WuXi AppTec Debuts on Shanghai Stock Exchange with 43.98% Surge, Market Cap Hits RMB 32.4 Billion

VCBeat (WeChat ID: vcbeat), May 8 – WuXi AppTec, the highly anticipated pharmaceutical “unicorn,” made its debut on China’s A-share market today. Its stock hit the daily upper limit at the opening, surging 43.98% to RMB 31.10 per share, bringing its total market capitalization to RMB 32.406 billion.

WuXi AppTec’s official listing marks the successful completion of its “one-into-three” split and return to the capital markets following its delisting from the U.S. stock market.

WuXi AppTec was founded in 2000 and listed on the New York Stock Exchange in August 2007. After many years in the United States, WuXi AppTec deeply felt that “Wall Street’s excessive focus on short-term performance made large-scale strategic investments increasingly difficult.” Consequently, it began to plan its return to China.

In April 2015, STA Pharmaceuticals, WuXi AppTec’s contract research and manufacturing organization (CRMO), was listed on the New Third Board, marking the first step in WuXi AppTec’s return to China’s capital markets. In December 2015, WuXi AppTec announced the completion of its privatization, a transaction involving $3.3 billion. On March 23, 2017, WuXi AppTec published an announcement regarding listing tutoring on its official website. In June 2017, WuXi Biologics was listed in Hong Kong, successfully completing the second step of the spin-off and return process.

In July 2017, WuXi AppTec filed its IPO prospectus, officially kicking off the third act of its “spin-off into three” strategy. On February 6 this year, WuXi AppTec released its pre-disclosure information for listing on the Shanghai Stock Exchange. By March 27, it had passed the regulatory review, taking only 50 days in total—setting another IPO queue record after Foxconn’s 36-day “lightning” approval.

As of now, WuXi AppTec has a market capitalization of RMB 32.406 billion, WuXi Biologics HKD 88.135 billion, and Pharmaron RMB 19.844 billion, bringing the combined market cap of the three WuXi-affiliated companies to RMB 123.72 billion. As WuXi AppTec’s new shares continue to attract strong investor interest, the market capitalizations of the three listed companies in the WuXi group are expected to keep rising.

From $3.3 billion to over RMB 120 billion, WuXi AppTec created a “unicorn” return myth in just over two years.

With the listing of WuXi AppTec, China’s CRO (contract research organization) industry is also set to experience rapid growth.

Similar to the pharmaceutical industry, China’s CRO sector developed later and was likewise introduced by foreign enterprises. In 1996, MDS Pharma Service invested in establishing the first true CRO company in China, primarily engaged in clinical research services, marking the nascent stage of China’s CRO industry. In 2000, WuXi AppTec was founded, followed by the establishment of companies such as Pharmaron, Boji Medicine, and Tigermed, ushering China’s domestic CRO industry into a period of growth.

Qianzhan Industry Research Institute predicts that, with the shortening of approval timelines in China and robust demand in the pharmaceutical market, China will continue to attract foreign pharmaceutical companies into its market. As multinational corporations expand their R&D operations domestically, leading Chinese CROs will be the first to seize opportunities for collaboration with these multinationals, gradually becoming their preferred suppliers and key strategic partners in China. These CROs will benefit from strong financial support and global R&D resources, allowing them to take the lead in capturing industry dividends.

Furthermore, China’s pharmaceutical industry is in a golden period of rapid development, and the incremental market space has provided substantial market support for the growth of pharmaceutical R&D services. In terms of the drug sales market, since 2012, the terminal drug market has maintained a compound annual growth rate (CAGR) of 13.09%. By 2016, the size of the drug market had approached RMB 1.5 trillion, making China the second-largest pharmaceutical market globally, from which domestic pharmaceutical companies have directly benefited.

According to data from Southern Pharma Institute, China’s CRO industry sales rose from RMB 14 billion in 2011 to RMB 37.9 billion in 2015, representing a compound annual growth rate (CAGR) of 22.04%, which exceeded the growth rate of the global CRO market during the same period.

Data Source: Southern Pharmaceutical Institute. The sales figures presented here refer to the domestic sales of local enterprises and exclude their overseas sales.

The Southern Institute of Pharmaceutical Industry projects that China’s CRO market sales will reach RMB 46.2 billion in 2016, with a compound annual growth rate (CAGR) of 20.79% over the next five years, bringing the market size to RMB 97.5 billion by 2020.

Beyond WuXi AppTec, companies such as Tigermed, Boji Medicine, ChemPartner, Shanghai New Summit, and Joinn Laboratories have also maintained competitive advantages in their respective niche markets and garnered favor from the capital markets.