Thanks to a big IPO on the Hong Kong Stock Exchange, a Chinese couple have become China’s richest husband-and-wife team.

The initial public offering of Hansoh Pharmaceutical Group, which closed up 37.3% on its debut on Friday, made Chairwoman Zhong Huijuan China’s third-richest woman. Zhong’s husband, Sun Piaoyang, is already worth $9.8 billion, according to Forbes

Together, Zhong and Sun have a $19.5 billion bank balance, which would make them wealthier than the Sackler family that owns OxyContin-maker Purdue Pharma, at $14 billion. They’re also worth considerably more than Robin Li and Ma Dongmin, the husband-wife team who run Baidu  (BIDU) and previously China’s top power couple, worth US$8.8 billion.

Zhong owns 68% of Hansoh, which now has a market capitalization of $14.2 billion in U.S. dollars. That values her stake at $9.7 billion. Among China’s wealthiest women, only the property developers Yang Huiyan of Country Garden Holdings (CTRYY) and Longfor Properties (LGFRY) chairwoman Wu Yajun are worth more. Not bad for Zhong, who quit her job as a chemistry teacher to enter the drug business.

Zhong is riding the rapid growth in China’s pharmaceutical industry, as the country concurrently gets richer and older. Revenue for Hansoh rose 24.8% in 2018, to $1.1 billion. Profits climbed 19.2%, to $275 million.

The company generated roughly $1 billion from the IPO. Singapore’s sovereign wealth fund GIC is one of the cornerstone investors. Hansoh plans to use 45% of the IPO money to invest in research and development, with a quarter of that to build improved as well as new product lines. An additional 20% goes to sales promotions, and 10% will be kept as working capital.

Sun has led another drug company, Jiangsu Hengrui Medicine, since 1990. He has turned it from a state-owned company founded in 1970 into a highly profitable maker of medicine to combat cancer, with a small-molecule drug treatment for advanced gastric cancer, as well as cardiovascular disease, inflammation and central-nervous system conditions.

In May 2018, Forbes named Jiangsu Hengrui No. 64 out of the 100 most-innovative companies in the world. But that did not help Jiangsu Hengrui’s market value. It was a torrid year for the stock, which lost 35.1% between May and the end of the year. The shares have advanced 39.4% so far in 2019, considerably bigger than Hansoh as a US$39.2 billion company.

Hansoh Pharmaceutical makes anti-infection and anti-tumor drugs, too, generating around half of sales from cancer treatments. It is far more accessible to overseas’ investors, thanks to its Hong Kong listing, than Jiangsu Hengrui, which went public in 2000 with a listing in Shanghai.

Investors have clearly not been deterred by an investigation that the Chinese authorities have launched into potential kickbacks paid by drugmakers to doctors and hospital administrators, to get their drugs used.

Hansoh Pharmaceutical is on the list of 77 pharmaceutical companies released earlier this month that China’s National Healthcare Security Administration and the Ministry of Finance are investigating. The Chinese arms of Sanofi (SNY) , Eli Lilly (LLY) and Bristol-Myers Squibb (BMY) are also on the list.

There’s suspicion that the embarrassment over the U.S. college admissions scandal may have prompted the investigation. The biggest bribe allegedly paid to college consult Rick Springer in the “Varsity Blues” case came from Zhao Tao, the chairman of Shandong Buchang Pharmaceutical, which is also on the list. Zhao says he was acting in a private capacity when he helped his daughter, “Molly” Zhao Yusi, get into Stanford University.

Springer allegedly paid a half million dollars to the Stanford University sailing team, and tried to get Molly Yao recruited to the team. He allegedly pocketed the rest of the $6.5 million paid by Zhao. The former Stanford sailing coach John Vandemoer reportedly pleaded guilty to racketeering, this week receiving a sentence of a day in prison, a $10,000 fine, and two years of supervised release. Stanford fired him after his plea.

It is the first conviction in the case, which has been an embarrassment in China, where aggressive parents will go to great lengths to push their children’s education. The second-largest alleged payment, of $1.2 million to get a student into Yale, also came from a Chinese family.

But there are also problems within the Chinese pharmaceutical industry itself. Doctors say it is common practice to supplement your income by accepting “grey money” from drug companies to push their products.

A maker of traditional Chinese medicine, Kangmei Pharmaceutical, said in April that it had overstated its cash holdings by as much as $4.3 billion. That led to a regulatory probe, with China’s stock watchdog finding the company used related parties to manipulate its shares.

Hansoh may come under a more-generic form of pressure as a result of the investigations. The Chinese government is on a long-term push to drive down the price of drugs. The government says it will instigate a second round of Group Purchase Organization price cuts for the national health service by September.

That would put pressure on margins at drugmakers. Those with proprietary treatments would likely fare better than those making generics. But Jiangsu Hengrui reportedly saw the price of its hypertension drug Irbesartan slashed 60% in a round of cuts in December. (Source:

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