HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

With the gradual marketing of biological drugs, almost all of the world's top ten blockbuster drugs were dominated by biological drugs. From the global total sales of blockbuster drugs announced in 2020, the top three were AbbVie's Humira ($19,832 million sales in 2020), Merck’s Keytruda ($14,380 million sales in 2020) and BMS’s Revlimid ($12,106 million sales in 2020). Throughout the world, biological drugs have become the main direction of future development. In China, domestic pharmaceutical enterprises have also laid out biological drug products in their pipelines. The following mainly analyzed the development situation and investment opportunities in this market.

With the gradual marketing of biological drugs, almost all of the world's top ten blockbuster drugs were dominated by biological drugs. From the global total sales of blockbuster drugs announced in 2020, the top three were AbbVie's Humira ($19,832 million sales in 2020), Merck’s Keytruda ($14,380 million sales in 2020) and BMS’s Revlimid ($12,106 million sales in 2020). Throughout the world, biological drugs have become the main direction of future development. In China, domestic pharmaceutical enterprises have also laid out biological drug products in their pipelines. The following mainly analyzed the development situation and investment opportunities in this market. 

Industry Report - Insights on China Biological Drug Market

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 189 stocks over the last week. The average A-H premium was 85.5% as of Jul 3rd.</li>
<li>The average A-H premium changed by 0.4ppt week-on-week, led by consumer staples, health care, energy and offset by utilities, consumer discretionary, materials.</li>
<li>We highlight weekly changes in A-H premium for China Longyuan, Psbc, Cicc, Yangtze Optical Fibre And-H, Midea, Ceb Bank.</li>
</ul>


We analyse the changes of A-H premium on 189 stocks over the last week. The average A-H premium was 85.5% as of Jul 3rd.
The average A-H premium changed by 0.4ppt week-on-week, led by consumer staples, health care, energy and offset by utilities, consumer discretionary, materials.
We highlight weekly changes in A-H premium for China Longyuan, Psbc, Cicc, Yangtze Optical Fibre And-H, Midea, Ceb Bank.


A-H Premium Weekly (Jul 3rd): China Longyuan, Psbc, Cicc, Yangtze Optical Fibre And-H, Midea

1. Industry viewpoints:<ul>
<li>Recently, there is news that insulin could be included in the volume-based purchase (VBP).</li>
<li>With the continuous improvement of the innovation capability of domestic pharmaceutical enterprises and the gradual recognition by foreign enterprises, "going global" has gradually become a common way in the domestic pharmaceutical industry.</li>
<li>As the residents' medical expenses continue to increase, commercial health insurance has become an important part to relieve the pressure of medical insurance fund.</li>
</ul>2. Company news:News about the new agreement and updated progress of new drugs from <a href="https://www.smartkarma.com/entities/wuxi-apptec" target="_blank" data-smartkarma-citation="entities:23679:1" rel="noopener">Wuxi Biologics (2269 HK)</a>, <a href="https://www.smartkarma.com/entities/alphamab-oncology" target="_blank" data-smartkarma-citation="entities:28213:1" rel="noopener">Alphamab Co Ltd (9966 HK)</a>, <a href="https://www.smartkarma.com/entities/luye-pharma-group-ltd" target="_blank" data-smartkarma-citation="entities:488:1" rel="noopener">Luye Pharma (2186 HK)</a> and <a href="https://www.smartkarma.com/entities/remegen-co-ltd" target="_blank" data-smartkarma-citation="entities:29191:1" rel="noopener">Remegen Co Ltd (9995 HK)</a>.3. Market review:Last week, stock price for healthcare sector in A share decreased 3.7%, while CSI 300 decreased 2.21% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
Recently, there is news that insulin could be included in the volume-based purchase (VBP).
With the continuous improvement of the innovation capability of domestic pharmaceutical enterprises and the gradual recognition by foreign enterprises, "going global" has gradually become a common way in the domestic pharmaceutical industry.
As the residents' medical expenses continue to increase, commercial health insurance has become an important part to relieve the pressure of medical insurance fund.
2. Company news:News about the new agreement and updated progress of new drugs from Wuxi Biologics (2269 HK), Alphamab Co Ltd (9966 HK), Luye Pharma (2186 HK) and Remegen Co Ltd (9995 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 3.7%, while CSI 300 decreased 2.21% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:<ul>
<li>It is expected that the market size of IBD (Inflammatory Bowel Disease) drug therapy in China would keep growing in the next five years.</li>
<li>Since COVID-19 virus was detected in imported reagents this time, considering safety factors, the trend of import substitution for reagent varieties is expected to accelerate.</li>
<li>In the field of high-end antibiotics, Chinese enterprises have yet to make breakthroughs.</li>
</ul>2. Company news:News about the progress of new drugs from <a href="https://www.smartkarma.com/entities/beigene-ltd" target="_blank" data-smartkarma-citation="entities:27352:1" rel="noopener">BeiGene Ltd (6160 HK)</a>, <a href="https://www.smartkarma.com/entities/harbour-biomed-holdings-limited" target="_blank" data-smartkarma-citation="entities:29717:1" rel="noopener">Harbour Biomed (2142 HK)</a>, <a href="https://www.smartkarma.com/entities/antengene-corp-ltd" target="_blank" data-smartkarma-citation="entities:29705:1" rel="noopener">Antengene (6996 HK)</a> and <a href="https://www.smartkarma.com/entities/shanghai-junshi-bioscience-h" target="_blank" data-smartkarma-citation="entities:27760:1" rel="noopener">Shanghai Junshi Bioscience Co. Ltd. (1877 HK)</a>.3. Market review:Last week, stock price for healthcare sector in A share decreased 7.1%, while CSI 300 decreased 3.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
It is expected that the market size of IBD (Inflammatory Bowel Disease) drug therapy in China would keep growing in the next five years.
Since COVID-19 virus was detected in imported reagents this time, considering safety factors, the trend of import substitution for reagent varieties is expected to accelerate.
In the field of high-end antibiotics, Chinese enterprises have yet to make breakthroughs.
2. Company news:News about the progress of new drugs from BeiGene Ltd (6160 HK), Harbour Biomed (2142 HK), Antengene (6996 HK) and Shanghai Junshi Bioscience Co. Ltd. (1877 HK).3. Market review:Last week, stock price for healthcare sector in A share decreased 7.1%, while CSI 300 decreased 3.91% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

On December 28th 2020, the National Healthcare Security Administration (NHSA) announced the results of 2020 medical insurance negotiations. The new medical insurance catalogue will be officially implemented on March 1st, 2021. It totally contains 2,800 types of drugs, including 1,426 types of western medicine and 1,374 types of proprietary Chinese medicine. A total of 162 drugs were negotiated this time, 119 of which successfully won the bidding, with a success rate of 73.46% and an average price reduction of 50.64%. The list of the 119 drugs is on the final page.

On December 28th 2020, the National Healthcare Security Administration (NHSA) announced the results of 2020 medical insurance negotiations. The new medical insurance catalogue will be officially implemented on March 1st, 2021. It totally contains 2,800 types of drugs, including 1,426 types of western medicine and 1,374 types of proprietary Chinese medicine. A total of 162 drugs were negotiated this time, 119 of which successfully won the bidding, with a success rate of 73.46% and an average price reduction of 50.64%. The list of the 119 drugs is on the final page.

China Healthcare Policy Update - The Official Results of 2020 Medical Insurance Negotiations

China

Junshi Biosciences is an innovation-driven biopharmaceutical company focused on the discovery, development, clinical research, and commercialization of innovative therapeutics. Its key products, including toripalimab injection, Etesevimab, and adalimumab injection, are used to treat malignant tumors, autoimmune diseases, chronic metabolic diseases, nervous system diseases, and infectious diseases. The company was founded in December 2012 and is headquartered in Shanghai, China.

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Junshi Biosciences (1877 HK)

Industry Report - Insights on China Biological Drug Market

The article analyzed China biological drug market in terms of monoclonal antibody, bispecific antibody,ADC,domestic application to NMPA and also...

Xinyao (Criss) Wang

A-H Premium Weekly (Jul 3rd): China Longyuan, Psbc, Cicc, Yangtze Optical Fibre And-H, Midea

We analyzed A-H premium changes in the past week and highlight A-H premium changes for China Longyuan, Psbc, Cicc, Yangtze Optical Fibre And-H,...

Ke Yan, CFA, FRM

China Healthcare Weekly (Mar.12)

The article analyzed viewpoints of potential VBP on insulin, internationalization of domestic pharmaceutical companies, commercial health...

Xinyao (Criss) Wang

China Healthcare Weekly (Jan.29)

The article analyzed industry viewpoints in terms of IBD drug therapy, import substitution for reagent varieties and high-end antibiotics market,...

Xinyao (Criss) Wang

China Healthcare Policy Update - The Official Results of 2020 Medical Insurance Negotiations

The article analyzed the results of 2020 medical insurance negotiations with the list of drugs that won the bidding. If interested in China...

Xinyao (Criss) Wang

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