Stricter Regulatory Scrutiny Leads to Multiple Pharma IPO Withdrawals in 2024

　　【Pharmaceutical Network Industry DynamicsRecently, Shanghai Genext Medicine Technology Co., Ltd. and its sponsor, Guotai Securities Co., Ltd., withdrew their application for issuance and listing. The SSE decided to terminate the review of their initial public offering of shares and listing on the STAR Market.
 

Data shows that Shanghai Genext Medicine Technology Co., Ltd. is a provider of medical device products and services in the field of organ transplantation.
 

In this IPO, Shanghai Genext Medicine Technology Co., Ltd. plans to issue no more than 23,467,230 shares, aiming to raise 1.023 billion yuan. The funds will be allocated respectively for the organ transplantation innovation R&D platform project, the localization and upgrade R&D project of kidney transplantation equipment in China, the product registration and promotion project of liver transplantation equipment and in-vitro diagnostic reagents in the transplantation field, the information system construction project, and the supplementation of working capital.
 

In terms of performance, from 2019 to the first quarter of 2022, the performance of Shanghai Genext Medicine Technology Co., Ltd. showed a year-on-year decline. Its operating revenues were 397 million yuan, 421 million yuan, 480 million yuan, and 114 million yuan, respectively, and its net profits were 97.1484 million yuan, 50.0992 million yuan, 49.963 million yuan, and 12.1969 million yuan, respectively.
 

It is worth mentioning that this is already the company's second termination of the STAR Market IPO. Previously, it had applied for the STAR Market IPO in April 2020 and withdrew the application in December 2020. Its second IPO application was accepted on November 24, 2022, with two rounds of inquiry responses completed and one version of the prospectus published, but the application was withdrawn on April 22, 2024.
 

Looking at the IPO situation of companies in China's pharmaceuticals industry, apart from Shanghai Genext Medicine Technology Co., Ltd., on February 5th not long ago, the Shanghai Stock Exchange announced that Peng Li Biomedical Technology (Shanghai) Co., Ltd. and its sponsor had withdrawn their application for issuance and listing, and the Shanghai Stock Exchange terminated its review of the issuance and listing. The company originally planned to raise 601 million yuan, which would be used respectively for the Jinqiao Preclinical R&D Service Industrial Base Project, the Innovative R&D Platform Project, the Zhangjiang Preclinical Service Industrial Base Technical Renovation and Upgrade Project, and replenishment of working capital. In addition, other pharmaceutical enterprises such as Largev Instrument Corp.,ltd., AI KANG, Zumax Medical Co.,Ltd., and Nanjing Shihe Gene Biotechnology Co., Ltd. also announced the termination of their IPOs within the year.
 

According to industry statistics, the number of companies that have had their IPO review terminated has significantly increased since 2024. As of April 21, a total of 120 companies have halted their listing process, involving the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE), and Beijing Stock Exchange (BSE). Specifically, the SSE saw 40 companies terminate their review (24 from the Main Board and 16 from the STAR Market), the SZSE had 49 companies (14 from the Main Board and 35 from the ChiNext), and the BSE recorded 31 companies.
 

The analysis pointed out that this is mainly related to the strict scrutiny of corporate quality by the current regulatory environment, as well as the operational pressures or strategic adjustment needs faced by some enterprises under market conditions.
 

It is reported that since the "827 New Policy" last year, IPO and refinancing policies have been continuously tightened. On March 15, the CSRC issued the "Opinions on Strictly Controlling the Access to Issuance and Listing to Improve the Quality of Listed Companies from the Source (Trial)," proposing eight policy measures, including strictly controlling the quality of proposed listed companies' applications,压实intermediaries' "gatekeeper" responsibilities, and highlighting the main responsibility of stock exchange reviews. On April 12, the "National Nine Measures" were issued, imposing higher requirements on securities firms' investment banking businesses. Among these, it requires improving the quality and efficiency of issuance and listing guidance, expanding the coverage of on-site inspections for companies under review and related intermediaries; further压实the primary responsibility of issuers and intermediaries' "gatekeeper" responsibilities, establishing a "blacklist" system for intermediaries; adhering to the principle of "responsibility upon submission," severely investigating illegal activities such as fraudulent issuance; and increasing regulatory efforts on issuance and underwriting.
 

Disclaimer: Under no circumstances shall the information or opinions expressed in this article constitute investment advice to any person.