(Yicai) Nov. 17 -- More than 40 Chinese pharmaceutical companies have applied to list on the Hong Kong Stock Exchange so far this year, eight of which submitted their application this month alone.

"We are conducting initial public offering roadshows in Hong Kong," a staffer at a Chinese mainland drugmaker seeking to go public in Hong Kong told Yicai. "But with so many pharmaceutical companies filing listing applications, cornerstone and anchor investors are extremely busy."

Pharmaceutical stocks have surged in the secondary market this year, so purchasing shares directly from a company during a listing generally grants more room for future growth, making investors more willing to choose the pharmaceutical industry for new share allocation, the staffer noted, adding that pre-IPO companies also hope to secure reputable cornerstone investors to endorse them.

"As a result, securities firms have been actively arranging roadshows for mainland biotechnology companies," the staffer explained. "This has led some large investors in Hong Kong to receive five to six roadshows in a single day, keeping them very busy.

"Our roadshow had to wait for investors to schedule their time to be arranged," the person pointed out. Moreover, roadshows are being squeezed now, as the Christmas break approaches.

A key reason for this trend is that several Chinese innovative drugmakers have signed overseas licensing deals for their investigational novel drugs with foreign peers, which has boosted their stock prices sharply. In the first nine months of the year, the Hang Seng Shanghai-Shenzhen-Hong Kong Innovative Drug Select 50 Index surged 69 percent.

In addition, the reforms to the HKEX IPO offering and pricing mechanism, which took effect in August, increased cornerstone investors' enthusiasm to participate in pharmaceutical listings too. Data from the exchange show that 23 drugmakers have successfully listed so far this year, 16 of which boasted cornerstone investors as subscribers.

Six of the pharmaceutical companies that listed on the HKEX this year, including industry giant Hengrui Pharmaceuticals, had five or more cornerstone investors, such as well-known institutions GIC Private, UBS Asset Management, Hillhouse Capital, Lilly Asia Ventures, Boyu Capital, and Clear Lake Capital.

However, as the number of pharmaceutical listings grows rapidly and the upward momentum of pharmaceutical stocks slows, cornerstone investors are becoming more selective in their investment choices, a pharmaceutical industry investor told Yicai.

"The enthusiasm for pharmaceutical listings among investors has changed, but some are still highly sought after," the investor noted. "For example, small interfering RNA drugs, antibody-drug conjugate drugs, and artificial intelligence projects continue to attract significant attention."

Several drugmakers are expected to list on the HKEX in the first quarter of next year, the staffer from the Chinese mainland pharmaceutical firm that has applied for a Hong Kong IPO noted, adding that the company also plans to go public in that window.

"The pharmaceutical industry remains highly watched," a person from a Hong Kong IPO sponsor institution told Yicai. "As many pharmaceutical companies are applying for listings, capital continues to flow into the sector.

"We believe high-quality or leading investment targets will continue to be popular," the sponsor noted.

While maximizing the issuer's interests, the final offering price still needs to reserve certain room for future growth for investors in order to gain more attention during the roadshow phase, the person added.

Editors: Tang Shihua, Futura Costaglione