Uncertain investors drop Fosun Pharma shares on first day
The company wants to grow by acquisitions but the market thinks it is the wrong strategy
Shares of Shanghai Fosun Pharmaceutical, a generic drug maker, closed 8 per cent below the initial public offer price on the first day of trading, as investors shunned the company's aggressive growth strategy.
The company's business model of growing through acquisitions "could cause the management team to lose focus", said a Hong Kong-based fund manager who runs a US$800 million portfolio.
Fosun Pharma has vowed "to concentrate on drug manufacturing while running a hospital chain simultaneously, which requires very different hands-on management and operating experience", he added.
The stock price in Hong Kong was down as much as 12 per cent before lunch yesterday in a weaker overall market, while its Shanghai-listed shares closed 1.3 per cent lower at 10.19 yuan (HK$12.55) in a firmer market.
Ahead of the IPO, chief executive and chairman Chen Qiyu expressed interest in buying overseas drug manufacturing firms that could immediately boost revenue. This has added to investor uncertainty.