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Medtide Launches Hong Kong IPO to Boost Weight-loss Business

The pharmaceutical services firm wants to expand production of peptides used in anti-obesity drugs, but it faces fierce competition and other business risks 

Key Takeaways:

The global market for developing and supplying pharmaceutical peptides is dominated by two players, leaving third-ranked Medtide with just a 1.5% slice

The company relies heavily on a handful of clients, leaving it exposed to any changes in business relationships 

The booming global market for weight-loss drugs depends on an abundant supply of the active ingredients that help to suppress food cravings and ease digestion.

With big pharma brands cashing in on the insatiable demand for slimming drugs, lesser known firms in the supply chain are keen to grab some of the investor spotlight.  Such is the premise for an IPO by a leading Chinese supplier of the peptides that serve as the base for weight management drugs.

Drug services provider Medtide (3880.HK) is looking to raise HK$514 million (410 million yuan or $65.48 million) in a listing on the Hong Kong stock market, with plans to invest the proceeds into expanding its peptide production capacity.

The offer opened last Friday, jointly sponsored by Morgan Stanley and CITIC Securities, with an indicative range of HK$28.40 to HK$30.60 per share. The issue price is to be determined on June 26.

The company plans to issue 16.80 million shares, with a subscription fee of HK$3090.85 per 100 shares, and has set aside a chunk of the offer for two cornerstone investors. Assuming a median price of HK$29.5 per share, CSPC Pharmaceutical (1093.HK) and Welight Capital will each take ...