HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>In the absence of significant decline in total pharmaceutical expenditure,the most simple logic tells us if some companies/varieties suffer loss in VBP, it inevitably means other companies benefit from it. </li>
<li>For innovative drugs, imported drugs have clear advantage over domestic drugs in both absolute and relative increments. But leading MNCs have been more impacted by VBP in recent years.</li>
<li>In this hundreds-of-billion-level payment transfer process, companies are actually competing to provide real clinical value, which is the key to fill the gap caused by VBP and restore companies’ growth.</li>
</ul>


In the absence of significant decline in total pharmaceutical expenditure,the most simple logic tells us if some companies/varieties suffer loss in VBP, it inevitably means other companies benefit from it. 
For innovative drugs, imported drugs have clear advantage over domestic drugs in both absolute and relative increments. But leading MNCs have been more impacted by VBP in recent years.
In this hundreds-of-billion-level payment transfer process, companies are actually competing to provide real clinical value, which is the key to fill the gap caused by VBP and restore companies’ growth.


China's VBP Policy for Pharmaceuticals – Misunderstandings, Real Impacts, and Outlook

Equity Capital Markets

HighTide Therapeutics / Equity Capital Markets

<ul>
<li>The mechanism of NASH has not yet been accurately determined. Among the major players, FDA has postponed the approval of OCA (FXR) for NASH. THR-β is currently the most promising. </li>
<li>HighTide claims that HTD1801 is able to achieve the goal of improving effectiveness and reducing toxicity. However, HTD1801 hasn’t reached pathological endpoints. We’ll have to wait for future clinical data.</li>
<li>This Company actually has high risk due to cash shortage and uncertain R&amp;D progress, which could lead to lower-than-expected stock price performance. We are conservative about HighTide based on analysis.</li>
</ul>


The mechanism of NASH has not yet been accurately determined. Among the major players, FDA has postponed the approval of OCA (FXR) for NASH. THR-β is currently the most promising. 
HighTide claims that HTD1801 is able to achieve the goal of improving effectiveness and reducing toxicity. However, HTD1801 hasn’t reached pathological endpoints. We’ll have to wait for future clinical data.
This Company actually has high risk due to cash shortage and uncertain R&amp;D progress, which could lead to lower-than-expected stock price performance. We are conservative about HighTide based on analysis.


Pre-IPO HighTide Therapeutics - Its Outlook in NASH Field Is Not Optimistic, with High Risks

Equity Bottom-Up

Hansoh Pharmaceutical Group  / Equity Bottom-Up

<ul>
<li>VBP would continue to have an impact on Hansoh’s generic drug business in 2023.Such negative impact would gradually fade from 2024 as big varieties have all been included in VBP.</li>
<li>The core difference between Hansoh and Hengrui is that someone similar to Zhang Lianshan's role arrived late, resulting in a slower start and weaker overall framework for innovation drug business.</li>
<li>
<a href="https://www.smartkarma.com/entities/hansoh-pharmaceutical-group" target="_blank" data-smartkarma-citation="entities:23675:1" rel="noopener">Hansoh Pharmaceutical (3692 HK)</a> is still in the process of business transformation. Before the harvest time of innovative drug pipeline comes, Hansoh's valuation growth would still be a long-term story.</li>
</ul>


VBP would continue to have an impact on Hansoh’s generic drug business in 2023.Such negative impact would gradually fade from 2024 as big varieties have all been included in VBP.
The core difference between Hansoh and Hengrui is that someone similar to Zhang Lianshan's role arrived late, resulting in a slower start and weaker overall framework for innovation drug business.

Hansoh Pharmaceutical (3692 HK) is still in the process of business transformation. Before the harvest time of innovative drug pipeline comes, Hansoh's valuation growth would still be a long-term story.


Hansoh Pharmaceutical (3692.HK)- Positive Growth in 2023, but Valuation Turning Point Hasn't Arrived

<ul>
<li>Policies will determine the development direction of the industry, which would then determine the profit model of companies. Companies that align with policy direction would outperform in the coming cycle.</li>
<li>The prosperity of the industry would determine the development trend of companies. For China healthcare, without a significant policy shift, it would be difficult for industry beta to emerge.</li>
<li>Domestic companies cannot achieve successful commercialization/internationalization mainly because they don’t have excellent enough products. It must be innovation that keeps companies alive and then thrive, rather than relying on policy changes.</li>
</ul>


Policies will determine the development direction of the industry, which would then determine the profit model of companies. Companies that align with policy direction would outperform in the coming cycle.
The prosperity of the industry would determine the development trend of companies. For China healthcare, without a significant policy shift, it would be difficult for industry beta to emerge.
Domestic companies cannot achieve successful commercialization/internationalization mainly because they don’t have excellent enough products. It must be innovation that keeps companies alive and then thrive, rather than relying on policy changes.


The Cyclicality of China Healthcare - Policy Environment, the Industry, and Investment Opportunities

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>There continues to be little traction above $93 on MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range. Important downside targets are $86, $84, and $75-77.</li>
<li>Additionally, the EURO STOXX 50 remains below 2-year resistance at 4400-4415.</li>
<li>We remain overweight Europe, Japan, and India, and we prefer to only add exposure on a pullback -- especially in Japan where indexes are bullish yet extended.</li>
</ul>


There continues to be little traction above $93 on MSCI ACWI (ACWI-US), which remains the top-end of our anticipated 2023 trading range. Important downside targets are $86, $84, and $75-77.
Additionally, the EURO STOXX 50 remains below 2-year resistance at 4400-4415.
We remain overweight Europe, Japan, and India, and we prefer to only add exposure on a pullback -- especially in Japan where indexes are bullish yet extended.


No Traction Above $93 on ACWI-US or 4400-4415 on EURO STOXX 50. Buys in Defensives/Japan/EM

China

Jiangsu Hengrui Medicine Co., Ltd. develops, manufactures, and markets a variety of medicines and medicine packing materials. The Company's products include anti-tumor medicines, pain-killers, anti-infection medicines, aluminum foil, and other related products.

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Jiangsu Hengrui Medicine (600276 CH)

China's VBP Policy for Pharmaceuticals – Misunderstandings, Real Impacts, and Outlook

The money saved in some drugs due to VBP will help expand the sales of other drugs,which we call “payment transfer”.Before being pessimistic about...

Xinyao (Criss) Wang

Pre-IPO HighTide Therapeutics - Its Outlook in NASH Field Is Not Optimistic, with High Risks

Intercept's failure to obtain FDA approval for NASH drug may cast shadow on HighTide's core product outlook.HighTide's valuation performance is...

Xinyao (Criss) Wang

Hansoh Pharmaceutical (3692.HK)- Positive Growth in 2023, but Valuation Turning Point Hasn't Arrived

Despite high growth in innovative drug business, Hansoh's business transformation is still uncertain due to low quality of innovative drug...

Xinyao (Criss) Wang

The Cyclicality of China Healthcare - Policy Environment, the Industry, and Investment Opportunities

Without industry beta, China healthcare companies still have opportunity to achieve countercyclical breakthrough.Investors need to be in line with...

Xinyao (Criss) Wang

No Traction Above $93 on ACWI-US or 4400-4415 on EURO STOXX 50. Buys in Defensives/Japan/EM

No Traction Above $93 on MSCI $ACWI or 4400-4415 on EURO #STOXX 50. Continues to reinforce our view from early-January that $93 on ACWI caps upside...

Vermilion Research

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