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By Daniela Wei and Pádraig Hoare
A Chinese biotech company developing anti-cancer drugs with Eli Lilly has urged investors to focus on future prospects and not hefty losses.
Innovent Biologics chief executive Michael Yu said investors need to look beyond the turmoil that has sent Chinese healthcare shares down as much as 35% since the summer.
“A typical biotech company is not like traditional businesses,” said Mr Yu, whose Jiangsu, China-based company is developing drugs with US pharmaceutical giant Eli Lilly, which has a major presence in Ireland.
It has been a rocky ride for the industry that has been hit by a scandal and broader market plunge, making it even tougher for companies that have just listed with little revenue and a history of losses.
Investors should take view of up to 10 years and focus on the outlook for cash flow, Mr Yu said after Innovent’s debut in Hong Kong.
The sector is volatile, because badumptions and psychology affect investors more so than in other industries, especially when the global market fluctuates, he said.
Eli Lilly employs more than 1,000 people in Ireland in manufacturing and sales, including more than 500 in Kinsale, Co Cork, since arriving in the 1970s.
In May last year, Eli Lilly announced it was proceeding with a €200m expansion at its Kinsale site after putting the decision on hold in the wake of Donald Trump’s election as US president.
The biopharma manufacturing campus in Dunderrow, near Kinsale, was augmented by a new €20m office building in Little Island this year.
However, Eli Lilly has had setbacks in recent years in the development of two potential blockbuster drugs and said last year it would cut about 3,500 positions around the world.
Anti-cancer drug maker Innovent is the fourth biotech firm to list since Hong Kong’s stock exchange revised its rules in April to allow unprofitable companies from the sector to go public, paving the way for more Chinese healthcare firms to raise money.
While at least 10 biotech companies have applied for listing, performance has been less than impressive.
With years needed for a new drug to develop, the sector typically needs a longer time to become profitable.
– Bloomberg and Irish Examiner staff
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