On September 24, Wu Qing, chairman of the CSRC, said at a press conference of the State Council that in order to further stimulate the vitality of the merger and reorganization market, the CSRC has studied and formulated the "Opinions on Deepening the Reform of the Merger and Reorganization Market of Listed Companies" ("Six Mergers and Acquisitions", hereinafter referred to as the "Opinions"), including supporting listed companies to transform and upgrade to new quality productivity, encouraging industrial integration, improving regulatory tolerance, and improving the transaction efficiency of the reorganization market.

Among them, it is clearly stated that listed companies are strongly supported to carry out cross-industry mergers and acquisitions and acquisitions of unprofitable assets based on transformation and upgrading.

This means that unprofitable biotech companies may usher in a new path to enter the capital market.

At the meeting, Wu Qing said that mergers and acquisitions are major events in the capital market, and further promoting the effective allocation of resources by supporting corporate mergers and acquisitions is a very important function of the capital market.

In order to further stimulate the vitality of the merger and reorganization market, the CSRC has studied and formulated the "Opinions" on the basis of extensive research and listening to opinions from all parties in the previous stage. The main contents of the opinions include:

First, strongly support listed companies to transform and upgrade to new quality productivity. The CSRC will actively support listed companies in mergers and acquisitions around strategic emerging industries and future industries, including cross-industry mergers and acquisitions based on transformation and upgrading, as well as acquisitions of unprofitable assets that help to strengthen the supply chain and improve the level of key core technologies, and guide more resource elements to gather in the direction of new quality productivity.

Second, actively encourage listed companies to strengthen industrial integration. While supporting the development of new industries, the capital market will continue to help traditional industries to reasonably improve industrial concentration and resource allocation efficiency through restructuring. Support will be given to the integration needs between listed companies by greatly simplifying the review procedures. At the same time, through some arrangements such as "reverse linkage" during the lock-up period, private equity funds are encouraged to actively participate in mergers and acquisitions.

Third, further improve regulatory tolerance. While further abiding by the rules, the CSRC will respect market laws, economic laws, and innovation laws, and further improve tolerance for restructuring valuations, performance commitments, peer competition, related transactions, etc., based on actual conditions, so as to better play the role of the market in optimizing resource allocation.

Fourth, make great efforts to improve the transaction efficiency of the restructuring market. The CSRC will support listed companies to adopt payment tools such as installment issuance of shares and convertible bonds, installment payment of transaction consideration, and installment supporting financing according to the specific needs of transaction arrangements, so as to further improve transaction flexibility and capital utilization efficiency. At the same time, a simplified reorganization review procedure will be established to reorganize qualified listed companies, greatly simplify the review process, shorten the review time limit, and improve the efficiency of reorganization.

The CSRC will strongly support listed companies to carry out cross-industry mergers and acquisitions and acquisitions of unprofitable assets based on the goal of transformation and upgrading. This may create a new way out for unprofitable biopharmaceutical companies.

In the past two years, the secondary market has been falling, and biopharmaceutical companies in both A-shares and Hong Kong stocks, especially unprofitable companies, have almost lost their financing windows.

The primary market is experiencing a financing cliff, and the situation of Hong Kong stocks and the Science and Technology Innovation Board IPO is even more grim, which has caused many unlisted and unprofitable companies to be in a long-term crisis of tight funds.

As we all know, biopharmaceutical innovation is a long process with high risks, high investment, and long cycles. If new funds cannot be integrated to support laboratory research, animal experiments, and human phase I, II, and III clinical trials, biopharmaceutical innovation may come to an abrupt end. Therefore, it is urgent to save the confidence of investment and financing.

At the end of July, the Shanghai government issued the "Several Opinions on Supporting the Innovation and Development of the Whole Chain of the Biopharmaceutical Industry", and launched 37 measures to support the innovation and development of the whole chain of the biopharmaceutical industry.

Among them, it clearly emphasizes strengthening investment and financing support, including giving full play to the role of Shanghai Biopharmaceutical Industry Mother Fund, Biopharmaceutical Industry Equity Investment Fund and Biopharmaceutical Innovation Transformation Fund, strengthening strategic investment in potential enterprises and high-quality R&D pipelines; encouraging government-guided funds to "invest early, invest in small, invest in hard technology".

And encourage the development of corporate venture capital to strengthen innovation incubation and upstream and downstream coordination of the industrial chain; support enterprises to become bigger and stronger through mergers and acquisitions.

With the strong support of local governments and the support of the "Six Mergers and Acquisitions" launched by the China Securities Regulatory Commission, the market may regain confidence. I hope that the biopharmaceutical industry can usher in a more brilliant future.

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