Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Bottom-Up

Alibaba Health Information Tec / Equity Bottom-Up

This Insight summarizes the takeaways from a recent China healthcare industry conference focused on biopharmaceuticals and medical devices, and builds on our Originals Insight <a href="https://www.smartkarma.com/insights/asian-healthcare-coming-of-age" target="_blank" data-smartkarma-citation="insights:45676" rel="noopener">Asian Healthcare - Coming of Age</a>.  Topics addressed include value-based purchasing for drugs and devices; development of commercial health insurance; internet hospitals and online pharmacies; DRGs for hospitals; issues for medical device companies; and amendments to China's patent laws.

This Insight summarizes the takeaways from a recent China healthcare industry conference focused on biopharmaceuticals and medical devices, and builds on our Originals Insight Asian Healthcare - Coming of Age.  Topics addressed include value-based purchasing for drugs and devices; development of commercial health insurance; internet hospitals and online pharmacies; DRGs for hospitals; issues for medical device companies; and amendments to China's patent laws.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by <a href="https://www.smartkarma.com/entities/jiangsu-hengrui-medicine-co-ltd" target="_blank" data-smartkarma-citation="entities:14128:1" rel="noopener">Jiangsu Hengrui Medicine (600276 CH)</a>, one of the standout domestic holdings within the Health Care sector, followed by <a href="https://www.smartkarma.com/entities/china-tourism-group-duty-free-corp-ltd" target="_blank" data-smartkarma-citation="entities:12278:1" rel="noopener">China Tourism Group Duty Free Corp Ltd (601888 CH)</a> and <a href="https://www.smartkarma.com/entities/luxshare-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:12310:1" rel="noopener">Luxshare Precision Industry (002475 CH)</a> .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

Last month saw China allocations hit record levels across Asia Ex-Japan, Emerging Market and Global active long-only funds.  The average China weight in Asia Ex-Japan funds stands at a record 50.96%, in active GEM funds a record 37.63% and in active Global funds an all-time high of 5.33%However, these increases have come at the expense of greater concentration.  Among Global managers, the top 10 largest China stock holdings now account for 62% of total China allocations, among GEM and Asia Ex-Japan funds just under 50% - an all-time high across all 3 investor groups. Dedicated China managers, however, are more diversified.  In this analysis, we look at the differences between dedicated China funds and their regional peers.  We find that Asia, GEM and Global managers are more concentrated in the Consumer Discretionary and Communication Services sectors, whereas dedicated China managers are more diversified across Technology, Industrials and Health Care stocks.  Regional funds are also underinvested in China A-Shares compared to dedicated China managers, who are running significant overweights vs the MSCI China benchmark.We identify the next generation of Chinese stocks outside of the big index names by following the lead of dedicated managers in the region.  We provide a list of 40 stocks, identified as 'Next Generation' stocks due to their widespread investment in dedicated China funds, but that are currently underowned by Asia Ex-Japan, GEM and Global investors.The list is headed by Jiangsu Hengrui Medicine (600276 CH), one of the standout domestic holdings within the Health Care sector, followed by China Tourism Group Duty Free Corp Ltd (601888 CH) and Luxshare Precision Industry (002475 CH) .Analysis taken from our Global, GEM, Asia Ex-Japan and China fund universes.  Global:  386 Active Funds, combined AUM $750bn                                                                                        GEM:  242 Active Funds, combined AUM $370bn                                                                                          Asia Ex-Japan: 98 Active Funds, combined AUM $70bn                                                                              China:  119 Active Funds, combined AUM $50bn

China's Next Generation:  Diversifying Away from Tencent and Alibaba.

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

1. Industry viewpoints: <ul>
<li>A new policy was released to clarify the scope and price of medical insurance payments for online healthcare service, which help open up the market scale of digital healthcare business.</li>
<li>Currently, some of the so-called "innovative drugs" in China are still far from real innovation, such as the PD-1 market.</li>
<li>Polypeptide drugs account for a small share in the global biomedical market, but they are developing rapidly.</li>
</ul>2. Company news:News from Wondfo Biotech, CSPC and Sino Biopharm about the new products for COVID-19 antigen tests, clinical progress on new category 1 drug and the new products that pass the consistency evaluation in China.3. Market review:Last week, stock price for healthcare sector in A share decreased 1.36%, while CSI 300 increased 4.05% over the same period of time.4. Risk Disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints: 
A new policy was released to clarify the scope and price of medical insurance payments for online healthcare service, which help open up the market scale of digital healthcare business.
Currently, some of the so-called "innovative drugs" in China are still far from real innovation, such as the PD-1 market.
Polypeptide drugs account for a small share in the global biomedical market, but they are developing rapidly.
2. Company news:News from Wondfo Biotech, CSPC and Sino Biopharm about the new products for COVID-19 antigen tests, clinical progress on new category 1 drug and the new products that pass the consistency evaluation in China.3. Market review:Last week, stock price for healthcare sector in A share decreased 1.36%, while CSI 300 increased 4.05% over the same period of time.4. Risk Disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/remegen-ltd" target="_blank" data-smartkarma-citation="entities:29191:1" rel="noopener">Remegen Ltd (1788976D CH) </a>is an innovative bio-pharmaceutical company dedicated to the development and commercialization of first-in-class and best-in-class biological drugs. The two core products of <a href="https://www.smartkarma.com/entities/remegen-ltd" target="_blank" data-smartkarma-citation="entities:29191:1" rel="noopener">Remegen Ltd (1788976D CH)</a>  are RC18 and RC48 (Related article: <a href="https://www.smartkarma.com/compose/insight/45020/Pre-IPO%20RemeGen%20-%20Insights%20on%20Two%20Core%20Products%20RC18%20&amp;%20RC48.%20Read%20more:%20https:/skr.ma/sxMEQ" target="_blank" rel="noopener">Pre-IPO RemeGen - Insights on Two Core Products RC18 &amp; RC48. Read more: https://skr.ma/sxMEQ</a>). It is said that the Company is going to be listed on HKEX at a price of HK$52.1/share in November. In terms of valuation, is RemeGen overvalued?

Remegen Ltd (1788976D CH) is an innovative bio-pharmaceutical company dedicated to the development and commercialization of first-in-class and best-in-class biological drugs. The two core products of Remegen Ltd (1788976D CH)  are RC18 and RC48 (Related article: Pre-IPO RemeGen - Insights on Two Core Products RC18 &amp; RC48. Read more: https://skr.ma/sxMEQ). It is said that the Company is going to be listed on HKEX at a price of HK$52.1/share in November. In terms of valuation, is RemeGen overvalued? 

A Different Angle - RemeGen Vs Akeso (Insights on Valuation)

1. Industry viewpoints: 
<ul>
<li>The IVD industry in China is a great place to invest in terms of market size, industry prosperity and growth potential.</li>
<li>With the rapid aging of the population, there is an increasing need for high-quality medical and nursing care for the elderly.</li>
<li>With the gradual homogenization of China's biotechnology industry, how to seek differentiated development has become the key.</li>
</ul>
2. Company news:
News from CStone Pharmaceuticals, Reistone Biopharma, Sino Biopharm and Fosun Pharma on new licensing deals and progress on innovative drugs. 
3. Market review:
Last week, stock price for healthcare sector in A share rose 2.79%, while CSI 300 decreased 0.49% over the same period of time.   
4. Risk Disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk

1. Industry viewpoints: 

The IVD industry in China is a great place to invest in terms of market size, industry prosperity and growth potential.
With the rapid aging of the population, there is an increasing need for high-quality medical and nursing care for the elderly.
With the gradual homogenization of China's biotechnology industry, how to seek differentiated development has become the key.

2. Company news:
News from CStone Pharmaceuticals, Reistone Biopharma, Sino Biopharm and Fosun Pharma on new licensing deals and progress on innovative drugs. 
3. Market review:
Last week, stock price for healthcare sector in A share rose 2.79%, while CSI 300 decreased 0.49% over the same period of time.   
4. Risk Disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk

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)

China Healthcare: Macro Themes

This Insight summarizes the takeaways from a recent China healthcare industry conference. There is much talk of pressures on the industry, but...

Kemp Dolliver, CFA

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Steven Holden

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Xinyao (Criss) Wang

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In this article, by comparing RemeGen and Akeso's pipelines from different aspects to provide referable and helpful insights about the valuation...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.30)

This article summarized major industry viewpoints, companies news and capital market review in healthcare industry in China during the week of Oct.30.

Xinyao (Criss) Wang

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