HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. </li>
<li>Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.</li>
<li>Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.</li>
</ul>


HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. 
Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.
Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.


Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

<ul>
<li>Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.</li>
<li>Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.</li>
<li>HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management's resilience in the future.</li>
</ul>


Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.
Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.
HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management's resilience in the future.


Hutchmed China Ltd (13.HK/​​HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

<ul>
<li>In 24Q1, the innovative drug projects and medical device projects ranked top two in domestic investment and financing deals, but investment in the field of AI cooled down.</li>
<li>For biotech that located in China and only for China markets, it’s hard for them to generate good returns. It is recommended not to spend too much time on them.</li>
<li>As the US House Committee advances the BIOSECURE Act to restrict WuXi AppTec/WuXi Bio last week, we listed some points worth the attention at this stage.This is far from over.</li>
</ul>


In 24Q1, the innovative drug projects and medical device projects ranked top two in domestic investment and financing deals, but investment in the field of AI cooled down.
For biotech that located in China and only for China markets, it’s hard for them to generate good returns. It is recommended not to spend too much time on them.
As the US House Committee advances the BIOSECURE Act to restrict WuXi AppTec/WuXi Bio last week, we listed some points worth the attention at this stage.This is far from over.


China Healthcare Weekly (May.19)- Decoupling Deadline with WuXi,Biotech Classification,Deals Cooling

Thematic (Sector/Industry)

<ul>
<li>A document titled "<em>Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain</em>" attracted widespread attention, which is significantly different from past policies. </li>
<li>Restrictions on payment end and deteriorating investment and financing situations will be improved, marking a new starting point for China’s innovative drug business. We have reasons to start being optimistic.</li>
<li>If approved and implemented, it would be a significant reversal of the previous expectation and investment logic of innovative drugs. So, investors should not overlook the importance of this document.</li>
</ul>


A document titled "Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain" attracted widespread attention, which is significantly different from past policies. 
Restrictions on payment end and deteriorating investment and financing situations will be improved, marking a new starting point for China’s innovative drug business. We have reasons to start being optimistic.
If approved and implemented, it would be a significant reversal of the previous expectation and investment logic of innovative drugs. So, investors should not overlook the importance of this document.


Important New Policy for China’s Innovative Drugs – The Game Rule Is About to Change Radically

<ul>
<li>HUTCHMED's 2023 results are relatively certain. Fruquintinib had a strong start after obtaining approval in the US, with sales of about US$13-15 million in just more than a month.</li>
<li>Oncology/Immunology consolidated revenue would be in line with management’s performance guidance (US$450 to US$550 million) in 2023. There are promising data readout/NDA submission this year, which would be potential catalysts.</li>
<li>HUTCHMED has sufficient cashflow and does not require external financing. From 2024 to 2026, it will enter a period of accelerated growth in product revenue. Breakeven is achievable in 2025.</li>
</ul>


HUTCHMED's 2023 results are relatively certain. Fruquintinib had a strong start after obtaining approval in the US, with sales of about US$13-15 million in just more than a month.
Oncology/Immunology consolidated revenue would be in line with management’s performance guidance (US$450 to US$550 million) in 2023. There are promising data readout/NDA submission this year, which would be potential catalysts.
HUTCHMED has sufficient cashflow and does not require external financing. From 2024 to 2026, it will enter a period of accelerated growth in product revenue. Breakeven is achievable in 2025.


Hutchmed China Ltd (13.HK/​​HCM.US) - 2023 Results Preview and Catalysts in 2024

Hong Kong

Hutchison China MediTech Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. Hutchison China MediTech markets its products globally.

China Traditional Chinese Medicine Co. Limited, through its subsidiaries, manufactures and sells medicine and pharmaceutical products in China.

China Traditional Chinese Medicine (570 HK)

SSY Group Limited researches, develops, manufactures, and sells a wide range of pharmaceutical products.  The Company sells non PVC soft bags, PP plastic bottles, and glass bottle infusions.

The United Laboratories International Holdings Limited produces and distributes pharmaceutical products. The Company's products include finished products, APIs, intermediates, and capsules.

The United Laboratories International Holdings Limited (3933 HK)

The United Laboratories International Holdings Limited

Beijing Tong Ren Tang Chinese Medicine Co. Ltd. is a Chinese medicine manufacturer. The Company mainly develops and produces health products, including patent medicines and health-care products.

Beijing Tong Ren Tang Chinese Medicine (3613 HK)

YiChang HEC ChangJiang Pharmaceutical Co Ltd develops a variety of drugs.  The Company develops and sells drugs for anti-virus, metabolic diseases, cardiovascular, and more.

Dawnrays Pharmaceutical (Holdings) Limited, through its subsidiaries, develops, manufactures, and sells non-patented chemical medicines including cephalosporins in sterile bulk medicine and powder for injection forms, their intermediate pharmaceuticals and system specific medicines.  The Group produces a series of cephalosporins with various therapeutic uses.

Dawnrays Pharmaceutical (Holdings) (2348 HK)

Jacobson Pharma Corporation Limited manufactures pharmaceuticals. The Company researches, produces, and sells a variety of generic and proprietary Chinese medicines around the world.

Tianda Pharmaceuticals Ltd is involved in research, development, production, and sales of pharmaceutical and health supplement products.

Lee's Pharmaceutical Holdings Limited develops, manufactures and sells quality biopharmaceutical products that focus on combating cardiovascular diseases and viral sexually transmitted diseases.

Perrigo Company PLC is a global healthcare supplier that develops, manufactures, and distributes OTC and generic prescription pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients and pharmaceutical and medical diagnostic products. The Company's primary markets and locations of manufacturing and logistics operations are the US, UK, Mexico, and Australia.

Bausch Health Companies Inc. discovers and distributes pharmaceutical. The Company develops drugs for unmet medical needs in central nervous system disorders, eye health, and gastrointestinal diseases, as well as contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetic devices. Bausch Health Companies serves customers worldwide.

Celltrion Pharm Inc. manufactures and sells pharmaceutical products.  The Company products inclue drugs for for hepatic diseases, digestion, diabetes, cold and fever, anti-inflammatory, and veterinary medical products.  Celltrion also provides pharmaceutical raw materials.

Sam Chun Dang Pharm Co., Ltd. (SCD) develops, manufactures, and markets medicines for human health care.  The Company specializes in producing medical treatment drugs as well as diagnostic drugs.  SCD Pharm's products include antibiotics, respiratory stimulants, pneumonia diagnosis devices, and many others.

J.B. Chemicals & Pharmaceuticals Ltd. manufactures pharmaceuticals, chemicals and agro-based products. The Group's products include metrogyl, rantac (a ranitidine-based formula), and nicardia, a cardiac care medicine. The Company has an agreement with Justesa Imagen, to manufacture and market diagnostics under the "Trazograf" brand name.

J.B. Chemicals & Pharmaceuticals (JBCP IN)

Corcept Therapeutics Inc. is a pharmaceutical company that discovers and develops drugs for the treatment of severe metabolic and psychiatric disorders. The Company's lead product modulates the effect of cortisol, also known as the "stress hormone", by selectively blocking the binding of cortisol to one of its two known receptors, the GR-II receptor.

Jiangsu Nhwa Pharmaceutical Co Ltd integrates science, industry and trade into one Group.  The Group engages in producing medications for central nervous system and preparation of raw materials.

Jiangsu Nhwa Pharmaceutical Co., (002262 CH)

Tasly Pharmaceutical Group Co.,Ltd. manufactures drug products. The Company develops and sells traditional Chinese medicine, biological medicine, chemical medicine, and other related products. Tasly Pharmaceutical Group markets its products throughout China.

Ajanta Pharma Limited is a pharmaceutical company involved in the areas of product research, manufacturing, and marketing. The Company's manufacturing capabilities include segments such as antiretrovirals, antimalarials, cardiovascular, dermatology, and ophthalmology. The Company also markets over the counter products that include some nature-based remedies.

Kangmei Pharmaceutical Co., Ltd. develops, produces, and sells medicines that are used for the treatment of high blood pressure and cold.  The Company also pr oduces antibiotic drugs and health care products. Kangmei also sells other manufacturers' medical products through its wholesale and retail chain.

Kangmei Pharmaceutical Co Ltd (600518 CH)

Hutchison China MediTech Ltd develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. Hutchison China MediTech markets its products globally.

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Hutchison China MediTech Ltd (HCM US)

Hutchmed China Ltd (13.HK/HCM.US) 23H1 - This Company Is Becoming More Attractive

We have seen over 35% share price rally after this insight was published. Obviously, the market is optimistic about the upcoming fruquintinib's FDA...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

HUTCHMED’s 2024 full-year sales may once again exceed expectations. It's time to recalculate the peak sales of pipeline and the Company’s outlook....

Xinyao (Criss) Wang

China Healthcare Weekly (May.19)- Decoupling Deadline with WuXi,Biotech Classification,Deals Cooling

Investment/financing deals cooling in 24Q1. It's better not to spend too much time on Biotech that located in China and only for China...

Xinyao (Criss) Wang

Important New Policy for China’s Innovative Drugs – The Game Rule Is About to Change Radically

A new document about China's innovative drugs would change the game rule/outlook radically. We have reasons to start being optimistic that the...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) - 2023 Results Preview and Catalysts in 2024

HUTCHMED has entered a harvest period.Product revenue would grow rapidly in the next two years, with promising catalysts head.Together with...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

We have seen over 35% share price rally after this insight was published. Obviously, the market is optimistic about the upcoming fruquintinib's FDA...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​​HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

HUTCHMED’s 2024 full-year sales may once again exceed expectations. It's time to recalculate the peak sales of pipeline and the Company’s outlook....

Xinyao (Criss) Wang

China Healthcare Weekly (May.19)- Decoupling Deadline with WuXi,Biotech Classification,Deals Cooling

Investment/financing deals cooling in 24Q1. It's better not to spend too much time on Biotech that located in China and only for China...

Xinyao (Criss) Wang

Important New Policy for China’s Innovative Drugs – The Game Rule Is About to Change Radically

A new document about China's innovative drugs would change the game rule/outlook radically. We have reasons to start being optimistic that the...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​​HCM.US) - 2023 Results Preview and Catalysts in 2024

HUTCHMED has entered a harvest period.Product revenue would grow rapidly in the next two years, with promising catalysts head.Together with...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) 23H1 - This Company Is Becoming More Attractive

Hutchmed China Ltd (13.HK/HCM.US) - Time to Reassess Valuation Prospects Despite the Pain Points

Hutchmed China Ltd (13.HK/HCM.US) - 2023 Results Preview and Catalysts in 2024