Asia Healthcare Analyst, Pathology Associates Limited

Dion Stéfan Büchner M.D., FCAP

Asia Healthcare Analyst

Pathology Associates Limited

Equity Bottom-Up

<p>Luye’s existing drugs seem to have entered a mature stage with slower growth prospects going ahead. However the oncology segment, which represents more than half of group revenue, reported YoY growth of 5.8% in FY15, led by severe inventory de-stocking. The YoY growth also improved to 12.5% in 1H16. Hospital sales data for 9M16 shows encouraging sales key drugs, Lipusu, Beixi, and Xuezhikang. We expect the de-stocking to normalize in 2017 due to robust terminal demand and conservatively expect 10-15% organic revenue growth during FY16-20e.</p>

Luye’s existing drugs seem to have entered a mature stage with slower growth prospects going ahead. However the oncology segment, which represents more than half of group revenue, reported YoY growth of 5.8% in FY15, led by severe inventory de-stocking. The YoY growth also improved to 12.5% in 1H16. Hospital sales data for 9M16 shows encouraging sales key drugs, Lipusu, Beixi, and Xuezhikang. We expect the de-stocking to normalize in 2017 due to robust terminal demand and conservatively expect 10-15% organic revenue growth during FY16-20e.

Luye Pharma Group Ltd (2186 HK) - Innovative R&D