Tongjitang Chinese Medicine Co, a domestic traditional Chinese medicine manufacturer, made its debut on Friday on the New York Stock Exchange, becoming the first traditional Chinese medicine company to list on the world's biggest exchange.
Tongjitang earlier offered 9.87 million American Depositary Shares (ADS) at an estimated price range of US$15 to US$17 a share in a bid to raise as much as US$168 million. The offer was underwritten by Merrill Lynch, UBS Securities and CIBC World Markets. The company offered 8.35 million ADS; selling shareholders offered another 1.5 million ADS.
"It is a sign that Chinese herbal medicine has been winning greater recognition among Westerners as an alternative health care supplement," said Yuan Lu, an analyst at Everbright Securities.
Tongjitang was privately founded in 1995. It has more than 140 kinds of Chinese traditional medicine and Western medicine, which are sold both by prescription and over the counter. The company owns seven patented herbal drugs, including Xianling Gubao for the treatment of osteoporosis and Zaoren Ansheng for neurasthenia.
Tongjitang's net income in 2006 amounted to US$17.2 million, up 20 percent from 2005. Its major product, Xianling Gubao, accounted for 77.2 percent of the revenue.
Premier Wen Jiabao said in a March 5 report that the government would strongly support the development of traditional Chinese medicine and the folk medicine of ethnic minorities and give full play to their important role in preventing and treating illness.
"The premier's report raised our confidence in the Chinese medicine industry. Chinese traditional medicine companies have been performing well in recent years," said Yuan. For instance, Yunnan Baiyao Group Co Ltd, which listed on the Shenzhen Stock Exchange, posted a net profit increase of 20 percent in the period from January to September in 2006.
"But not all the medicine companies performed well, especially when the price of medicine drops and the medicine industry lacks regulation," said Ye Songtao, an analyst at Changjiang Securities.
"Listing overseas can help companies boost their international reputation and facilitate overseas expansion," said Ye.
(China Daily March 17, 2007)