Healthcare equity analyst - emerging & dev mkts, daaimon

Avien Pillay

Healthcare equity analyst - emerging & dev mkts

daaimon

daaimon is an independent research company focusing on healthcare and consumer sectors across developed and emerging markets. We produce insightful research which challenges conventional thinking. In particular, we look for new ideas by testing consensus forecasts and markets expectations.

Equity Bottom-Up

Takeda Pharmaceutical   / Equity Bottom-Up

Takeda Pharmaceutical Company Limited is engaged in research and development, manufacturing, sales and marketing, and import and export of pharmaceutical drugs. The Company focuses on the core therapeutic areas of oncology, gastrointestinal, and central nervous system disease.

<ul>
<li>Production problems of Vyvanse generics seem to be largely resolved with nine of the ten suppliers back in stock.</li>
<li>Safety concerns with Takeda’s approved psoriasis competitor does raise further concerns as they are both TYK-2 inhibitors.</li>
<li>The company’s $900 m big restructure and cited areas for margin improvement are not “convincing” and lack detail.   </li>
</ul>


Production problems of Vyvanse generics seem to be largely resolved with nine of the ten suppliers back in stock.
Safety concerns with Takeda’s approved psoriasis competitor does raise further concerns as they are both TYK-2 inhibitors.
The company’s $900 m big restructure and cited areas for margin improvement are not “convincing” and lack detail.   


Additional Points Add to Our Recent Bearish View on Takeda.

Takeda Pharmaceutical Co Ltd focuses on the Research & Development, Manufacturing, Sales and Marketing and Import/Export of Pharmaceutical Drugs. The Company focuses on the following core therapeutic areas: Cardiovascular & Metabolic, Oncology, Central Nervous System, Respiratory & Immunology, General Medicine (Gastrointestinal & Genitourinary) and Vaccine.

<ul>
<li>Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.</li>
<li>A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.</li>
<li>Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.</li>
</ul>


Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.
A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.
Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.


China Medical System Holdings Limited manufactures pharmaceutical and medical products primarily in China.

<ul>
<li>A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.</li>
<li>With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.</li>
<li>The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.</li>
</ul>


A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.
The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.


UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

<ul>
<li>A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.</li>
<li>A transition period following the inclusion of four large drugs in the NDRL creates an opportunity following a big de-rating.</li>
<li>With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.</li>
</ul>


A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
A transition period following the inclusion of four large drugs in the NDRL creates an opportunity following a big de-rating.
With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.


China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

Thematic (Sector/Industry)

<ul>
<li>China’s healthcare spend has been growing faster than GDP, however it still lags a number of the other emerging markets especially in Latin America.</li>
<li>India’s healthcare spend is very concerning and has been stagnant/declining despite the high growth in GDP over the past few decades.</li>
<li>China and India need to drastically increase spend to address their critical healthcare issues or face a declining growth rate.</li>
</ul>


China’s healthcare spend has been growing faster than GDP, however it still lags a number of the other emerging markets especially in Latin America.
India’s healthcare spend is very concerning and has been stagnant/declining despite the high growth in GDP over the past few decades.
China and India need to drastically increase spend to address their critical healthcare issues or face a declining growth rate.


Asian Healthcare Spend as a Percentage of GDP – the Laggards

A multi-skilled investment professional with 20+ years’ experience in the developed and emerging markets across all sectors, and a strong focus on healthcare. Most of my time has been spent as a buyside and independent equity analyst. My approach is a combination of bottom-up and top-down analysis, with a strong bias to qualitative analysis.

Avien Pillay
Healthcare equity analyst - emerging & dev mkts
• daaimon

Additional Points Add to Our Recent Bearish View on Takeda.

Additional points add to our recent bearish view on Takeda. We are particularly concerned about the psoriasis acquisition and restructuring.

Avien Pillay

Takeda (4502 JP)– Avoid

A potentially disappointing $6bn acquisition, high pipeline dropout, and limited probability of upside surprises sums up our analysis of expensive...

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UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

A derating as a result of a transition period creates an excellent investment opportunity in a market that desperately needs to increase healthcare...

Avien Pillay

China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis

A derating as a result of a transition period creates an excellent investment opportunity in a market that desperately needs to increase healthcare...

Avien Pillay

Asian Healthcare Spend as a Percentage of GDP – the Laggards

China and especially India’s spend on healthcare lags several emerging markets and needs to drastically increase to address their critical...

Avien Pillay