Three Pharma Firms Halt IPOs Last Week; Xinjie High-Tech Warns of Rising Academic Promotion Expenses

　　【Pharmaceutical Network Medical Stock MarketOn the evening of January 19, two more IPO application companies had their reviews terminated: Chengjie Intelligence from the SSE STAR Market and Giantech Hi-technology from the SZSE Growth Enterprise Market. Among them, Giantech Hi-technology is a pharmaceutical company mainly engaged in chemical drug preparations and chemicals.APIAndPharmaceutical IntermediatesChengdu Giantech Hi-technology Development Co., Ltd. is engaged in the research and development, production, and sales of products, and also provides technical services externally. As of the date of the signing of the prospectus, Giantech Hi-technology holds 11 drug registration certificates and 15 approved raw material drug registration numbers for use in marketed formulations.
 

It is reported that Giantech Hi-technology Development Co., Ltd. submitted its prospectus in June 2023, preparing for an IPO on the ChiNext Board. In this attempt to go public, Giantech Hi-technology Development plans to raise 1.2 billion yuan, which will be used for projects including the construction of a specialized formulation industrialization base, the headquarters and R&D pipeline platform construction project, a high-end chemical API industrialization base, and the Giantech information system construction project.
 

From the financial data, the company's growth is undoubtedly high. During the reporting period (2020 to 2022), the compound annual growth rate of the company’s operating revenue reached 111%, and the compound annual growth rate of net profit excluding non-recurring items reached 112%.
 

According to the data, in 2020, 2021, 2022, and the first half of 2023, the revenue of Chengdu Giantech Hi-technology Development Co., Ltd. was 65.9724 million yuan, 108 million yuan, 283 million yuan, and 353 million yuan respectively, with net profits of 13.9549 million yuan, 25.6895 million yuan, 61.5243 million yuan, and 106 million yuan respectively. After deducting non-recurring gains and losses, the net profits were 13.6005 million yuan, 21.9691 million yuan, 61.1787 million yuan, and 104 million yuan respectively. It is reported that in 2020 and 2021, the main business income of Chengdu Giantech Hi-technology Development Co., Ltd. mainly came from chemical raw materials and pharmaceuticals.IntermediateBusiness: Mainly from the chemical pharmaceutical preparations business in the 2022 fiscal year and the first half of 2023.
 

However, at the same time, Giantech Hi-technology also incurred high sales expenses. During the reporting period, the company's sales expenses were 985,200 yuan, 13,641,400 yuan, 116 million yuan, and 163 million yuan, respectively, accounting for 1.49%, 12.68%, 41.02%, and 46.16% of operating revenue. The company’s sales expenses mainly consisted of academic promotion fees.
 

Chengdu Giantech Hi-technology Development Co., Ltd. stated in its prospectus that the academic promotion expenses mainly resulted from the commencement of sales of chemical drug preparations in 2021, with continuous increased efforts in sales promotion. In the future, if the promotion effects of the company's cooperative promotion service providers fail to meet expectations and market competition intensifies further, there may be a risk of continued increase in its academic promotion expenses, which could adversely affect the company’s performance.
 

In the industry, it is noted that in 2020, Chengdu Giantech Hi-technology Development Co., Ltd.'s academic promotion expenses were still 0 yuan. By 2022, this expense had grown to 107 million yuan, accounting for 93.99% of the current period's sales expenses and nearly 40% of the same period's operating income. In 2022, Giantech’s sales expenses increased by 103 million yuan compared to 2021, an increase of over 700%. While revenue and profits have been growing rapidly, the surge in sales expenses has also posed certain risks for Giantech.
 

According to the review, last week Hanyu Medical and Kangya Pharmaceutical were also delisted from IPO. It was reported that on January 16, the Shanghai Stock Exchange (SSE) announced that due to Hanyu Medical and its sponsor withdrawing their application for issuance and listing, in accordance with relevant regulations, the SSE terminated its review of the issuance and listing. For this IPO, Hanyu Medical originally planned to raise about 1.722 billion yuan for production base construction, R&D center construction, etc.
 

On January 16, the Beijing Stock Exchange website announced the decision to terminate the review of Kangya Pharmaceutical's public offering of shares and its listing on the Beijing Stock Exchange. The company originally planned to raise 162.9027 million yuan, which was intended for the R&D center upgrade construction project (including the R&D center construction project and multifunctional laboratory project) and the innovative drug technology platform construction project.
 

Disclaimer: In any case, the information or opinions expressed in this article do not constitute investment advice to any person.