Report on Hong Kong-Listed Biotech Companies

Skadden Insights – June 2022

Paloma Wang Kai Sun Anthony Pang Martina To


Our second annual report on Hong Kong-listed biotech companies demonstrates the continued health of the sector. The report provides a comprehensive overview of the market in its current state, examining key data points for biotech companies undertaking IPOs on the Stock Exchange of Hong Kong Limited (HKEX) in calendar year 2021 and analyzing the corporate governance practices of all 48 biotech companies listed on HKEX as of December 31, 2021.

Some of our findings include the following:

  • The HKEX biotech initiative has continued to gain momentum, with 20 new biotech listings in 2021, a record high.
  • HKEX continues to attract relatively well-established biotech companies: Companies are undertaking IPOs an average of nine years after founding, having raised an average of US$216 million in pre-IPO financing over 4.7 rounds and spending an average of US$44 million on R&D during the two years prior to IPO.
  • More PRC-incorporated biotech companies are listing on HKEX, (seven in 2021 — another record high), while Shanghai is consolidating its position as a hub for China’s biotech companies.
  • Average biotech IPO size in 2021 was US$243 million, notably less than the average US$345 million for 2018 to 2020, reflecting reduced deal sizes in challenging market conditions and also that smaller biotech companies are now seeking to undertake IPOs.
  • Consistent with the downtrend in the broader market, of the 48 listed biotech companies, only 23 were trading above their IPO price as of December 31, 2021. However, the average share price change from IPO through that date increased 33.5%, indicative of outperformers in the sector.
  • Board diversity continues to be an issue across biotech, with women representing only 15.5% of directors. However, new HKEX board diversity rules will require increased board diversity.
  • Follow-on fundraising has been robust: 14 of the 33 biotech companies listed for at least six months as of December 31, 2021, had conducted follow-on fundraising, with an average of US$1.05 billion raised.
  • The biotech initiative is showing success in creating sustainable companies: Four companies demonstrated the necessary profit and/or revenue to remove the “B” marker from their listings between 10 and 20 months after listing, and so far one company removed the marker in 2022, 38 months after listing.

Since December 31, 2021, two additional biotech companies have listed on HKEX. Both are incorporated in the PRC, with one headquartered in Shanghai and one in Taizhou, Jiangsu. These two IPOs raised gross proceeds of US$120 million and US$110 million, respectively (which is significantly lower than the average deal size identified in our report for 2021).

We hope our report will provide benchmarks for listed and unlisted biotech companies, and insights and analysis for stakeholders. 

Read the full report here.