HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai Shyndec Pharmaceutical / Equity Bottom-Up

<ul>
<li>China plans to issue ultra long-term special treasury bond (about RMB1 trillion) to promote large-scale medical equipment renewal, which is expected to boost domestic demand in medical device sector. </li>
<li>Various regions (e.g. Beijing, Hainan, Guangzhou, Zhuhai) have issued separate supporting policies for innovative drug industry. It may be too early to completely lose hope of Chinese innovative drugs.</li>
<li>There is “horizontal competition” issue between Taiji and <a href="https://www.smartkarma.com/entities/shanghai-shyndec-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:1952:1" rel="noopener">Shanghai Shyndec Pharmaceutical (600420 CH)</a>, which is the underlying logic for potential spin-offs and integrations within Taiji and China TCM before 2025.</li>
</ul>


China plans to issue ultra long-term special treasury bond (about RMB1 trillion) to promote large-scale medical equipment renewal, which is expected to boost domestic demand in medical device sector. 
Various regions (e.g. Beijing, Hainan, Guangzhou, Zhuhai) have issued separate supporting policies for innovative drug industry. It may be too early to completely lose hope of Chinese innovative drugs.
There is “horizontal competition” issue between Taiji and Shanghai Shyndec Pharmaceutical (600420 CH), which is the underlying logic for potential spin-offs and integrations within Taiji and China TCM before 2025.


China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond

Event-Driven

Chongqing Taiji Industry (Group) A / Event-Driven

<ul>
<li>There are several ways for pharmaceutical companies to commercialize drugs. We analyzed the advantages and disadvantages and ranked them accordingly. Among them, out-licensing early-stage pipelines is the worst choice.</li>
<li>After 5-6 years of commercialization, China Biotech have reached the critical point of verifying the feasibility of business models. However, some companies are falling behind. We listed them below.</li>
<li>After the failure of China TCM’s privatization, CNPGC can choose to launch another privatization after 12 months. There’re also other methods to address the horizontal competition issue with Taiji Group.</li>
</ul>


There are several ways for pharmaceutical companies to commercialize drugs. We analyzed the advantages and disadvantages and ranked them accordingly. Among them, out-licensing early-stage pipelines is the worst choice.
After 5-6 years of commercialization, China Biotech have reached the critical point of verifying the feasibility of business models. However, some companies are falling behind. We listed them below.
After the failure of China TCM’s privatization, CNPGC can choose to launch another privatization after 12 months. There’re also other methods to address the horizontal competition issue with Taiji Group.


China Healthcare Weekly (Nov.10)-Biotech Model Validation, CNPGC Need to Fulfill Commitment to Taiji

China National Medicines A / Event-Driven

<ul>
<li>The "Entrusted Management Agreement" indicates that horizontal competition issue will be completely solved within three years.This could pave the way for a future merger between Guorui and <a href="https://www.smartkarma.com/entities/shanghai-shyndec-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:1952:1" rel="noopener">Shanghai Shyndec Pharmaceutical</a>. </li>
<li>The spin-off of Guorui won’t have material impact on China National Medicines Corporation (CNMC). After restructuring, CNMC will focus on “Beijing area pharmaceutical distribution + nationwide distribution of anesthesia/psychotropic drugs”. </li>
<li>Based on strong/stable fundamentals as well as the dominant position in anesthesia and psychotropic drug business, CNMC’s future growth potential is promising. We share our views on the Company’s valuation.</li>
</ul>


The "Entrusted Management Agreement" indicates that horizontal competition issue will be completely solved within three years.This could pave the way for a future merger between Guorui and Shanghai Shyndec Pharmaceutical. 
The spin-off of Guorui won’t have material impact on China National Medicines Corporation (CNMC). After restructuring, CNMC will focus on “Beijing area pharmaceutical distribution + nationwide distribution of anesthesia/psychotropic drugs”. 
Based on strong/stable fundamentals as well as the dominant position in anesthesia and psychotropic drug business, CNMC’s future growth potential is promising. We share our views on the Company’s valuation.


China National Medicines (600511.CH) - After Restructuring, Performance Growth Is Guaranteed

China Traditional Chinese Medicine / Event-Driven

<ul>
<li>Some investors have concerns that the privatization may fail. We also noticed that Morgan Stanley raised China TCM's target price to HK$5.4. However, the privatization of China TCM seems “mandatory”.</li>
<li>At this stage, some background information is worth the attention, which will help investors better understand the logic behind this privatization and thus resolve the "confusion".</li>
<li>According to regulatory requirements, it's expected that both CNPGC and Taiji will integrate resources in pharmaceutical manufacturing and distribution sectors, so as to solve horizontal competition issue between the two.</li>
</ul>


Some investors have concerns that the privatization may fail. We also noticed that Morgan Stanley raised China TCM's target price to HK$5.4. However, the privatization of China TCM seems “mandatory”.
At this stage, some background information is worth the attention, which will help investors better understand the logic behind this privatization and thus resolve the "confusion".
According to regulatory requirements, it's expected that both CNPGC and Taiji will integrate resources in pharmaceutical manufacturing and distribution sectors, so as to solve horizontal competition issue between the two.


China TCM (570.HK) Update - Despite Doubts, This Privatization Seems “Mandatory”

<ul>
<li>Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.</li>
<li>The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.</li>
<li>We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.</li>
</ul>


Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.
The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.
We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.


China TCM (570.HK) - Latest Updates on Privatization and the Potential Merger with Taiji Group

China

Shanghai Shyndec Pharmaceutical Co.,Ltd. develops, manufactures and distributes pharmaceuticals. The Company's products include antibiotics, hypertension drugs, diet pills, anti-aging drugs, biological products and medicine preparations.

Shanghai Shyndec Pharmaceutical (600420 CH)

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Shanghai Shyndec Pharmaceutical (600420 CH)

China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond

China will issue special treasury bonds for healthcare.New policy boosts hope for innovative drugs.Horizontal competition in Taiji and Shanghai...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.10)-Biotech Model Validation, CNPGC Need to Fulfill Commitment to Taiji

Out-licensing early-stage pipelines is the worst option. China Biotech at a critical point in verifying business models. CNPGC has other methods to...

Xinyao (Criss) Wang

China National Medicines (600511.CH) - After Restructuring, Performance Growth Is Guaranteed

Horizontal competition issue will be solved within 3 years. The restructuring will increase the business concentration/scale/competitiveness of...

Xinyao (Criss) Wang

China TCM (570.HK) Update - Despite Doubts, This Privatization Seems “Mandatory”

Some investors have concerns that the privatization may fail, but China TCM's privatization seems "mandatory", which will lead to spin-off...

Xinyao (Criss) Wang

China TCM (570.HK) - Latest Updates on Privatization and the Potential Merger with Taiji Group

The privatization is highly likely to succeed. It's not wise for investors to bet against privatization.Taiji's high-level personnel changes...

Xinyao (Criss) Wang

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond

​China will issue special treasury bonds for healthcare.New policy boosts hope for innovative drugs.Horizontal competition in Taiji and Shanghai...

Xinyao (Criss) Wang

China Healthcare Weekly (Nov.10)-Biotech Model Validation, CNPGC Need to Fulfill Commitment to Taiji

Out-licensing early-stage pipelines is the worst option. China Biotech at a critical point in verifying business models. CNPGC has other methods to...

Xinyao (Criss) Wang

China National Medicines (600511.CH) - After Restructuring, Performance Growth Is Guaranteed

Horizontal competition issue will be solved within 3 years. The restructuring will increase the business concentration/scale/competitiveness of...

Xinyao (Criss) Wang

China TCM (570.HK) Update - Despite Doubts, This Privatization Seems “Mandatory”

Some investors have concerns that the privatization may fail, but ​China TCM's privatization seems "mandatory", which will lead to spin-off...

Xinyao (Criss) Wang

China TCM (570.HK) - Latest Updates on Privatization and the Potential Merger with Taiji Group

The privatization is highly likely to succeed. It's not wise for investors to bet against privatization.Taiji's high-level personnel changes...

Xinyao (Criss) Wang

China will issue special treasury bonds for healthcare.New policy boosts hope for innovative drugs.Horizontal competition in Taiji and Shanghai...

Some investors have concerns that the privatization may fail, but China TCM's privatization seems "mandatory", which will lead to spin-off...