Founded 20 years ago in eastern China’s Yantai city, Luye last month completed Hong Kong’s biggest pharmaceutical initial public offering in more than three years, raising 5.9 billion yuan ($764 million). The company has gained more than 20 percent to HK$7.28 at the close in Hong Kong.
Liu controls about 31 percent of the drugmaker and sold about $44 million in stock at the offering, regulatory filings show, giving the 49-year-old a $1 billion fortune, according to the Bloomberg Billionaires Index.
“The pharmaceutical market in China will continue to grow rapidly in the next 20 years,” Liu said in an interview last month. “We have a population that’s becoming older and older and their demand for health related products is huge.”
Luye, which gets 99 percent of its revenue from China, will continue to focus on the mainland even as it expands globally in the long term, according to Liu. The company is the first among its Chinese peers to conduct clinical trials in international markets including the U.S., as it weighs boosting its business through acquisitions, Liu said.
Opportunities for Chinese drug companies include an expanding middle class, increasing health-care investment and rising insurance coverage, said Milo Liu, an analyst at Bocom International Ltd., adding that “ongoing anti-corruption campaign may drive domestic drugs to gain market share from imported drugs.”
Being ambitious helped the billionaire expand Luye from a factory founded with 100,000 yuan to a company with 2.5 billion yuan in revenue last year. It also led the former biology lecturer at Yantai Teachers’ College to start his own business with two partners in 1994, shortly after paramount leader Deng Xiaoping called for entrepreneurship to flourish.
Bocom’s Liu said China’s drug industry peaked in March and expects pharmaceutical stocks to be volatile in the second half with a slowdown in provincial purchases and cost controls at hospitals, which affected prescription volume.
Unlike most of the Chinese pharmaceutical companies, which focus on generic drugs, Luye was one of the first to build its research and development capability and produce innovative medicines, the analyst said.
“My childhood dream was to be a doctor and save lives,” said the billionaire, who speaks with a slight Shandong accent. “Probably because of that I was never content to just make generic drugs. Innovation is the future.”
Luye had seven product candidates, including four at clinical-stage, being developed for approval in the U.S., according to its IPO prospectus.
To contact the reporter on this story: Zijing Wu in Hong Kong at firstname.lastname@example.org