Loncar unveils China BioPharma Index

Loncar Investments introduced the Loncar China BioPharma Index (LCHINA), a global benchmark designed to track the performance of China’s biopharma industry.

The index will monitor the performance of publicly traded stocks listed on either Hong Kong Exchanges and Clearing Ltd. (HKEX) or NASDAQ, and will include pharmaceutical, biotech and diagnostics companies as well as drug manufacturers, wholesalers, distributors and service providers.

The inaugural index is composed of 32 publicly traded stocks, 24 of which are listed on HKEX. LCHINA’s largest component is conglomerate Shanghai Fosun Pharmaceutical Group Co. Ltd. (Shanghai:600196; HKSE:2196), with a 4.61% weighting. The largest NASDAQ-listed company is cancer developer BeiGene Ltd. (NASDAQ:BGNE) at 3.53%.

LCHINA uses a modified equal-weighting approach, with price and return data calculated independently on a daily basis by Indxx LLC. The index’s closing value corresponds to NASDAQ’s daily close, and it will be reconstituted and rebalanced semi-annually.

Brad Loncar, who created the index, told BioCentury there was no index analogous to the NASDAQ Biotechnology Index (NBI) to gauge the performance of China’s biopharma industry. “We have no way of saying, ‘How fast is their biotech sector growing?’” he said.

He hopes the index will eventually be adopted by global investors interested in China’s biotech evolution.

LCHINA is Loncar’s second index product, following the March 2015 launch of the Cancer Immunotherapy Index. That index serves as the foundation for the Loncar Cancer Immunotherapy ETF (NASDAQ:CNCR), which has $60 million in assets (see BioCentury Extra, Oct. 14, 2015).