LiveReport learned that Edding Group Company Limited (Edding Group Company Limited), founded in 2015 (hereinafter referred to as “Yiteng Pharmaceutical”), which was founded in 2015, submitted a listing application on the Hong Kong Stock Exchange twice on June 23, 2023. It plans to be listed on the Hong Kong Main Board. The first submission was on September 23, 2020. This submission is the second time the form was submitted two years after the form expired. The sole sponsor is Morgan Stanley.

The company is a fully integrated biopharmaceutical company dedicated to providing promising treatments for patients in the underserved treatment sector in China. The company began operations in 2001 to distribute its products in China through partnerships with a number of global multinational pharmaceutical companies and biotechnology companies. Through years of cooperation with multinational companies and biotech companies, the company has developed complete value chain capabilities, laying the foundation for future development into a comprehensive biopharmaceutical company. With in-depth knowledge of the Chinese market and recognition of the company's value chain capabilities by multinational partners and global biotech companies, the company has successfully acquired all product rights to a series of low-risk drug asset portfolios aimed at meeting China's huge medical needs, and has developed into a listing license holder responsible for drug quality throughout the life cycle (“listing license holder”).

The company's product portfolio includes commercialization and innovation pipeline novel drug assets with clearly visible near-term market potential in China. The company's current product portfolio focuses on original research drugs in the fields of anti-infective, CVD and respiratory treatment, and has synergistic value in pediatric care. The company's core commercialization and pipeline drug portfolio is set out below:

The following table provides a breakdown of the company's gross revenue by product for the period indicated, and the reconciliation of gross revenue and net revenue:

Investment highlights

• Business development and asset selection. The company has formed a systematic business development system that enables the company to strategically select treatment areas and assets with a track record of success;

• Drug development and commercialization. The company is an ideal entry partner for global multinational pharmaceutical companies and biotech companies. The company uses drug development capabilities focused on China and a globally standardized management and operation system to create value for the company's partners through rapid, high-quality drug development;

• Advanced production and global supply chain. With more than 20 years of experience, the company relied on its own technology and expertise to establish a production platform to produce drugs of unparalleled quality, forming a key competitive advantage over the company's competitors;

• Academically oriented marketing. With an innovative and branded drug portfolio, the company implements an overall product and branding strategy focused on academic promotion, which the company believes will have long-term benefits for building brand awareness and the company's reputation.

Company Information:

Official website: http://www.eddingpharm.com

Headquarters address: Unit 122-129, Building A3, Daning Center Plaza, 700 Wanrong Road, Jing'an District, Shanghai, China Hong Kong Address: Room 3306, 33rd Floor, Tower 6, Gateway Tower, Seaport City, Kowloon, Hong Kong

Financial analysis

For the 3 years ended December 31, 2022:

Revenue was approximately RMB 1,768 billion, RMB 2,073 billion, and RMB 2,074 billion respectively, with a compound annual growth rate of 8.31%;

Gross profit was approximately RMB 1,063 million, RMB 1,278 million and RMB 1,368 million respectively, with a compound annual growth rate of 13.44%;

Net profit was approximately RMB 87 million, RMB 157 million and RMB 306 million respectively, with a compound annual growth rate of 87.71%;

The gross margins were about 60.15%, 61.64%, and 65.99%, respectively;

Net interest rates were approximately 4.92%, 7.57%, and 14.77%, respectively.

The company's revenue growth in 2022 was weak, but gross profit and net profit increased well. Although the overall revenue scale did not increase effectively, there was an increase in profit retention.

Industry prospects

The original antimicrobial drug has maintained a steady growth trend in China in recent years, mainly due to its safety and efficacy verification that it has gained the trust of medical professionals and patients. The market size of China's original research antimicrobials rapidly increased at a compound annual growth rate of 5.0% from RMB 19.4 billion in 2017 to RMB 24.8 billion in 2022. It is expected to further increase from 2022 at a compound annual growth rate of 7.0% to RMB 32.6 billion in 2026, and then to RMB 37.4 billion in 2030 with a compound annual growth rate of 3.5% in 2026. There was a temporary fluctuation in the size of China's original antimicrobials market from 2019 to 2022, mainly due to unstable hospital traffic. Guided by policies to prevent the abuse and misuse of antimicrobials, high-quality original research drugs have shown the potential to further gain huge market share.

Due to the rise in confirmed MRSA infections due to hospitalizations, China's anti-MRSA drug market increased at a compound annual growth rate of 1.0% from RMB 3.6 billion in 2017 to RMB 3.8 billion in 2022, and is expected to increase at a compound annual growth rate of 17.9% from 2022 to RMB 7.3 billion in 2026, further increasing by a compound annual growth rate of 6.9% from 2026 to RMB 9.5 billion in 2030.

The size of the pediatric antimicrobials market in China increased at a compound annual growth rate of 2.9% from RMB 3.8 billion in 2017 to RMB 4.3 billion in 2022, and is expected to increase further from 2022 to RMB 6.3 billion in 2026, and from a compound annual growth rate of 7.8% in 2026 to RMB 8.5 billion in 2030. Affected by the expansion of centralized drug procurement programs, the market size of pediatric antimicrobials declined from RMB 4.2 billion in 2019 to RMB 2.8 billion in 2020, then rebounded to RMB 4.2 billion in 2021. The future growth of the pediatric antimicrobial market in China will be mainly driven by the launch of new pediatric drugs.

Industry status

ICS is the most effective control agent used to treat asthma to date, and it is also one of the few types of drugs that can effectively suppress the characteristic inflammation of the asthma airways. Based on 2022 sales revenue, ICS-related inhalants account for more than 50% of the market share of the respiratory inhaler market in China. The ICS nebulizer market is a major segment of the ICS-related inhaler market in China. Other than eripin, there are only two ICS atomizers currently marketed in China: budesonide atomizer and beclomethasone atomizer. The three main products are eripine, budesonide, and beclomethasone.

The original research version of budesonide atomizer had sales revenue of RMB 2.8 billion in 2022. The original research version of the beclomethasone atomizer was launched in China in 2013. The following table shows the status of ICS-related inhalants marketed products and candidate products undergoing clinical trials in China.

Comparing IPOs of companies in the same industry

The companies selected for comparison in the same industry this time are:Mengke Pharmaceutical(8.200, -0.14, -1.68%) (688373.SH) andFosun Pharmaceuticals(30.780, 0.12, 0.39%) (02196.HK)

Mengke Pharmaceutical is an innovative pharmaceutical company with independent global intellectual property rights and international competitiveness that focuses on treating infectious diseases. It is committed to the discovery, development and commercialization of innovative drugs that do not meet clinical needs. The company's first commercialized product, contezolid tablets, are a new generation of oxazolidone antimicrobials independently designed and developed by the company, which can be used to treat infections caused by multiple drug-resistant gram-positive bacteria.

The business directly operated by Fosun Pharmaceutical includes pharmaceuticals, medical devices, medical diagnostics, and healthcare services, and covers the pharmaceutical business sector through participation in Sinopharm Holdings. As of the latest reporting period, Fosun Pharmaceutical's anti-infective core products (revenue ratio 19.53%), anti-tumor and immunomodulatory core products (revenue ratio 12.56%), metabolic and digestive system core products (revenue ratio 4.81%), core products of the cardiovascular system (revenue ratio 4.81%), core products of APIs and intermediates (revenue ratio of 2.84%), core products of the central nervous system (revenue ratio 2.28%)

Major shareholders

As of the last practicable date, Mr. Ni controlled about 45.19% of the company's voting rights through Suremoment Investments, Chinapharm Holding, Xianzhi and Chinapharm Group. Since (i) Suremoment Investments and Chinapharm Holding are wholly owned by Mr. Ni, and (ii) Mr. Ni is the sole director of Xianzhi and Chinapharm Group, Mr. Ni, Suremoment Investments, Chinapharm Holding, Xianzhi, and Chinapharm Group will continue to be the controlling shareholders of the company.

Management situation

Mr. Ni Xin, aged 52, is the founder, chairman, executive director and CEO of the company. He has over 20 years of experience in the pharmaceutical industry. He was appointed as a director on June 22, 2020, and then transferred to an executive director on August 27, 2020. Mr. Ni founded the Group in September 2001. It is mainly responsible for overseeing the Group's strategic development, overall operation and management, and major decision-making work. As of the last practicable date, Mr. Ni also served as a director of various subsidiaries of the Group. Mr. Ni obtained a medical bachelor's degree from Zhenjiang Medical College (later merged with Jiangsu University) in 1994/7 and a master's degree in business administration from the China-Europe International Business School in September 2006. He was selected as a leading talent in science and technology by Suzhou Industrial Park in October 2017.

Ms. Zhai Jing, aged 40, was appointed as a director on September 15, 2022, and then transferred to an executive director on June 2, 2023. He joined the Group in November 2015 as Senior Business Development Manager, then was promoted to the Group's Business Development Director in January 2020, and promoted to Senior Director of Business Development of the Group in August 2020. Ms. Zhai has been the company's vice president of business development since January 2022. He is mainly responsible for business development, managing product licensing and acquisitions, and strategic partnerships. Prior to joining the Group, he worked as a clinical pharmacist at United FamilyHospital (United FamilyHospital) from 2007/8 to 2008/8, worked as a consultant for IQVIA Inc. (formerly IMS Health) from August 2008 to 2014/6, and was the business development manager of Fresenius Cabi (China) from 2014/6 to 2015/11. Ms. Zhai obtained her bachelor's and master's degrees from Peking University in July 2005 and July 2007, respectively.

Dr. Wang David Guowei, aged 61, is a non-executive director who is mainly responsible for providing guidance and advice on the Group's corporate and business strategies. He was appointed as a director on July 31, 2020, and was subsequently transferred to a non-executive director on August 27, 2020. Dr. Wang has over 16 years of experience in the pharmaceutical industry. From April 2006 to July 2011, Dr. Wang was the managing director of China Economic Cooperation Group. He has worked for OrbiMed Advisors LLC (an investment fund focused on the healthcare industry) since 2011/8 as an Asian partner and senior managing director.

Pre-IPO financing

Intermediary team

According to LiveReport big data statistics, Yiteng Pharmaceutical has a total of 9 intermediary teams, including 1 sponsor. The data performance of nearly 10 sponsorship projects is average; there are 4 company lawyers in total, and the comprehensive project data is average. Overall, the agency team's historical data performance is average.

Sponsor underwriting history

The first-day breakout rate of Morgan Stanley's recent sponsors was 34.45%

Analysis of public opinion

Currently, I found Yiteng Pharmaceutical (China) Co., Ltd. through the Tianyancha website and found the following risk tips:

30 personal risks; mostly information such as court announcements and lawsuits against others or companies;

Of the 58 surrounding risks, related companies have been sued, announcements and case filing information;

10 historical risks; some of the shares of major companies are in a state of quality and 1 administrative penalty;

Among the 26 warning reminders, the main ones were personnel changes, changes in registered addresses, etc.

Overall, a company that began operations in 2001 has relatively few lawsuits, and there is also large-scale negative public opinion online.

Recent market conditions for Hong Kong stock IPOs

According to LiveReport's big data, the average issued market value of the last 10 listed IPOs was 9.816 billion, the largest market capitalization was Li Du, and the lowest market value was Yijun Group Holdings; the average number of issued PE was 20.69 times, and PE was in the middle upper level; the average number of subscribers was 5,298, and the average subscription multiplier was 6.64; the average cornerstone ratio was 45.97%, with a slight increase recently;

Recently, the performance of the Hong Kong IPO market has been poor. The average decline in the dark market of the last 10 IPOs was 5.49%, and the average drop on the first day was 12.15%. Zhongbao New Materials, Beisen Holdings, Zhenshu Li Du, and Luzhu Bio-B all plummeted. Hongxin C&D, which was spun off from Yuandong Hongxin, was not spared. Easy Dianyun and Kodi B were average on the first day, but their performance in the aftermarket was remarkable.