Recent announcements that the Hong Kong Stock Exchange (HKEX) plans to allow the listing of pre-revenue biotech companies onto it’s stock exchange has potential to yield significant changes for the global biotech industry. This significant announcement reinforces Hong Kong’s commitment to play a key role in the global biotech ecosystem capable of nurturing companies from development through commercialization stages.
The February 23, 2018 announcement seeking consultation on new rules expanding the listing regime boosts Hong Kong Exchange’s attractiveness for emerging biotech companies. Allowing pre-revenue companies to list on HKEX sends the message that Hong Kong is ready for a dynamic and creative biotech boom.
But what does this really mean for the sector?
After the final round of consultation ends on March 23, 2018, HKEX will publish final conclusions and rulings for pre-revenue biotech listings. A primary benefit of the HKEX ruling will allow for second listings on exchanges. This means all companies that are currently listed on other international exchanges may also seek listing on HKEX. Ultimately this helps companies expand access to public financing.
Garnering investment for biotech projects is challenging for many in the industry regardless of the region. Accordingly, allowing for a second listing may provide legitimacy and aid companies in attracting additional investment to move their product through production. The HKEX ruling supports increasing the collaboration between Chinese and global companies with hopes of expanding the growth that’s already in motion.
But why now?
Over the past 25 years, Hong Kong has been inspired by the Biotech Revolution that swept the early 1980s. Over the past 10-15 years specifically, the Hong Kong biotech investment climate has been particularly challenging. The attrition rate for biotech entrepreneurs seeking financing has been very high with limited success stories.
However, the past 5 years have yielded a new turn for the region’s biotech investment climate. Hong Kong’s biotech industry has become increasingly attractive due to expanding efforts to globalize its industries. More and more, stories of companies finding success after years of financial struggles signaled big changes for the industry.
Hong Kong’s biotech investment climate has improved because there has been a refocused need from government and social enterprises to support healthcare issues. Healthcare has been pushed to forefront and has become increasingly valued across Hong Kong and mainland China.
Another reason for this shift towards biotech has been due to the demands of investors themselves. With a history of strong investment culture, specifically focused on real estate, more and more investors are looking to diversify. Since entering the biotech sector in the early 1990s, sector growth in Hong Kong has been steady, with steady investment streams from both public and private stakeholders.
Now in the 21st century, investors are seeking to diversify and find innovative industries with high potential. Accessibility of pre-revenue biotech companies to list on HKEX allows increased engagement between companies and potential investors. With this new announcement, the strength of its Science & Technology Parks, Hong Kong’s strategic geographic location, and accessibility to the Chinese market Hong Kong is ready for increased biotech business.
Interest in the Hong Kong biotech market is booming and the new HKEX announcement will only aid in developing the sector. With increased investment and increased potential for collaborative partnering, there is great opportunity for Hong Kong’s industry. This potential can already be seen in Hong Kong’s engagement across industry events.
In 2018, as Hong Kong celebrates over 10 years exhibiting at the 2018 BIO International Convention this June in Boston, we look forward to learning more how Hong Kong’s new policy can help fuel biotech innovation both in Asia and abroad. We also invite you to learn more about China’s biotech hubs at the China Summit @ BIO International on Monday, June 4 of the BIO International Convention. Join us for a half-day program to explore China’s regulatory changes, investment trends, and cross-border collaborations in the life sciences sector.
To learn more about Hong Kong’s new HKEX ruling, we hope you tune in to BIO’s President and CEO James Greenwood keynote address to the global investment community on Thursday, March 22nd at the inaugural HKEX Biotech Summit, as he highlights the global biotech landscape and how collaborations in Hong Kong are helping to make history.
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