Hong Kong's Healthcare IPOs: A Beacon of Confidence in China's Biotech Future

The resurgence of Hong Kong’s IPO market in 2025 has been marked by two standout deals: Jiangsu Hengrui Pharmaceuticals and Mirxes, whose oversubscribed listings underscore a critical shift in investor sentiment toward China’s healthcare sector. Despite valuation premiums that may deter the cautious, these deals signal a renewed appetite for high-quality assets with defensible moats and scalable growth. For investors seeking exposure to China’s healthcare renaissance, Hengrui and Mirxes represent compelling opportunities—provided they are selective and disciplined.

The Case for Hengrui: R&D Powerhouse at a Premium Price
Hengrui’s Hong Kong IPO, which priced at the top of its HK$41.45–HK$44.05 range, raised HK$9.89 billion (US$1.27 billion) and attracted cornerstone investors including Singapore’s GIC, Invesco, and Hillhouse. While the exact oversubscription multiple was not disclosed, the cornerstone commitments alone—totaling US$533 million—reflect institutional confidence in the firm’s R&D-driven growth model. Hengrui’s valuation, with a post-IPO market cap of HK$273.7 billion (US$35.6 billion), implies a P/E ratio of 49.87x, a premium to peers like CATL (18x in 2024) but justified by its profitability and pipeline.

Consider the fundamentals: Hengrui reported a 47.3% surge in 2024 net profit to RMB6.34 billion, with revenue growing 22.6% to RMB72.0 billion. Its 23.4% net margin and 14% ROE outpace loss-making rivals like BeiGene (P/E: N/A) and Innovent Biologics (P/E: N/A), which are still burning cash to fuel clinical trials. Hengrui’s focus on oncology, metabolic diseases, and innovative drugs—backed by R&D allocation of 75% of IPO proceeds—positions it to capitalize on China’s aging population and rising healthcare spending.

Mirxes: Niche Innovation at a 15x Oversubscription
Mirxes, a Singapore-based biotech targeting early cancer detection, achieved a north of 15-times oversubscription for its HK$1.09 billion listing. Its proprietary liquid biopsy technology, which detects cancer through blood tests, taps into a market expected to grow at 15% CAGR through 2030. The oversubscription, driven by retail and institutional demand, reflects investor enthusiasm for its first-mover advantage in a segment where late-stage detection remains the norm.

While Mirxes’ valuation is less mature than Hengrui’s, its strategic partnerships—including collaborations with leading Chinese hospitals and pharma firms—suggest a clear path to commercialization. The firm’s focus on cost-efficient, non-invasive diagnostics aligns with China’s push to reduce healthcare costs, making it a complementary play to Hengrui’s broader pharmaceutical portfolio.

Why Now? Contextual Tailwinds for Chinese Healthcare
These deals thrive amid three macro tailwinds:
1. Regulatory Support: Hong Kong’s revised listing rules for biotech firms, which allow unprofitable companies to access capital, have unlocked liquidity for innovators.
2. Geopolitical Truce: The U.S.-China tariff truce has eased supply chain risks, boosting investor sentiment for Asian manufacturers.
3. Structural Demand: China’s 2.67 billion elderly population by 2035 will drive spending on chronic disease management and diagnostic tools.

CATL’s 30x oversubscribed Hong Kong listing in 2025—a proxy for broader investor risk appetite—further validates this narrative. Despite geopolitical headwinds, the market’s willingness to pay premiums for defensible IP, scalable models, and ESG-aligned strategies is clear.

Risks and Caveats
Valuation multiples are not without risks. Hengrui’s 50x P/E demands flawless execution of its R&D pipeline, while Mirxes must prove its technology’s clinical utility at scale. Geopolitical tensions and regulatory changes—such as drug price controls—could also disrupt margins. Investors must remain vigilant about catalysts, including FDA approvals for Hengrui’s oncology drugs or Mirxes’ partnerships with global diagnostics firms.

The Investment Thesis: Go Long, but Stay Selective
For long-term investors, Hengrui and Mirxes offer asymmetric upside:
- Hengrui: Buy the dip to HK$40/share (a 10% discount to IPO price), targeting HK$60–HK$70 by 2027 as its pipeline matures.
- Mirxes: Accumulate on volatility, with a 12–18-month horizon to see clinical validation of its liquid biopsy platform.

Both firms benefit from a secular tailwind: China’s healthcare sector is expected to grow at 10% annually through 2030, outpacing GDP. Pair these positions with CATL or other EV battery plays to hedge against sector-specific risks.

In conclusion, the Hong Kong IPOs of Hengrui and Mirxes are not mere fundraising events—they are milestones in China’s transition to a biotech leader. For investors willing to pay a premium for quality, these deals offer a rare chance to own pieces of the future of healthcare. The time to act is now, before the narrative becomes consensus.