Research On The Motivation And Performance Of Pharmaceutical Industry Spin-off Listing

With the development of the capital market and the increasing competition among enterprises,enterprises began to seek effective ways of resource allocation to improve their competitiveness.At first,most enterprises often choose mergers and acquisitions to achieve their own expansion and scale operation,so as to enhance their competitiveness and influence in the market.However,the result of over-expansion and diversification is the low operating efficiency and performance of enterprises.The reason is that diversified operation often consumes a lot of resources,capital and labor costs of the parent company.Under the condition of limited resources,it is often difficult for enterprises to integrate scattered diversified businesses,which easily leads to negative synergy.Later,in order to make up for the consequences of overexpansion and diversified operation,some enterprises began to turn to the operation mode of contractible assets,so the spin-off and listing came into being.Since December 13,2019,when the CSRC issued the "Several Provisions on the Pilot of Domestic Listing of Listed Companies’ Subsidiaries after Splitting",many listed companies have issued announcements of splitting and listing.Due to the characteristics of independent operation of multi-track business in the pharmaceutical industry,it can better meet the "independence" requirements of the CSRC on spin-off and listing,and the fierce competition in the pharmaceutical industry,constantly seeking capital support to promote its own innovation,pharmaceutical enterprises have become the main force of spin-off and listing;As an important part of the pharmaceutical industry,the field of medical devices is more familiar to the public under the background of the COVID-19 epidemic.Therefore,this paper selects the first case of A-share listed companies splitting their holding subsidiaries to list in Hong Kong in the field of medical devices for case analysis.In this paper,taking CDL’s spin-off and listing of Shanghai Kindly Medical Instruments as an example,the following research is carried out.First of all,it sorted out the situation of split listing of Chinese pharmaceutical industry.On this basis,it focuses on the analysis of the motivation and performance of CDL’s spin-off of the listing of Shanghai Kindly Medical Instruments.Finally,the case conclusion and enlightenment are drawn.In terms of research methods,firstly,the event study method is used to analyze the short-term stock price effect,and to determine whether this spin-off has improved the market value of CDL.Then,the financial index analysis is used to measure the solvency,growth and profitability of parent-subsidiary companies before and after the split.Non-financial indicators are also used to measure the degree of nationalization,industry status and innovation ability of parentsubsidiary companies before and after the split.Finally,EVA analysis is used to judge the impact of the spin-off on the overall enterprise value of the parent company.Through research,this paper draws the following conclusions:(1)The split listing has produced short-term positive effects on the stock of parent and subsidiary companies,and the parent company has obtained reasonable valuation;(2)The spinoff and listing broadens the financing channels of parent-subsidiary companies,and the solvency of subsidiaries is significantly improved;(3)The spin-off and listing continues to consolidate the leading position of parent-subsidiary companies in the segmentation field;(4)After the spin-off and listing,the overseas market of the parent subsidiary is expanding continuously,and the degree of internationalization is improved;(5)After the spin-off and listing,the R&D investment of parent and subsidiary companies increased,and the innovation ability improved;(6)The spin-off and listing has improved the enterprise value of KDL Group.The main contributions of this paper are as follows: The successful spin-off of Shanghai Kindly Medical Instruments by KDL is the first case that A-share listed companies spin off their holding subsidiaries and list them in Hong Kong.China’s case study on spin-off listing does not cover a wide range of industries.Therefore,the research in this paper can make up for the gaps in related case studies,and can also provide reference for other similar enterprises that intend to spin-off listing.