(Yicai) June 19 -- Multiple primary market investors told Yicai they are closely watching for the resumption of initial public offerings by unprofitable biopharmaceutical startups on the Chinese mainland.

Investors expect to hear more details after Wu Qing, chairman of the China Securities Regulatory Commission, announced yesterday that Shanghai’s Star Market will introduce a new "growth tier" aimed at supporting promising startups.

Wu, speaking at the Lujiazui Forum, added that this initiative would enable the revival of the fifth listing standard, a regulatory pathway allowing unprofitable firms to go public. The last company to utilize this route was Chongqing-based Genrix Biopharmaceutical, which was listed in June 2023.

China's innovative drug sector is facing headwinds, including a downturn in investment, limited reimbursement capacity, and heightened competition. Since the second half of 2023, the securities regulator has tightened IPO requirements, restricting capital access for pharmaceutical companies and hampering investment in drug discovery.

As a result, biotech firms have sought alternative financing options. Some have turned to mergers and acquisitions to enter public markets, while others have begun preparing to list in Hong Kong. According to Yicai’s incomplete statistics, at least 15 biopharmaceutical companies have filed IPO prospectuses with the Hong Kong Stock Exchange since the start of this year.

"Biopharmaceutical companies choosing to list in Hong Kong reflects the current lack of better listing alternatives," an IPO lawyer told Yicai.

Despite current challenges, the long-term growth potential remains strong. From 2015 to 2024, China’s innovative drug market nearly tripled in size to CNY71.6 billion (USD10 billion), while the share of homegrown medicines rose to almost 28 percent of the total market, up from nearly 19 percent.

Editor: Emmi Laine