HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The assassination of Trump in July has greatly increased the probability of his election as president this year. However, a Trump presidency is not necessarily good for healthcare industry.</li>
<li>Trump's reform in the field of healthcare has two major propositions - One is to achieve the independence of US pharmaceutical supply chain. The other is to reduce drug prices.</li>
<li>From a US national security perspective, China's APIs/CXO would be the segments with the highest sanction risk. China Biotech may also face some headwinds. The risk of "decoupling" further increases.</li>
</ul>


The assassination of Trump in July has greatly increased the probability of his election as president this year. However, a Trump presidency is not necessarily good for healthcare industry.
Trump's reform in the field of healthcare has two major propositions - One is to achieve the independence of US pharmaceutical supply chain. The other is to reduce drug prices.
From a US national security perspective, China's APIs/CXO would be the segments with the highest sanction risk. China Biotech may also face some headwinds. The risk of "decoupling" further increases.


What Does a Trump Presidency Mean for China Healthcare?

<ul>
<li>China healthcare can be mainly divided into the following segments: pharmaceuticals, medical devices, medical services, To B Supply Chain. Investment logic and business characteristics in these fields are completely different.</li>
<li>“High standardization+low dependence on doctors” help pharmaceuticals gain a more favorable commercial value than medical devices in distribution process. Profit margin/cross-regional expansion capability of medical services have always been questioned.</li>
<li>The business characteristics of “To B supply chain” indicate strong cyclical characteristics due to supply rigidity and demand fluctuations, which are easily affected by changes in demand trends.</li>
</ul>


China healthcare can be mainly divided into the following segments: pharmaceuticals, medical devices, medical services, To B Supply Chain. Investment logic and business characteristics in these fields are completely different.
“High standardization+low dependence on doctors” help pharmaceuticals gain a more favorable commercial value than medical devices in distribution process. Profit margin/cross-regional expansion capability of medical services have always been questioned.
The business characteristics of “To B supply chain” indicate strong cyclical characteristics due to supply rigidity and demand fluctuations, which are easily affected by changes in demand trends.


The “Game Rule” of China Healthcare - Pharmaceuticals Vs Medical Devices Vs Medical Services

Event-Driven

<ul>
<li>Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.</li>
<li>“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.</li>
<li>Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.</li>
</ul>


Leading Chinese biotech firms are among the few sub-sectors sustaining rapid growth. However, RemeGen stands as a negative example, with its business model and investment rationale proving flawed.
“Increasing revenue without increasing profits” is actually a “denial” of a company's business model. Even though the losses decreased in 24H1, this doesn’t change our negative expectations for Zai Lab.
Genor Biopharma and Edding Group are merging through a reverse takeover, benefiting both companies by boosting Genor's valuation and allowing Edding to achieve its goal of going public.


China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 6th.</li>
<li>The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.</li>
<li>We highlight flows for HSI ETF (2800 HK), HSCEI ETF (2828 HK), Li Auto (2015 HK), Tencent (700 HK). </li>
</ul>


We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 6th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for HSI ETF (2800 HK), HSCEI ETF (2828 HK), Li Auto (2015 HK), Tencent (700 HK). 


Hong Kong Connect Flows (Sep 6th): Inflows into ETF, Li Auto, Tencent

Yichang HEC Changjiang Pharma / Event-Driven

<ul>
<li>Biotech will continue selling early-stage pipeline in a sluggish market, but this will further lower its valuation as financing won't improve quickly.</li>
<li>Pharmaceutical distribution companies are facing challenges, driving ongoing consolidation in the industry. However, this trend will ultimately benefit the growth of leading companies in the long run.</li>
<li>If investors truly understand "the essence" of <a href="https://www.smartkarma.com/entities/yichang-hec-changjiang-pharmaceutical" target="_blank" data-smartkarma-citation="entities:21040:1" rel="noopener">HEC Changjiang Pharma</a>, they will be more calm/rational to look at this absorption merger and the inclusion of Hang Seng family of indexes.</li>
</ul>


Biotech will continue selling early-stage pipeline in a sluggish market, but this will further lower its valuation as financing won't improve quickly.
Pharmaceutical distribution companies are facing challenges, driving ongoing consolidation in the industry. However, this trend will ultimately benefit the growth of leading companies in the long run.
If investors truly understand "the essence" of HEC Changjiang Pharma, they will be more calm/rational to look at this absorption merger and the inclusion of Hang Seng family of indexes.


China Healthcare Weekly (Sep.1)-Biotech Sell Asset,Pharmaceutical Distribution Company,HEC CJ Pharma

Hong Kong

HUTCHMED (China) Limited develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. HUTCHMED (China) markets its products worldwide.

Price Gauge
52-week Range	0.00 - 0.00
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Hutchmed China Ltd (13 HK)

What Does a Trump Presidency Mean for China Healthcare?

Trump successfully elected as the US President. His reform in healthcare is to achieve the independence of US pharmaceutical supply chain and...

Xinyao (Criss) Wang

The “Game Rule” of China Healthcare - Pharmaceuticals Vs Medical Devices Vs Medical Services

China healthcare has distinct segments with different investment logic/characteristics.The pecking order is drugs>medical device>medical...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Sep 6th): Inflows into ETF, Li Auto, Tencent

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for HSI ETF (2800 HK), HSCEI ETF (2828 HK), Li Auto (2015...

Ke Yan, CFA, FRM

China Healthcare Weekly (Sep.1)-Biotech Sell Asset,Pharmaceutical Distribution Company,HEC CJ Pharma

Biotech's decision to sell pipeline will continue in sluggish market, leading to lower valuation. Pharmaceutical distribution companies face...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

What Does a Trump Presidency Mean for China Healthcare?

Trump successfully elected as the US President. His reform in healthcare is to achieve the independence of US pharmaceutical supply chain and...

Xinyao (Criss) Wang

The “Game Rule” of China Healthcare - Pharmaceuticals Vs Medical Devices Vs Medical Services

​China healthcare has distinct segments with different investment logic/characteristics.The pecking order is drugs>medical device>medical...

Xinyao (Criss) Wang

China Healthcare Weekly (Oct.13)-Genor to Acquire Edding, RemeGen's Bleak Outlook, Zai Lab's Trouble

Genor/Edding are merging through a reverse takeover, but valuation is unsatisfactory. Remegen is negative example among China Biotech.Weak...

Xinyao (Criss) Wang

Hong Kong Connect Flows (Sep 6th): Inflows into ETF, Li Auto, Tencent

We analyzed southbound Hong Kong connect flows in the past week and highlighted flows for HSI ETF (2800 HK), HSCEI ETF (2828 HK), Li Auto (2015...

Ke Yan, CFA, FRM

China Healthcare Weekly (Sep.1)-Biotech Sell Asset,Pharmaceutical Distribution Company,HEC CJ Pharma

​Biotech's decision to sell pipeline will continue in sluggish market, leading to lower valuation. Pharmaceutical distribution companies face...

Xinyao (Criss) Wang

China healthcare has distinct segments with different investment logic/characteristics.The pecking order is drugs>medical device>medical...

Biotech's decision to sell pipeline will continue in sluggish market, leading to lower valuation. Pharmaceutical distribution companies face...