Hengrui Medicine Plans to Go Public in Hong Kong, Innovative Drug Revenue Soars!

On January 6, 2025, the Hong Kong Stock Exchange (HKEX) announced on its official website that Hengrui Medicine has submitted a listing application to the HKEX. The joint sponsors for this listing application are Morgan Stanley, Citi, and Huatai International.

According to Hengrui Medicine's prospectus, the company is a global leading innovative pharmaceutical enterprise rooted in China. Since 2019, Hengrui Medicine has been selected for six consecutive years in the Pharmaceutical Executive magazine’s list of the Top 50 Global Pharmaceutical Companies. In the 2024 Citeline list of the Top 25 Global Pharmaceutical Companies by Pipeline Size, Hengrui Medicine ranked eighth.

Additionally, according to Frost & Sullivan, based on the revenue from new molecular entity innovative drugs in 2023 and the number of new molecular entities in clinical and later stages as of the last practicable date, Hengrui Medicine ranks among the top in Chinese pharmaceutical companies, demonstrating its significant achievements in innovation.

Since its listing on the A-share market in 2000, Hengrui Medicine has built a large and differentiated portfolio of innovative drugs through continuous investment in R&D and a focused spirit of innovation, including several potential blockbuster products.

Hengrui Medicine's commitment to innovation is reflected in its financial investment, with 21.7% of total revenue allocated to R&D expenses in 2023.

Moreover, Hengrui Medicine is dedicated to providing substantial returns to its shareholders. Since its A-share listing, the company has distributed approximately RMB 8.029 billion in cash dividends, equivalent to 16.8 times the funds raised during its A-share listing, marking its only capital market financing to date.

As of the last practicable date, Hengrui Medicine has 17 marketed new molecular entity innovative drugs and over 90 new molecular entities in clinical and later stages under development.

Hengrui Medicine is expected to maintain a strong momentum in the approval and launch of innovative drugs. For example, in 2024, the company submitted eight new drug applications (NDA/BLA) for innovative drugs.

As further evidence of Hengrui Medicine's R&D achievements and efficiency, between 2022 and 2024, the company's products and pipeline were featured in 1,019 peer-reviewed papers published in top international academic journals such as The Lancet, The British Medical Journal, JAMA, Nature Medicine, and Clinical Oncology, with a cumulative impact factor of approximately 7,173.

In terms of finances, Hengrui Medicine's total revenue in 2023 reached RMB 22.8 billion, with a compound annual growth rate of approximately 14% since 2013, far exceeding the global pharmaceutical market's growth rate of about 4% during the same period.

Furthermore, innovative drugs have become the main source of Hengrui Medicine's revenue. The percentage of sales revenue from innovative drugs increased from 38.1% in 2022 to 43.4% in 2023, further rising to 47.7% for the nine months ending September 30, 2024.

Hengrui Medicine's robust profitability and strong cash flow enable it to continue investing in R&D activities, driving long-term sustainable growth and creating a virtuous cycle. The company’s net profit margin increased from 17.9% in 2022 to 18.7% in 2023, and further to 22.9% for the nine months ending September 30, 2024.

During the same period, Hengrui Medicine's operating cash inflows were RMB 1.2653 billion, RMB 7.6437 billion, and RMB 4.5854 billion, respectively.

By the end of 2024, the Hong Kong pharmaceutical stocks have shown signs of recovery. It is hoped that Hengrui Medicine's successful re-listing in Hong Kong, 20 years after its A-share listing, will bring a good start to the entire Hong Kong pharmaceutical sector in 2025.