Research On The Path Selection And Economic Consequences Of The Spin-off Listing Of Pharmaceutical Enterprises

In October 2000,Tong Ren Tang spun off its subsidiary,Tong Ren Tang Science and Technology Development Co.,LTD,to the overseas Hong Kong stock market for listing,which became the first successful case of spin-off of a domestic listed company.However,due to the Chinese regulatory authorities maintain a cautious attitude for a long period of time,the cases of Chinese domestic demerger listing have been relatively rare in more than ten years since the regulations of enterprises demerger overseas listing were issued in 2004.Until 2019,China Securities Regulatory Commission issued pilot regulations on domestic spin-off and listing,explicitly allowing domestic spin-off and listing.Together with the Spin-off Rules for Listed Companies(Trial)issued in 2022,A series of policies were released to provide a more flexible choice for the spin-off of listed companies,triggering a boom of spin-off in the A-share market and many listed companies announcing spinoff plans.The pharmaceutical industry has the characteristics of large research and development investment in the early stage,long investment return cycle,long time of research and development and approval period will increase the financial burden of pharmaceutical enterprises,spin-off and listing can broaden financing channels for enterprises,has a high heat in the pharmaceutical industry.In this paper,a typical case of Liaoning Chengda splitting up its subsidiary Liaoning Chengda Bio and listing on the Science and Technology Innovation Board is selected.Combining with relevant theories,the paper analyzes that the main reasons for the splitting up of Liaoning Chengda include: expanding financing channels,improving the overall valuation of the company and focusing on the main business.Liaoning Chengda chose to list on the domestic Science and Technology Innovation Board due to policy development,the degree of matching with enterprise business development and the high valuation premium of the science and Technology Innovation Board.In terms of the analysis of economic consequences,this paper adopts the methods of event study and financial index analysis to carry out research from three perspectives: market effect,business performance and financing efficiency.From the perspective of the reaction of the capital market: due to the reduction of information asymmetry,the parent company Liaoning Chengda won the support of the market when it announced that it was going to be split and listed,and its stock price showed a rising trend.However,in the successful listing of subsidiary Cheng Da Biology,due to the high valuation led to the break of the stock market,the successful spin-off listing caused by the positive impact on the market has not been reflected.From the perspective of business performance: for the parent company Liaoning Chengda,since its subsidiary Chengda Biological accounts for a relatively small share of revenue in Liaoning Chengda,and Liaoning Chengda is a comprehensive group enterprise,the spin-off and listing has a limited impact on the parent company’s financial performance and a positive impact on the parent company’s short-term solvency.For the subsidiary Chengda Biology,the spin-off and listing on the Science and Technology Innovation Board has raised far more funds than planned for the subsidiary,which has a positive impact on the shortterm and long-term solvency of the subsidiary,provided sufficient funds for the enterprise’s research and development investment and asset construction,and brought certain positive financial influence to the enterprise in the short term.However,the profitability and operating capacity of enterprises have not been greatly improved due to the spin-off and listing,and the financing efficiency still needs to be improved.Finally,based on the analysis of the path selection and economic consequences of the case of Liaoning Chengda being split into Daibio,this paper puts forward suggestions from the perspectives of parent company,subsidiary company and regulator.Due to the late launch time of the Science and Technology Innovation Board,there are few case studies on the spin-off of enterprises to list on the Science and Technology Innovation Board.Liaoning Chengda spin-off subsidiary Chengda Bio was listed on the Science and Technology Innovation Board.It is the first batch of pharmaceutical enterprises that successfully spin-off subsidiaries to the science and technology innovation Board,which has timeliness and typicability in case selection.At the same time,this paper focuses on the background of the pharmaceutical industry,and focuses on the analysis of the motivation and path selection of the listing of Liaoning Big by splitting into Big Bio,as well as the series of economic consequences caused by the separation and listing of enterprises,which is of more reference significance for the spin-off and listing of pharmaceutical enterprises.