Revaluation of Dizhe Pharma: Three Capital Migrations of a 20+ Billion Yuan "Hybrid Gene"

(Source: Investor.com - Thinking Finance)

【Medical Perspective】Focus on industry trends in health and pharmaceutical companies, with policy analysis to quickly understand the prospects of the pharmaceutical sector.

“From STAR Market to private placements, and then to Hong Kong Exchanges.”

Dizhe Medicine (688192.SH, hereafter “the Company”) is still waiting for an olive branch from the Hong Kong Stock Exchange.

In January, the company officially submitted its prospectus to HKEX. Riding the wave of the “A+H” listing craze for innovative pharmaceutical companies, the company aims to complete three capital transfers: from the STAR Market to private placements, and then to HKEX.

However, the market is re-evaluating the company’s past successful narrative. Whether in terms of business performance or overseas validation, Hong Kong investors are more discerning. Whether the company can cross this threshold remains to be seen.

01

Two shifts in valuation model

Dizhe Medicine’s story begins with the implementation of a “hybrid” structure.

Around 2016, Zhang Xiaolin, then Vice President of AstraZeneca Global and head of China Innovation Center, faced a turning point. At that time, many multinational R&D centers were closing, but Lu Dazhong from Guotou Innovation saw an opportunity. He negotiated with AstraZeneca and Zhang Xiaolin, hoping to establish a new platform based on transforming the existing team to continue R&D, with funding support.

This idea materialized with the company’s founding in 2017. The “hybrid gene” of the company is reflected in its three shareholders: AstraZeneca, a foreign-invested pharmaceutical company; Guotou Innovation, with state-owned background; and management holding shares. To date, the company has no controlling shareholder or actual controller, with Zhang Xiaolin leading the senior management team.

This “foreign technology + state capital + management shareholding” structure is rare but not unique. The innovative drug giant BeiGene, before going public, also adopted a “overseas technology + capital” model. Interestingly, whether in capital path or pipeline strategy, the company seems to be following in BeiGene’s footsteps, shaping its own narrative.

In 2021, the company listed on the STAR Market, raising 1.987 billion yuan. Its technical approach—focusing on niche, differentiated indications—closely mirrors BeiGene, mainly targeting pipelines like Suvorotin and Gilteritinib. By 2023, these two drugs were launched.

In other words, the company has successfully navigated the “R&D spending—commercialization” chain, shifting its valuation focus from pipeline potential at IPO to commercialization volume. But the company’s capital ambitions are not satisfied, and its story needs new chapters.

By 2025, the company’s international expansion has yielded multiple results. On one hand, at ASCO, it announced data on the non-covalent dual-target BTK drug DZD8586, showing good efficacy in objective response rate and safety. On the other hand, Suvorotin received accelerated approval from the US FDA, becoming the first Chinese-origin targeted lung cancer drug approved in the US. To date, the company has built a pipeline of seven products in clinical stages.

Clearly, after shifting from “pipeline potential” to “commercialization volume,” the narrative has elevated to a “volume + internationalization” dual-driven model. The pioneer of this model is BeiGene, which has achieved great success in the capital markets. Soon, the company’s own capital feast will begin.

02

Three capital transfers

With this new narrative, Dizhe Medicine has been active on the capital stage.

In 2025, the company completed a private placement at 43 yuan per share, raising nearly 1.8 billion yuan, with participation from well-known institutions such as Taikang Asset, Zhuque Fund, and UBS.

In fact, the capital story of domestic innovative drugs has gone through three stages. The first, before 2019, was “pipeline equals valuation,” where major pharma companies piled up pipelines and bet on targets, with capital paying for “whether it exists.” The second, before 2023, was “good pipeline equals valuation,” emphasizing clinical data and commercial progress, with capital paying for “how good it is.” The third, in 2025, is “ability to go global equals valuation,” driven by numerous BD deals and overseas R&D, with capital paying for “whether it can sell worldwide.”

On this spectrum, the company has successfully advanced through all stages, attracting capital and once reaching a market value of over 36 billion yuan. Meanwhile, senior management has also begun to cash out.

In July, the company announced that Vice President Zhang Shiying and Chief Business Officer and Vice President Wu Qingyi had reduced their holdings, at prices ranging from 58.9 to 69 yuan per share, citing reasons such as debt repayment and tax payments related to equity incentives. Notably, some of their holdings stemmed from 2022 equity incentives, with an exercise price of 9.61 yuan per share. Since then, the stock price has gradually fallen back, currently around 50 yuan per share, with a market cap of about 23 billion yuan.

This has raised market questions: Was this high-level reduction a precise exit? More deeply, is the company’s capital story sustainable? In response, the company told Investor.com that “the senior management’s equity incentives and share reductions strictly follow regulatory laws, with procedures that are open, transparent, and compliant, and there is no so-called ‘interest transfer.’”

Regardless, the company plans to re-enter the capital stage. In January, it officially submitted its IPO application to HKEX, aiming to complete the three capital transfers: from STAR Market to private placement, and then to Hong Kong.

However, the company’s high valuation has declined, prompting the market to reassess its value. First, how self-sustaining is the company’s “self-blooding”? Second, can its overseas expansion narrative translate from R&D validation to solid commercial results?

03

Reevaluating the narrative

To answer these questions, we must return to Dizhe Medicine’s fundamentals.

By 2025, the company expects revenue of 800 million yuan, a year-over-year increase of over 120%, with net losses further narrowing. The growth is mainly driven by two drugs gaining market share under national insurance policies. As of Q3 2025, the company held 1.93 billion yuan in cash and equivalents, with sufficient funds.

However, there is a “ceiling” to commercialization: drugs like Suvorotin and Gilteritinib target niche indications, still far from becoming billion-yuan blockbusters. The company told Investor.com, “Both products follow a development path of starting with initial indications and gradually expanding to broader treatment areas. We are actively advancing research to expand indications and cover more patient groups.”

Meanwhile, the company believes that “innovative drug companies typically enter profitability after their product portfolio matures and commercialization scales up. We aim to balance ongoing R&D investment with sales development, focusing on global innovation.”

Regarding overseas expansion, after validating its technology, the next step is commercial launch. The company disclosed to Investor.com, “Currently, there are no overseas sales revenue. We are actively exploring and promoting diverse international collaborations, evaluating partners based on their global commercialization capabilities, pipeline synergy, and growth potential to determine the best overseas commercialization path.”

Essentially, the company is also reevaluating its own narrative. In the past, the market believed it could follow BeiGene’s path—“R&D foundation—capital empowerment—global breakthrough”—to become a Big Pharma. Now, the market recognizes that BeiGene’s story is replicable, but its core competitive advantage is not. The key difference is that BeiGene invests heavily overseas, establishing a physical presence and then raising capital from the market.

Therefore, the current Hong Kong listing requires a clear new vision. In 2025, many A-share pharma companies are seeking to list in Hong Kong, including Changchun High & New, Maiwei Biotech, and Betta Pharmaceuticals, while Hengrui Medicine has already successfully listed. Likely, the HKEX and international investors will prioritize mature, large-scale pharmaceutical companies.

The company told Investor.com, “Going public in Hong Kong is part of our long-term global strategic layout, not just a short-term fundraising goal. We will determine the appropriate issuance scale based on our actual business needs and market conditions to match our company’s value.” (Produced by Thinking Finance)■

Image source | Setu.com

(This article is for reference only and does not constitute investment advice. Markets are risky; invest cautiously.)