative pharmaceutical companies, innovative medical device companies, and biotechnology companies have completed 18A listings on the Hong Kong stock market.

Source: Analysis by Frost & Sullivan

After liquidity screening, the SSE Sci-Tech Innovation Board Biomedical Index selects securities of 50 listed companies in the fields of biomedicine, biomedical engineering, bio-agriculture, biomass energy, and other biological industries with large market capitalization from the Sci-Tech Innovation Board market as index samples, in order to reflect the overall performance of securities of listed companies representing representative biomedical industries in the Sci-Tech Innovation Board market.

In the long run, the pharmaceutical industry is a star industry worthy of investment. During the '14th Five-Year Plan' period, a new development pattern featuring a domestic large cycle as the main body and mutual promotion between international and domestic dual cycles is accelerating its formation, and the domestic biopharmaceutical market has entered a stage of high-quality development. The new development stage also sets higher requirements for the biotechnology industry, urgently necessitating accelerated innovation-driven transformation to provide strong support for building a new development pattern. Biopharmaceuticals are a strategic emerging industry of the country and one of the core areas supported by the Sci-Tech Innovation Board. A certain scale and characteristics have been formed, attracting many representative biotechnology enterprises to list on the Sci-Tech Innovation Board. Biopharmaceuticals are also one of the industry themes with the most outstanding overall profitability on the Sci-Tech Innovation Board.

As of August 31, 2023, the Sci-Tech Biotech Index has performed better than the Sci-Tech 50 Index during the same period. Specifically, the relative excess return over the Sci-Tech 50 Index during the same period exceeded 15.0% (non-annualized).

Source: Analysis by Frost & Sullivan

The 'Blue Book' provides a detailed analysis of the index performance, market value, and sub-industries of the Hong Kong stock market's 18A/Sci-Tech Innovation Board biotech sector, company list, valuation levels and performance in 2023, as well as the investment and financing environment. For more detailed content, please refer to the full report.

Source: Analysis by Frost & Sullivan

From 2017 to 2021, the market scale of China's pharmaceutical industry increased from 1.4304 trillion yuan to 1.5912 trillion yuan, with an annual compound growth rate of 2.7%. However, it slightly declined in 2020 due to the impact of the COVID-19 pandemic. In the future, China's pharmaceutical market will expand at a rate exceeding that of the global pharmaceutical market. The annual compound growth rates from 2021 to 2025 and from 2025 to 2030 are expected to reach 6.7% and 5.8%, respectively, with market scales increasing to 2.0645 trillion yuan and 2.7390 trillion yuan in 2025 and 2030.

The 'Blue Book' conducts an in-depth analysis of the market scale and driving factors of biomedicine in China. It elaborates on small molecule chemical drugs, antibody drugs, human vaccines, nucleic acid drugs, peptide drugs, cell and gene therapy drugs, etc., from dimensions such as product characteristics, market scale, and development trends. It also analyzes five major hot tracks: anti-tumor drugs, digestive tract and metabolic drugs, cardiovascular drugs, systemic anti-infective drugs, and central nervous system drugs. The book elaborates on these from dimensions such as industry introduction, development drivers, development trends, and market scale. For more detailed content, please refer to the full report.

The development of the medical device market in China started relatively late but has been developing at a rapid pace. From 2017 to 2021, the scale of the Chinese medical device market increased from 440.3 billion yuan to 843.8 billion yuan, with a compound annual growth rate of 17.7%. It is estimated that by 2025, the scale of the Chinese medical device market will reach 1244.2 billion yuan, and by 2030, it will further expand to 1660.6 billion yuan.

The 'Blue Book' conducts an in-depth analysis of the scale and driving factors of China's medical device market. It elaborates on various aspects such as basic concepts, product characteristics, market scale, and development trends, focusing on in vitro diagnostics, medical imaging equipment, cardiovascular interventional devices, orthopedic devices, ophthalmic devices, dental devices, surgical robots, and artificial intelligence (AI)-enabled medical imaging. For more detailed content, please refer to the full report.

Pre-listing financing can not only solve the financial difficulties faced by enterprises during production and R&D but also directly reflect the value of the company's R&D pipeline at each R&D milestone, thereby driving up the company's valuation. As of August 31, 2023, 60 18A companies have gone public (12 companies have had their -B flag removed, and all with a -B flag are restored in the statistical analysis below), and among the listed 18A companies (excluding Chinese concept stocks returning to the market), they have all undergone financing at varying rounds before going public. This not only complies with the listing rules for 18A companies set by the Hong Kong Stock Exchange but is also closer to the actual situation of 18A companies in production and operation.

As shown in the chart below, among the listed 18A companies, those with a pre-listing valuation growth rate between 10 and 50 times had the most data. Most of these companies had 2 to 6 rounds of financing before listing, totaling 50 companies, accounting for 86.21% of all 18A companies.

Source: Analysis by Frost & Sullivan

The 'Blue Book' provides an in-depth analysis of the situations of 18 A-share listed companies and the fifth batch of companies on the Sci-tech Innovation Board in Hong Kong from three stages: pre-exhibition, during the exhibition, and post-exhibition. For more detailed content, please refer to the full report.

The 'Blue Book' analyzes the 18 A-listed companies and the fifth batch of companies on the Sci-tech Innovation Board in Hong Kong from dimensions such as basic company information, development history, competitive advantages, product pipeline, and core products, in chronological order of listing. For more detailed content, please refer to the full report.