Hong Kong to remain as a biotech IPO hub even despite trade war
Jun 03, 2019 (China Knowledge) - Hong Kong will likely still be able to maintain its status as a biotech IPO hub even as the current Sino-US trade war rages on and compete strongly with the upcoming tech-board in Shanghai.
While these companies may see reduced valuations, the current economic climate will not prevent companies from going public as long as they have access to capital. In the coming 12 to 18 months, at least 10 Chinese biotech companies are expected to go public in either Hong Kong or the upcoming Shanghai Science and Technology Innovation board.
Since April last year, listing reforms by the Hong Kong stock exchange has allowed biotech startups without profit or revenue to go public in the city when Shanghai’s upcoming Science and Technology Innovation board will also allow pre-profit companies in sectors such as biotechnology, artificial intelligence and semiconductors to go public.
On average, it takes about a decade and more than USD 1 billion to bring a drug from research to market and drug developers will first consider Hong Kong as a listing destination due to the city’s proven track record in helping these developers to raise funds.
Currently, Hong Kong’s biotech market has yet to see a late-stage clinical trial failure and investors should be prepared for this occurrence and any price volatility that comes with it as this is an industry norm.
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