HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>For the three commercialized products (fruquintinib, surufatinib and savolitinib), they are facing challenges from different aspects. </li>
<li>The lack of blockbuster products and promising targets indicates that Hutchmed's current pipeline does not have core competitiveness, which means Hutchmed's position in the industry is not in first echelon.</li>
<li>In fact, Li Ka-shing's positioning and original intention for Hutchmed is not on innovative drugs. So, big but not strong has always been the pain point of the Company.</li>
</ul>


For the three commercialized products (fruquintinib, surufatinib and savolitinib), they are facing challenges from different aspects. 
The lack of blockbuster products and promising targets indicates that Hutchmed's current pipeline does not have core competitiveness, which means Hutchmed's position in the industry is not in first echelon.
In fact, Li Ka-shing's positioning and original intention for Hutchmed is not on innovative drugs. So, big but not strong has always been the pain point of the Company.


Hutchmed China Ltd (13.HK/HCM.US) - Big but Not Strong

Thematic (Sector/Industry)

<ul>
<li>The domestic provider business subsector fell sharply due to a document leaked out of the industry.Although rebounded, before the policy is clear, we do not recommend to buy the dips.</li>
<li>The reasonable market value of a biotech company in HKEX is the price that Big Pharma is willing to pay for it, or the valuation of its products.</li>
<li>Obtaining CE certificate is one of an important (or “easier”) ways for domestic medical device companies to enter global markets. However, the game rule changes.</li>
</ul>


The domestic provider business subsector fell sharply due to a document leaked out of the industry.Although rebounded, before the policy is clear, we do not recommend to buy the dips.
The reasonable market value of a biotech company in HKEX is the price that Big Pharma is willing to pay for it, or the valuation of its products.
Obtaining CE certificate is one of an important (or “easier”) ways for domestic medical device companies to enter global markets. However, the game rule changes.


China Healthcare Weekly (Mar18)-Leaked Document On Medical Service,Biotech Valuation,CE Mark Upgrade

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> could replace <a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> in the <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index (HSCEI INDEX)</a> at the June rebalance. The review period ends 31 March.</li>
<li>
<a href="https://www.smartkarma.com/entities/bilibili-inc-83a27302-cd7d-4e6a-a1de-bcf93eb022c3" target="_blank" data-smartkarma-citation="entities:32215:1" rel="noopener">Bilibili (9626 HK)</a> is a close add while <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a> is a close delete. Stock prices moves over the next 3 weeks will decide on the changes.</li>
<li>Passive HSCEI Index trackers will need to buy 1.74 days of ADV on Great Wall Motor (2333 HK) and sell over 3 days of ADV on Hansoh Pharmaceutical (3692 HK).</li>
</ul>



Great Wall Motor (2333 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance. The review period ends 31 March.

Bilibili (9626 HK) is a close add while Sunac China Holdings (1918 HK) is a close delete. Stock prices moves over the next 3 weeks will decide on the changes.
Passive HSCEI Index trackers will need to buy 1.74 days of ADV on Great Wall Motor (2333 HK) and sell over 3 days of ADV on Hansoh Pharmaceutical (3692 HK).


HSCEI Index Rebalance Preview (June): Great Wall Motor (2333) Should Replace Hansoh Pharma (3692)

<ul>
<li>The expansion of the scope of positioning directly reflects the change in the importance of pharmaceutical industry in the minds of the top level, which is very pivotal.</li>
<li>The determination to abandon old development mode, and promote real innovation and high-quality internationalization remains unchanged. So, companies need to develop at a higher level and a larger stage.</li>
<li>Once achieved, it means that China's pharmaceutical industry will have another radical change after 2015, leading the industry to another new phase of growth.</li>
</ul>


The expansion of the scope of positioning directly reflects the change in the importance of pharmaceutical industry in the minds of the top level, which is very pivotal.
The determination to abandon old development mode, and promote real innovation and high-quality internationalization remains unchanged. So, companies need to develop at a higher level and a larger stage.
Once achieved, it means that China's pharmaceutical industry will have another radical change after 2015, leading the industry to another new phase of growth.


Interpretation of The "14th Five-Year Plan" For the Development of China Pharmaceutical Industry

<ul>
<li>For development strategy, <a href="https://www.smartkarma.com/entities/alphamab-oncology" target="_blank" data-smartkarma-citation="entities:28213:1" rel="noopener">Alphamab Co Ltd (9966 HK) </a>may lack the foundation of strategic certainty of expectation. It is also not sure about the commercialization performance of KN035 brought by Simcere.</li>
<li>Although the management’s thinking mode of business operation has improved, it still cannot dispel the doubts about whether the Company can catch up with top-level biopharmaceutical enterprises in the future.</li>
<li>Even with the concerns, it does not rule out that investors can long this stock at an undervalued or a reasonable price to get a good return.</li>
</ul>


For development strategy, Alphamab Co Ltd (9966 HK) may lack the foundation of strategic certainty of expectation. It is also not sure about the commercialization performance of KN035 brought by Simcere.
Although the management’s thinking mode of business operation has improved, it still cannot dispel the doubts about whether the Company can catch up with top-level biopharmaceutical enterprises in the future.
Even with the concerns, it does not rule out that investors can long this stock at an undervalued or a reasonable price to get a good return.


Alphamab Co Ltd (9966.HK) - Some Points Worth the Attention

Hong Kong

Sino Biopharmaceutical Limited, through its subsidiaries, researches, develops, produces, and sells biopharmaceutical products for the medical treatment of ophthalmia, as well as modernized Chinese medicine and chemical medicine for the treatment of hepatitis.

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Sino Biopharmaceutical (1177 HK)

Hutchmed China Ltd (13.HK/HCM.US) - Big but Not Strong

Li Ka-shing's original intention for Hutchmed is not on innovative drugs. Hutchmed's current pipeline also does not have core competitiveness. So,...

Xinyao (Criss) Wang

China Healthcare Weekly (Mar18)-Leaked Document On Medical Service,Biotech Valuation,CE Mark Upgrade

We analyzed the impact of leaked document on medical service. We also analyzed the logic of the reasonable market value of a biotech in HKEX. The...

Xinyao (Criss) Wang

HSCEI Index Rebalance Preview (June): Great Wall Motor (2333) Should Replace Hansoh Pharma (3692)

Great Wall Motor (2333) should replace Hansoh Pharma (3692) in the HSCEI at the June rebalance. Bilibili is a close add in case Sunac is deleted....

Brian Freitas

Interpretation of The "14th Five-Year Plan" For the Development of China Pharmaceutical Industry

For the newly released "14th Five-year Plan" of China pharmaceutical industry, we analyzed key points and our interpretation. Once achieved, it...

Xinyao (Criss) Wang

Alphamab Co Ltd (9966.HK) - Some Points Worth the Attention

The article analyzed Alphamab Oncology in terms of its conservativeness on business operation and decision making in early stages, the concerns on...

Xinyao (Criss) Wang

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