WuXi, ShangPharma seek Chinese listings

WuXi AppTec and ShangPharma, two major contract research firms that previously traded publicly in the U.S., have started the process of listing themselves in China. The simultaneous moves, apparently coincidental, come at a time when company valuations in China are higher than in the U.S.

Shanghai-based WuXi AppTec, the world’s largest contract pharmaceutical research firm, with more than 10,000 employees and operations in China and the U.S., says it has retained Huatai United Securities as its financial adviser for an initial public offering of stock in China.

Separately, ShangPharma says it plans to merge with a firm already listed in Shanghai or Shenzhen to achieve a market listing in China. Before the merger, ShangPharma will consolidate its various contract research and custom manufacturing subsidiaries into a single firm, Shanghai ChemPartner. With more than 2,000 employees, ShangPharma is China’s third-largest contract research firm after WuXi and Pharmaron.

WuXi was listed on the New York Stock Exchange from 2007 until August 2015, when founder Ge Li bought the firm back from shareholders for $3.3 billion. In an interview with C&EN last year, Li said he did this not to relist in China, but because he had grown frustrated with the short-term outlook of U.S. stock analysts.

ShangPharma was listed in New York from 2010 to 2013. Founder Michael Hui initiated a management buyout of the company in late 2012 for nearly $200 million. The buyout came after the value of ShangPharma’s shares fell by half.

That WuXi and ShangPharma are both seeking to list in China at the same time is merely coincidental, says Jimmy Wei, managing partner of the Shanghai-based life sciences investment firm I-Bridge Capital. Listing in China makes financial sense, he notes, because stock valuations of life sciences companies there are much higher than in the U.S.

WuXi listed the shares of its small-molecule manufacturing subsidiary SynTheAll Pharmaceutical in Shanghai in April 2015. Earlier this year, its biologics manufacturing affiliate WuXi Biologics announced plans to list in Hong Kong, reportedly to raise $1.5 billion.