HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The rebounds in healthcare sector is more due to oversold. Unfriendly macro environment could make stock price fluctuate largely.Investors would find better places to long than the current valuation level.</li>
<li>The new document about payment management measures for new technology out of CHS-DRG payment scope is an important “policy correction” signal, but there are still problems remain to be solved.</li>
<li>We analyzed our top picks and investment logic in CXO, pharmaceuticals and medical device industry. Overall, as a “defensive sector”, China healthcare has investment value in such complicated external environment.</li>
</ul>


The rebounds in healthcare sector is more due to oversold. Unfriendly macro environment could make stock price fluctuate largely.Investors would find better places to long than the current valuation level.
The new document about payment management measures for new technology out of CHS-DRG payment scope is an important “policy correction” signal, but there are still problems remain to be solved.
We analyzed our top picks and investment logic in CXO, pharmaceuticals and medical device industry. Overall, as a “defensive sector”, China healthcare has investment value in such complicated external environment.


2022H2 China Healthcare Investment Strategy and Top Picks

Equity Bottom-Up

Innovent Biologics Inc / Equity Bottom-Up

<ul>
<li>The biggest characteristic of <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 HK)</a> is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&amp;D productivity, Innovent deserves credit.</li>
<li>If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent's upgrade from biotech to biopharma is almost complete. </li>
<li>Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”. </li>
</ul>


The biggest characteristic of Innovent Biologics Inc (1801 HK) is its strong ability of resources integration. Besides, when it comes to execution, clinical efficiency and R&amp;D productivity, Innovent deserves credit.
If having 10 big commercialized drugs are the threshold for becoming a biopharma, Innovent's upgrade from biotech to biopharma is almost complete. 
Innovent has enough cash flow over the next few years to support development, and may even turn losses into profits. So, we think that Innovent could get through “this winter”. 


Innovent Biologics Inc (1801.HK) - Capable of Surviving “this Winter”

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

<ul>
<li>From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range</li>
<li>Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary</li>
<li>Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.</li>
</ul>


From peak allocations of over 8% at the height of the COVID-19 pandemic, China &amp; HK Health Care allocations have fallen back in to their long-term range
Greater China managers have actively rebalanced portfolios away from China &amp; HK Health Care over the last 6-months, with Taiwan Tech the key beneficiary
Venus MedTech and Jiangsu Hengrui Medicine led the exodus, but it wasn't completely one-sided, with Mindray Bio-Medical Electronics and Aier Eye Hospital Group capturing new investment from Greater China managers.


Greater China Funds: China Health Care Reversal

Shenyang Xingqi Pharmaceutical / Equity Bottom-Up

<ul>
<li>The 10th national VBP has started. Kelun Pharma, Fosun Pharma and CSPC are expected to be the big pharmaceutical companies that get hit most in this VBP.</li>
<li>For biopharmaceutical companies, rather than R&amp;D technology, revenue scale is the most important moat. Accordingly, we recommend to invest medium and large biotech that are currently scaling up.</li>
<li>Xingqi’s share price decline is related to the potential lower-than-expected performance in 24Q3. Sales expansion of 0.01% atropine eye drops takes time considering the difficulty of new drug hospital admission.</li>
</ul>


The 10th national VBP has started. Kelun Pharma, Fosun Pharma and CSPC are expected to be the big pharmaceutical companies that get hit most in this VBP.
For biopharmaceutical companies, rather than R&amp;D technology, revenue scale is the most important moat. Accordingly, we recommend to invest medium and large biotech that are currently scaling up.
Xingqi’s share price decline is related to the potential lower-than-expected performance in 24Q3. Sales expansion of 0.01% atropine eye drops takes time considering the difficulty of new drug hospital admission.


China Healthcare Weekly (Oct.27)-10th National VBP, Revenue Scale Is the Only Moat, Xingqi’s Outlook

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/samsung-biologics-co-ltd" target="_blank" data-smartkarma-citation="entities:22932:1" rel="noopener">Samsung Biologics (207940 KS)</a> signed a contract manufacturing agreement worth KRW1.7T ($1.2B) with an Asian pharmaceutical company. <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> has announced KRW100B ($72M) share buyback, starting October 28.</li>
<li>
<a href="https://www.smartkarma.com/entities/astellas-pharma-inc" target="_blank" data-smartkarma-citation="entities:6091:1" rel="noopener">Astellas Pharma (4503 JP)</a> received FDA approval for Vyloy for gastric cancer. <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi &amp; Co (4507 JP)</a> received FDA Fast Track designation for its RSV drug candidate, S-337395.</li>
<li>
<a href="https://www.smartkarma.com/entities/zai-lab-ltd-94df40cf-c15e-462f-b3de-8d2d434ae935" target="_blank" data-smartkarma-citation="entities:36261:1" rel="noopener">Zai Lab (9688 HK)</a> announced positive topline data from global Phase 1a/1b study of ZL-1310 in small cell lung cancer. <a href="https://www.smartkarma.com/entities/legend-biotech-corp" target="_blank" data-smartkarma-citation="entities:28963:1" rel="noopener">Legend Biotech Corp (LEGN US)</a> sheds Genscript Biotech as its majority shareholder.</li>
</ul>



Samsung Biologics (207940 KS) signed a contract manufacturing agreement worth KRW1.7T ($1.2B) with an Asian pharmaceutical company. Celltrion Inc (068270 KS) has announced KRW100B ($72M) share buyback, starting October 28.

Astellas Pharma (4503 JP) received FDA approval for Vyloy for gastric cancer. Shionogi &amp; Co (4507 JP) received FDA Fast Track designation for its RSV drug candidate, S-337395.

Zai Lab (9688 HK) announced positive topline data from global Phase 1a/1b study of ZL-1310 in small cell lung cancer. Legend Biotech Corp (LEGN US) sheds Genscript Biotech as its majority shareholder.


APAC Healthcare Weekly (Oct 27)- Samsung Biologics, Celltrion, Astellas, Otsuka, Legend, and Zai Lab

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)

2022H2 China Healthcare Investment Strategy and Top Picks

We analyze the investment strategy,top picks and logic in CXO,pharmaceuticals and medical device industry.As a “defensive sector”,China healthcare...

Xinyao (Criss) Wang

Innovent Biologics Inc (1801.HK) - Capable of Surviving “this Winter”

After continuous pullback, investors may lose interest in Innovent. However, it still has investment value based on pipeline, resources, R&D and...

Xinyao (Criss) Wang

Greater China Funds: China Health Care Reversal

Greater China managers have actively rebalanced portfolios away from China & HK Health Care over the last 6-months, with Taiwan Tech the key...

Steven Holden

China Healthcare Weekly (Oct.27)-10th National VBP, Revenue Scale Is the Only Moat, Xingqi’s Outlook

10th national VBP will impact big pharma like Kelun/Fosun/CSPC.Revenue scale is the only moat for pharma company.Xingqi's 24Q3 results may be...

Xinyao (Criss) Wang

APAC Healthcare Weekly (Oct 27)- Samsung Biologics, Celltrion, Astellas, Otsuka, Legend, and Zai Lab

Samsung Biologics secures largest ever contract, Celltrion announced KRW100B buyback, Astellas Pharma got label expansion approval for Vyloy,...

Tina Banerjee

Price Gauge

52-week Range

Market Cap (USDm)

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2022H2 China Healthcare Investment Strategy and Top Picks

We analyze the investment strategy,top picks and logic in CXO,pharmaceuticals and medical device industry.As a “defensive sector”,China healthcare...

Xinyao (Criss) Wang

Innovent Biologics Inc (1801.HK) - Capable of Surviving “this Winter”

After continuous pullback, investors may lose interest in Innovent. However, it still has investment value based on pipeline, resources, R&D and...

Xinyao (Criss) Wang

Greater China Funds: China Health Care Reversal

Greater China managers have actively rebalanced portfolios away from China & HK Health Care over the last 6-months, with Taiwan Tech the key...

Steven Holden

China Healthcare Weekly (Oct.27)-10th National VBP, Revenue Scale Is the Only Moat, Xingqi’s Outlook

​10th national VBP will impact big pharma like Kelun/Fosun/CSPC.Revenue scale is the only moat for pharma company.Xingqi's 24Q3 results may be...

Xinyao (Criss) Wang

APAC Healthcare Weekly (Oct 27)- Samsung Biologics, Celltrion, Astellas, Otsuka, Legend, and Zai Lab

Samsung Biologics secures largest ever contract, Celltrion announced KRW100B buyback, Astellas Pharma got label expansion approval for Vyloy,...

Tina Banerjee

10th national VBP will impact big pharma like Kelun/Fosun/CSPC.Revenue scale is the only moat for pharma company.Xingqi's 24Q3 results may be...