HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The key task of medical system reform in 2022 is to promote service price reform. There would be overall medical service price increase, but not all hospitals would be benefit.</li>
<li>The primary market financing of medical device CXO industry has become very hot in the past two years, but it could be challenging to form a complete industrial chain.</li>
<li>The lifting of lockdown in Shanghai/Beijing significantly reduces the pressure on supply chain and hospital operations. However, there would still be lockdown in places where positive cases are found. </li>
</ul>


The key task of medical system reform in 2022 is to promote service price reform. There would be overall medical service price increase, but not all hospitals would be benefit.
The primary market financing of medical device CXO industry has become very hot in the past two years, but it could be challenging to form a complete industrial chain.
The lifting of lockdown in Shanghai/Beijing significantly reduces the pressure on supply chain and hospital operations. However, there would still be lockdown in places where positive cases are found. 


China Healthcare Weekly (Jun.10) - Medical Service Price Reform, Medical Device CXO, Lockdown Lifted

<ul>
<li>The blood products VBP results in Guangdong relieved the worries of the market, which provides us with a stable policy environment. Investors would have more confidence in this industry.</li>
<li>Higher burn/market cap ratio would force biotech to dilute larger portion of shares to raise money. Companies with solid R&amp;D may also die due to financing gap in market downturn.</li>
<li>The high market value not commensurate with the real industry development level has been formed.So, in the industry clearing process, there's more bubble in market value needs to be digested. </li>
</ul>


The blood products VBP results in Guangdong relieved the worries of the market, which provides us with a stable policy environment. Investors would have more confidence in this industry.
Higher burn/market cap ratio would force biotech to dilute larger portion of shares to raise money. Companies with solid R&amp;D may also die due to financing gap in market downturn.
The high market value not commensurate with the real industry development level has been formed.So, in the industry clearing process, there's more bubble in market value needs to be digested. 


China Healthcare Weekly (Jun.3) - Blood Products VBP, Burn/Market Cap Ratio, Longer Recovery Cycle

Equity Bottom-Up

<ul>
<li>With Roche’s failure of several clinical trials on TIGIT project tiragolumab, the market's future expectations on this target have discounted. Investors may need to get prepared in advance.</li>
<li>Ociperlimab means a lot to BeiGene. If ociperlimab fails, BeiGene would have no big catalyst for a long time. BeiGene’s label of superior global R&amp;D capability + potential BIC doesn't hold water.</li>
<li>Without ociperlimab, BeiGene’s valuation could fall back to about RMB60 billion to RMB80 billion. If the valuation is finally in line with Innovent, it would be no surprising.</li>
</ul>


With Roche’s failure of several clinical trials on TIGIT project tiragolumab, the market's future expectations on this target have discounted. Investors may need to get prepared in advance.
Ociperlimab means a lot to BeiGene. If ociperlimab fails, BeiGene would have no big catalyst for a long time. BeiGene’s label of superior global R&amp;D capability + potential BIC doesn't hold water.
Without ociperlimab, BeiGene’s valuation could fall back to about RMB60 billion to RMB80 billion. If the valuation is finally in line with Innovent, it would be no surprising.


BeiGene Ltd (6160.HK/BGNE.US/688235.CH) - Valuation Remodeling if the TIGIT Project Fails

<ul>
<li>China biotech companies are “being squeezed” between the negative domestic policies and the dilemma of internationalization. The investment logic of biotech has broken and the valuation forecasts are ineffective.</li>
<li>For CXO, the uncertainties outweigh the certainties.Investors need to be prepared for the possibility of CXO not to return to its peak, because its best time may have been over.</li>
<li>We’re in a very complicated environment. A lot of things come together. Survive first. Seize rebounds after plunge rather than go bottom fishing. You don't know when the bottom is. </li>
</ul>


China biotech companies are “being squeezed” between the negative domestic policies and the dilemma of internationalization. The investment logic of biotech has broken and the valuation forecasts are ineffective.
For CXO, the uncertainties outweigh the certainties.Investors need to be prepared for the possibility of CXO not to return to its peak, because its best time may have been over.
We’re in a very complicated environment. A lot of things come together. Survive first. Seize rebounds after plunge rather than go bottom fishing. You don't know when the bottom is. 


Re-Examine the Outlook and Investment Strategy for China Biotech and CXO

<ul>
<li>FDA’s CRL on Hutchmed and Junshi indicates if there’s no real innovation, there’s little point in doing MRCT. Chinese companies must re-evaluate the costs of internationalization.There’s nothing related to “politics”.</li>
<li>DRGs is a policy that will have a significant impact on the development trend of the entire healthcare industry, because it would change doctors’ interest orientation and companies’ profit model.</li>
<li>However, we believe that DRGs will be a top-level policy design, which will gradually be followed by supporting policies, such as special subsidies for innovation.</li>
</ul>


FDA’s CRL on Hutchmed and Junshi indicates if there’s no real innovation, there’s little point in doing MRCT. Chinese companies must re-evaluate the costs of internationalization.There’s nothing related to “politics”.
DRGs is a policy that will have a significant impact on the development trend of the entire healthcare industry, because it would change doctors’ interest orientation and companies’ profit model.
However, we believe that DRGs will be a top-level policy design, which will gradually be followed by supporting policies, such as special subsidies for innovation.


China Healthcare Weekly (May.6)-FDA’s CRL on Junshi/HCM, Biotech Globalization, Significance of DRGs

China

Innovent Biologics, Inc. operates as a biopharmaceutical company. The Company develops, manufactures, and distributes monoclonal antibody drug candidates for the treatment of oncology, ophthalmology, autoimmune, cardiovascular, and other diseases. Innovent Biologics serves customers in China.

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Innovent Biologics Inc (1801 HK)

China Healthcare Weekly (Jun.10) - Medical Service Price Reform, Medical Device CXO, Lockdown Lifted

China medical system reform will increase overall service price; Medical device CXO is popular but has a long way to go; SH lockdown has lifted,...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.3) - Blood Products VBP, Burn/Market Cap Ratio, Longer Recovery Cycle

Positive results of blood products VBP restore investors' confidence. After "indiscriminate boom" in China biotech, It's time to show true colors....

Xinyao (Criss) Wang

BeiGene Ltd (6160.HK/BGNE.US/688235.CH) - Valuation Remodeling if the TIGIT Project Fails

Roche’s clinical failures on TIGIT project are enough to make investors wary. Without TIGIT, BeiGene's outlook and valuation would shrink largely....

Xinyao (Criss) Wang

Re-Examine the Outlook and Investment Strategy for China Biotech and CXO

The investment logic of China biotech has broken due to dilemma of domestic policy and internationalization risk.CXO couldn't sustain high...

Xinyao (Criss) Wang

China Healthcare Weekly (May.6)-FDA’s CRL on Junshi/HCM, Biotech Globalization, Significance of DRGs

The FDA announced its CRL on Hutchmed’s surufatinib and Junshi’s PD-1. It's time to reexamine the logic and prospects of biotech globalization. The...

Xinyao (Criss) Wang

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