CHINA Trends and Developments Contributed by: Min Zhu, Ya-ling Gon, Yang Gu, Chai Lu, Ying Li and Shiye Yuan, Han Kun Law Offices
Han Kun Law Offices 9/F Office Tower C1 Oriental Plaza 1 East Chang An Avenue Dongcheng District Beijing 100738 China Tel: +86 10 8525 5500 Fax: +86 10 8525 5511/5522 Email: beijing@hankunlaw.com Web: www.hankunlaw.com/en
Introduction In 2024, China’s pharmaceutical industry entered a recovery phase, marking a rebound from a peri- od of stagnation. Despite the continued cautious attitude of investors and the tightened regula- tions surrounding initial public offerings (IPOs), the industry began to show promising signs of revival. Notably, the development of antibody- drug conjugates (ADCs) and bi-specific/multi- specific antibodies emerged as focal points of pharmaceutical innovation where China’s phar- maceutical industry has demonstrated remark- able capabilities in engineering innovation and operational efficiency. Pharmaceutical Industry Transactions in 2024 IPOs In 2024, the pharmaceutical industry continued to experience a decline in IPOs. Only five phar- maceutical companies were listed on the Chi- nese A-shares market, compared to 22 in the previous year, the lowest number since 2008. Additionally, at least 24 pharmaceutical compa- nies announced the withdrawal of their IPOs or the suspension of the IPO review process. The slowdown was primarily due to stricter regula- tory scrutiny, with a focus on financial perfor-
mance, promotional expenses and technological innovation. These developments indicate a shift toward increasing regulatory complexity within the industry due to more rigourous market entry standards. VC/PE financing In 2024, securing VC/PE financing in China’s primary market became even more challenging, with companies likely to attract funding limited to those in high-growth fields or holding leading market positions. Throughout the year, a total of 652 companies completed financing rounds in the primary market, of which 550 disclosed their financing amounts. The cumulative financ- ing reached RMB51.315 billion, representing a 35% decline from RMB79.203 billion in 2023. The average financing amount per deal stood at RMB93 million, a 15% decrease from the RMB109 million in 2023. Most financings in 2024 were concentrated in early funding rounds, par- ticularly around Series A. The combined propor- tion of seed, Series A and Series B financing events accounted for 82.4% of all deals. Inves- tors showed a greater preference for early-stage
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