Shanghai Stock Exchange Informs Bankers to be Attentive with Regards to IPOs of Pharmaceutical Companies

By: Asia Business Outlook Team | Monday, 14 August 2023

In accordance with sources, the Shanghai Stock Exchange has urged bankers to pay close attention to the marketing practises of Chinese drug and medical equipment makers seeking initial public offerings (IPOs).

According to an internal publication sent to bankers in late July and reviewed, the exchange asked investment bankers and lawyers to ensure drugmakers' compliance and legitimacy in sales and marketing activities.

Two banking sources familiar with the situation confirmed the report. The Shanghai exchange did not respond to requests for comment. The advice comes as China launched an anti-graft campaign in late July, aimed at the practise of salespeople bribing doctors in drug and medical equipment sales.

As a result of the increased crackdown, a growing number of healthcare companies are abandoning their IPO plans, and listed medical firms' shares have fallen in the last two weeks.

Bankers should carefully investigate whether the company, controlling shareholders, or actual controllers engage in bribery in marketing activities, according to the publication.

"Sales and marketing fees are complicated, and there could be hidden expenses," the bourse said.

The bourse also requested that bankers verify the legitimacy of marketing expenses and urged companies to fully disclose information in their prospectus.