Only M&A? They also do spin-offs... Overseas pharmaceutical companies, the 'Spin-off' craze

Recently, while there has been an increase in cases where promising biotech companies are being acquired or merged by global big pharma (large pharmaceutical companies), there are also ongoing cases of spinning off business units or subsidiaries to go public through initial public offerings (IPOs). This is interpreted as a move to facilitate fundraising by creating separate companies and conducting IPOs.

Promotional booth of Wooshin BioLogics set up at the Boston Convention Center in the United States, where the 'Bio International Convention (Bio USA) 2023' was held. Photo by Lee Chunhee

According to the Bioeconomy Research Center of the Korea Bio Association on the 17th, Wuxi Biologics, a Chinese contract development and manufacturing organization (CDMO) for biopharmaceuticals, recently disclosed plans to spin off its subsidiary specializing in antibody-drug conjugates (ADC) and other bioconjugates, Wuxi XDC, and list it on the Hong Kong Stock Exchange.

Wuxi XDC is a company jointly established by Wuxi Biologics and Wuxi STA for the research and development (R&D) and manufacturing of antibodies and other biological intermediates. Currently, it is conducting global contract research, development, and manufacturing operations (CRDMO) focused on all conjugates (XDC), including ADCs, peptide conjugates, oligo conjugates, and chemical conjugates.

Through this spin-off, Wuxi XDC will become an independent subsidiary within the Wuxi Group rather than a subsidiary of Wuxi Biologics, with plans to proceed to listing on the Hong Kong Stock Exchange. The company expects that this spin-off will help secure its position as a specialized CRDMO in the bioconjugate market while aiding in fundraising, talent acquisition, and governance improvement. As of May, Wuxi XDC is managing 102 projects and is submitting clinical trial applications (INDs) for various ADC projects within 15 months, roughly half the duration of traditional development timelines.

Continued Spin-offs by Overseas Big Pharma

This trend is not unique to Wuxi. Recently, various big pharma companies such as Sanofi and Novartis have been spinning off subsidiaries. In May last year, Sanofi spun off its active pharmaceutical ingredient (API) business under the name EuroAPI and listed it on the Paris Stock Exchange. EuroAPI is the world's largest manufacturer of APIs for small molecule drugs and the second largest API company overall worldwide.

Sandoz's Humira Biosimilar 'Hyrimoz'

Additionally, Novartis spun off its generic and biosimilar business unit under the name Sandoz in August last year. The plan is to make it the largest generic drug company in Europe. In the ongoing biosimilar competition for Humira (active ingredient adalimumab) in the U.S. that started this month, Novartis has been successfully operating its business by listing its biosimilar "Hyrimoz" and the unbranded product with a higher discount rate "Adalimumab-adaz" on formularies of major pharmacy benefit managers (PBMs) such as OptumRx and Express Scripts.

Furthermore, in November last year, Ireland's Alkermes announced plans to separate its oncology business unit, which is in the development stage, from its neurology business unit, which is in the commercialization stage, to create an independent publicly listed company named Oncology. In April last year, there were reports that India's Glenmark planned to sell Glenmark Life Sciences, which handles the active pharmaceutical ingredient business.

This content was produced with the assistance of AI translation services.