HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<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

Equity Bottom-Up

Jiangsu Hengrui Medicine / Equity Bottom-Up

<ul>
<li>The 2021 report is the worst ever annual report of Hengrui, with double drop in both revenue and net profit.2021Q4 and 2022Q1 are also the worst two quarters so far.</li>
<li>Although Hengrui has invested heavily in R&amp;D and internationalization, it’s still trying to follow an established model with better security.Essentially, Hengrui is still the same Hengrui. Nothing has changed fundamentally. </li>
<li>For now, Hengrui hasn’t released any signal for “a reversal”. If going bottom fishing, investors may have to take a long, uncertain journey with Hengrui. Can you afford to wait?</li>
</ul>


The 2021 report is the worst ever annual report of Hengrui, with double drop in both revenue and net profit.2021Q4 and 2022Q1 are also the worst two quarters so far.
Although Hengrui has invested heavily in R&amp;D and internationalization, it’s still trying to follow an established model with better security.Essentially, Hengrui is still the same Hengrui. Nothing has changed fundamentally. 
For now, Hengrui hasn’t released any signal for “a reversal”. If going bottom fishing, investors may have to take a long, uncertain journey with Hengrui. Can you afford to wait?


Jiangsu Hengrui Medicine (600276.CH) 2021/2022Q1 Results - Can You Afford to Wait?

<ul>
<li>The development trajectory of Japanese pharmaceutical companies could be a good reference for Chinese pharmaceutical companies. Their “solution” is innovation + internationalization.</li>
<li>We further analyzed the impact of Shanghai lockdown to Pharma and CXOs. In the context of intensifying global confrontation, resource shortage and soaring costs, the priority of healthcare may decline.</li>
<li>At the current stage, biotech companies could be divided into the following categories, and it is very interesting.</li>
</ul>


The development trajectory of Japanese pharmaceutical companies could be a good reference for Chinese pharmaceutical companies. Their “solution” is innovation + internationalization.
We further analyzed the impact of Shanghai lockdown to Pharma and CXOs. In the context of intensifying global confrontation, resource shortage and soaring costs, the priority of healthcare may decline.
At the current stage, biotech companies could be divided into the following categories, and it is very interesting.


China Healthcare Weekly (Apr.29)-SH Lockdown Impact on Pharma/CXO,China Biotech Categories & Way Out

<ul>
<li>Due to its early involvement in license-in mode, Zai Lab could in-license many high-quality candidates at a low price in the early stage, thus leading to today's achievements.</li>
<li>However, the increasingly low cost performance of in-licensed products has made the capital “reconsider”, because it is increasingly difficult to maintain high growth as before based on license-in mode.</li>
<li>Zai Lab could be a good short-term trade,especially when it reaches licensing deals or launch new products,but doubts about long-term prospects could discourages investors from holding it for long term.</li>
</ul>


Due to its early involvement in license-in mode, Zai Lab could in-license many high-quality candidates at a low price in the early stage, thus leading to today's achievements.
However, the increasingly low cost performance of in-licensed products has made the capital “reconsider”, because it is increasingly difficult to maintain high growth as before based on license-in mode.
Zai Lab could be a good short-term trade,especially when it reaches licensing deals or launch new products,but doubts about long-term prospects could discourages investors from holding it for long term.


Zai Lab Ltd (ZLAB.US/9688.HK) - Will Zai Lab Go into a Vicious Circle?

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Innovent Biologics Inc (1801 HK)

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

Jiangsu Hengrui Medicine (600276.CH) 2021/2022Q1 Results - Can You Afford to Wait?

Hengrui's 2021, 2021Q4 and 2022Q1 reports are the worst ever. We updated our views on possible future development trajectory of Hengrui's...

Xinyao (Criss) Wang

China Healthcare Weekly (Apr.29)-SH Lockdown Impact on Pharma/CXO,China Biotech Categories & Way Out

We analyzed the impact of lockdown to Pharma and CXO, worrying the priority of healthcare may decline.China biotech can be divided into some...

Xinyao (Criss) Wang

Zai Lab Ltd (ZLAB.US/9688.HK) - Will Zai Lab Go into a Vicious Circle?

Due to increasing cost and potential legal risks, relying on license-in mode is not as glamorous as before.The transition to independent R&D takes...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)