Global Pharma Firms Embrace Spin-offs as MicroPort Completes Sixth Subsidiary IPO Filing

　　【Pharmaceutical Network Industry DynamicsRecently, Novartis announced that its shareholders have approved the proposal for the 100% spin-off of its generics and biosimilars subsidiary, Sandoz. Following the spin-off, Sandoz will be listed as an independent company on the Swiss Stock Exchange. Data shows that Sandoz's revenue in 2022 was $9.249 billion.
 

Novartis stated that this spin-off aims to make Sandoz the largest generic drug company in Europe and a global leader in biosimilars, maximizing shareholder value and allowing Novartis shareholders to fully participate in the potential future development of both Sandoz and Novartis' innovative drugs. At the same time, this split will enhance Novartis' ability to focus and pursue an independent development strategy.
 

It is reported that, apart from Novartis, many multinational corporations (MNCs) such as Johnson & Johnson, Merck & Co., and GSK have undertaken significant spin-offs and reorganizations in the past two years. For instance, in July 2022, GSK’s consumer healthcare business unit was officially spun off, giving rise to Haleon. Currently, Haleon operates a series of well-known health brands in the Chinese market, such as Caltrate, Centrum, Sensodyne, Panadol, Voltaren, Contac, and Bactroban. After the spin-off, Haleon further optimized its operations, achieving an organic revenue growth of 9% for the entire year of 2022, with annual revenue reaching £10.9 billion. In the first half of 2023, Haleon’s revenue saw an organic growth of 10.4%, with 55% of its business gaining or maintaining market share.
 

In September 2022, Johnson & Johnson announced the spin-off of its consumer health business, which was to be listed as an independent company named "Kenvue." In August this year, Kenvue began fully independent operations. Currently, Kenvue owns approximately four $1 billion superbrands and 20 brands with revenues exceeding $150 million, such as Band-Aid, Listerine, Neutrogena, Tylenol, Johnson's Baby, and Dr. Ci:Labo. In the first half of this year, Kenvue's net sales reached $7.863 billion, representing a year-on-year increase of 6.3%.
 

Overall, the listing of pharmaceutical companies' subsidiaries can reduce the financing costs of the subsidiaries, alleviate the financial pressure on the parent company, and also help accelerate the development process of the subsidiaries' businesses. It is worth mentioning that currently, apart from large multinational pharmaceutical companies, a large number of local pharmaceutical companies in China are also riding the wave of spin-off listings. It is reported that since 2023, several listed companies in China, including Salubris, Chenxin Pharmaceutical, Kelun Pharmaceutical, Lepu Medical, and MicroPort, have spun off their subsidiaries for listing.
 

Among them, in January this year, Kelun Pharmaceutical planned to spin off Kelun Biotech to the Hong Kong Stock Exchange Main Board for listing. At the end of March, Salubris planned to spin off its subsidiary, Salubris Medical, to the STAR Market for listing. In May, Hong Kong-listed MicroPort Medical proposed to spin off MicroPort Cardiac Rhythm Management for listing on the Hong Kong stock market. In June, Cisen Pharmaceutical planned to spin off its subsidiary, Fodu Pharmaceutical, to the Shenzhen Main Board for listing. In July, WuXi Biologics planned to spin off WuXi Xilian for listing in Hong Kong. On July 24, Lepu Medical unveiled a plan to list its subsidiary, Bingkun Medical, on the ChiNext Board.
 

In terms of progress, Kelun-Biotech is the fastest among the pharmaceutical companies undergoing spin-off listings. On July 11, Kelun-Biotech officially listed on the Hong Kong Stock Exchange, raising approximately HK$1.259 billion through its initial public offering at a price of HK$60.6 per share. The spin-off plans of the other five companies are still in progress.
 

In terms of the number of spin-offs, MicroPort Scientific has been very active in recent years. In May this year, MicroPort Cardiac Rhythm submitted an application for listing on the Main Board of the Hong Kong Stock Exchange. This is the 6th subsidiary that MicroPort Scientific has spun off. Prior to this, MicroPort Scientific had already spun off MicroPort Endovascular, MicroPort CardioFlow, and MicroPort.Robot, Minimally Invasive NeuroScience and Minimally Invasive Electrophysiology, five subsidiaries went public, corresponding to innovative businesses such as aortic and peripheral vascular, structural heart disease, surgical robots, neurointervention, and electrophysiology.
 

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