HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>The plunge in medical beauty sector last week was due to the industry-wide overhaul and investigation resulting from the increase in business bribery/tax evasion/medical malpractice/customer complaints.</li>
<li>We found an interesting phenomenon – Investors dare not buy biotech, opting instead for Traditional Chinese Medicine (TCM) companies, scientific research service companies and medical service companies.</li>
<li>If investors still want to trade CXO, here are two suggestions.</li>
</ul>


The plunge in medical beauty sector last week was due to the industry-wide overhaul and investigation resulting from the increase in business bribery/tax evasion/medical malpractice/customer complaints.
We found an interesting phenomenon – Investors dare not buy biotech, opting instead for Traditional Chinese Medicine (TCM) companies, scientific research service companies and medical service companies.
If investors still want to trade CXO, here are two suggestions.


China Healthcare Weekly (Sep.25) - CXO Trading Strategy, Plunge in Medical Beauty, Belief in Biotech

Equity Bottom-Up

Simcere Pharmaceutical Group / Equity Bottom-Up

<ul>
<li>Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. </li>
<li>The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.</li>
<li>In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.</li>
</ul>


Simcere’s profit was mainly driven by the income of non-recurring items (investment business). Due to unfriendly external environment, investors are recommended to be prepared for further decline in net profit. 
The overall quality of Simcere’s pipeline is not high, which would be difficult to bring decent revenue in the next few years. Simcere’s transformation is not as smooth as expected.
In fact, over the years, Simcere's strongest capability lies in the sales rather than R&amp;D. Since the game rule changes, we are bearish on Simcere.


Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

<ul>
<li>Four departments jointly issued “opinions” emphasis on the training/construction of TCM talents, which has great significance of TCM development in China. We advise investors not to underestimate this policy.</li>
<li>The COVID-19, policy risks (VBP/centralized procurement/DRGs) and public hospitals expansion have significantly intensified private hospitals' pressure for survival, which will eventually be reflected in the financial statements.</li>
<li>The deal between <a href="https://www.smartkarma.com/entities/sino-biopharmaceutical" target="_blank" data-smartkarma-citation="entities:230:1" rel="noopener">Sino Biopharmaceutical (1177 HK) </a>and F-star Therapeutics with aggregate consideration of approximately US$161 million indicated that the industry clearing of biotech in China is far from completed.</li>
</ul>


Four departments jointly issued “opinions” emphasis on the training/construction of TCM talents, which has great significance of TCM development in China. We advise investors not to underestimate this policy.
The COVID-19, policy risks (VBP/centralized procurement/DRGs) and public hospitals expansion have significantly intensified private hospitals' pressure for survival, which will eventually be reflected in the financial statements.
The deal between Sino Biopharmaceutical (1177 HK) and F-star Therapeutics with aggregate consideration of approximately US$161 million indicated that the industry clearing of biotech in China is far from completed.


China Healthcare Weekly (July.1)- TCM New Policy, Private Hospitals Survival Pressure, Sino Biopharm

<ul>
<li>The 7th national VBP is about to start. The competition would be more intense. Due to the adjustment of bidding rules, it’s more difficult for companies to win at high price.</li>
<li>Recently, the State released an exposure draft stipulating that third-party digital healthcare platforms shall not directly participate in online drug sales activities. We analyzed the impact.</li>
<li>National Health Commission issued a new document to remove the threshold for the qualification of medical institutions on OK lens business, which could lead to accelerated development of this industry.</li>
</ul>


The 7th national VBP is about to start. The competition would be more intense. Due to the adjustment of bidding rules, it’s more difficult for companies to win at high price.
Recently, the State released an exposure draft stipulating that third-party digital healthcare platforms shall not directly participate in online drug sales activities. We analyzed the impact.
National Health Commission issued a new document to remove the threshold for the qualification of medical institutions on OK lens business, which could lead to accelerated development of this industry.


China Healthcare Weekly (Jun.24)-7th National VBP, Online Pharmacy New Policy, OK Lens Rules Relaxed

<ul>
<li>Shanghai Municipal Medical Insurance Bureau issued a policy that TAVR consumables would be reimbursed according to surgery performance, breaking the bottleneck of low demand due to the expensive TAVR surgery.</li>
<li>The COVID nucleic acid testing industry faces the problem of exit, because it is very difficult to find a corresponding scale of replacement business for these huge capacity accumulated.</li>
<li>In terms of the internationalization prospects of China biotech companies, we prefer to pick RemeGen. The same logic also applies to Keymed.</li>
</ul>


Shanghai Municipal Medical Insurance Bureau issued a policy that TAVR consumables would be reimbursed according to surgery performance, breaking the bottleneck of low demand due to the expensive TAVR surgery.
The COVID nucleic acid testing industry faces the problem of exit, because it is very difficult to find a corresponding scale of replacement business for these huge capacity accumulated.
In terms of the internationalization prospects of China biotech companies, we prefer to pick RemeGen. The same logic also applies to Keymed.


China Healthcare Weekly (May.27) - New TAVR Policy, Exiting Issue of COVID Testing, RemeGen/Keymed

Hong Kong

Sino Biopharmaceutical Limited, through its subsidiaries, researches, develops, produces, and sells biopharmaceutical products for the medical treatment of ophthalmia, as well as modernized Chinese medicine and chemical medicine for the treatment of hepatitis.

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Sino Biopharmaceutical (1177 HK)

China Healthcare Weekly (Sep.25) - CXO Trading Strategy, Plunge in Medical Beauty, Belief in Biotech

If investor still want to trade CXO,here are two suggestions; The plunge in medical beauty sector last week was due to industry-wide...

Xinyao (Criss) Wang

Simcere Pharmaceutical Group (2096.HK) 22H1 - Gloomy Outlook and Risks in Profits

Simcere’s profit was driven by investment business, which will further decline due to unfriendly macro. The pipeline quality is not high, leading...

Xinyao (Criss) Wang

China Healthcare Weekly (July.1)- TCM New Policy, Private Hospitals Survival Pressure, Sino Biopharm

New policy about TCM talent will have great significance of TCM development.Private hospitals' survival pressure will be reflected in financial...

Xinyao (Criss) Wang

China Healthcare Weekly (Jun.24)-7th National VBP, Online Pharmacy New Policy, OK Lens Rules Relaxed

7th national VBP is coming,with more competition. New policy that third-party digital healthcare platforms can't directly participate in online...

Xinyao (Criss) Wang

China Healthcare Weekly (May.27) - New TAVR Policy, Exiting Issue of COVID Testing, RemeGen/Keymed

New TAVR policy will break the low demand bottleneck due to high cost; COVID testing industry faces the problem of exit; Remegen/Keymed may have...

Xinyao (Criss) Wang

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52-week Range

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