The Suns, rising

Hansoh’s IPO boosts top pharma pairing


Gleevec, a drug for treating leukemia, wasn’t well known until the hit movie Dying to Survive featured it last year. The social satire, which drew attention to the issue of unaffordable medicines in China, also raised awareness of the potential of the generic drug market (see WiC418). So when another company presented itself as the maker of a widely sought alternative to Gleevec in China, investor interest was almost guaranteed. So much so that its boss became the country’s second richest woman after the listing.

Hansoh Pharmaceutical Group sold its $1 billion IPO at the top end of its indicative pricing, and its Hong Kong-listed shares skyrocketed 37% on their maiden trading day last Friday. Backed by Singapore’s sovereign wealth fund GIC, Boyu Capital, Hillhouse Capital and six other seasoned investors, the deal gave the Jiangsu-based company a market capitalisation of over HK$112 billion ($14.3 billion), topping sizeable peers such as Sino Biopharmaceutical and CSPC Pharmaceutical Group in value.

Hansoh’s 58 year-old founder Zhong Huijuan holds a 68% stake, and her net worth has swollen to $9.7 billion from $1.6 billion in less than six months, according to Forbes.

Zhong’s paper wealth ranks her behind only Country Garden’s Yang Huiyan, who inherited her fortune from her father’s property empire.

Zhong was originally a chemistry teacher at a local high school in Lianyungang, a prefecture-level city in Jiangsu province. In 1996 she joined Hansoh, an enterprise established by her husband Sun Piaoyang, so that he could focus more of his attention on Jiangsu Hengrui Medicine, another pharma firm.

The following year she was at the helm as Hansoh developed its first proprietary blockbuster drug Meifeng. Hansoh committed 11% of its revenues last year to research and development, having developed 14 key products categories including oncology, diabetes and cardiovascular complaints. It says it has nearly 100 drugs in its development pipeline.

Hansoh has also been China’s largest psychotropic pharmaceutical company by sales since 2014, commanding 9.2% of the market last year. Oulanning, a generic of olanzapine for treating schizophrenia and bipolar disorder, was its best-selling single product, bringing in Rmb1.79 billion ($261 million) in sales, or 23% of its total revenue, in 2018.

More of its income is going to come from oncological treatments, which made up 46% of Hansoh’s sales last year. Of the 15 high-growth products it is going to launch by 2020, four are related to cancer treatments. The shift is partly due to the expected growth in cancer cases, which Hansoh expects to expand at an annual rate of 15% in the five years to 2023. The other reason is the strong affiliation between Hansoh and her husband’s Hengrui Medicine. Shanghai-listed Hengrui was one of the first companies to produce PD-1 checkpoint drugs, a groundbreaking therapy which helps boost immune responses against cancer cells.

“Hansoh is often seen as shadowing Hengrui. They work closely together with much similarity in their business models and offerings,” commented China Business Journal, a publication run by the Chinese Academy of Social Sciences. “Although they both deny [the partnership], there are frequent overlaps between their drug licences, product development process, and sales channels,” it added.

Government bulk-buying rules and new contracting arrangements launched last year have contributed to an average 52% drop in prices for 31 specified generic drugs. However, companies that win the rights to major contracts will be guaranteed purchase allocations from 11 major cities that account for about a third of China’s drug market. Hansoh and Hengrui are thought to stand a decent chance of scooping up the increased volumes. Investors seem to agree.

Last year the pharma couple ranked 20th on Hurun’s China rich list with combined wealth of Rmb82.5 billion. As their companies are now collectively worth around Rmb400 billion, they will be climbing into the top 10 this year with a net worth of Rmb120 billion, noted Tencent News.

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