HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<p><strong>1. Industry viewpoints: </strong></p><ul>
<li>China’s new intensive procurement policy has finally been applied to high-value medical consumables. Thus, related medical device companies are facing new challenges.</li>
<li>
<span>With the increase of patients' affordability and doctors' cognition and acceptance of minimally invasive surgery, it is expected that MISIA market will have greater growth potential in the near future.</span><span> </span>
</li>
<li><span>In recent years, China cancer drug market has grown rapidly. With large growth potential in this market and more favorable policy, more innovative cancer drugs will be approved in China</span></li>
</ul><p><strong>2. Company news</strong></p><p style="text-align: justify;">News of Jiangsu Hengrui Medicine, Dingdang Kuaiyao and AstraZeneca China on the cooperation of new drugs and the progress of new funding.</p><p><strong>3. Market review</strong></p><p style="text-align: justify;">Last week, stock price for healthcare sector in A share decreased 6.24%, while CSI 300 decreased 1.53% over the same period of time.</p>

1. Industry viewpoints: 
China’s new intensive procurement policy has finally been applied to high-value medical consumables. Thus, related medical device companies are facing new challenges.

With the increase of patients' affordability and doctors' cognition and acceptance of minimally invasive surgery, it is expected that MISIA market will have greater growth potential in the near future. 

In recent years, China cancer drug market has grown rapidly. With large growth potential in this market and more favorable policy, more innovative cancer drugs will be approved in China
2. Company newsNews of Jiangsu Hengrui Medicine, Dingdang Kuaiyao and AstraZeneca China on the cooperation of new drugs and the progress of new funding.3. Market reviewLast week, stock price for healthcare sector in A share decreased 6.24%, while CSI 300 decreased 1.53% over the same period of time.

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/834/original/2020-08-02_06-39-22.png?1596317982" class="editor-image img-responsive" data-smartkarma-image-id="149834"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>CORRECTION</strong> - The last day of July saw the TOPIX index fall by 2.8% to reach a new two-month low, 8.2% below the closing high of June 8th. A combination of a strong yen, peak COVID-19 cases, the continuing unedifying stream of results &amp; revisions, and month-end portfolio 'adjustments' proved toxic. Our Results Score lost a further 57 basis points, while bullish initial full-year forecasts from <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> and <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso (6902 JP)</a> helped the Forecast/Revision Score recover by 51 basis points. Nevertheless, the market's correlation with earnings and revisions momentum remains distorted by central bank liquidity. As noted in<a href="https://www.smartkarma.com/insights/japan-market-update-tired" target="_blank" data-smartkarma-citation="insights:41562" rel="noopener"> Tired</a>, we expect both our Scores to bottom nearer the 2009 lows, in which case the Bank of Japan's cumulative purchases could reach over 10% of market value.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/839/original/2020-08-02_07-35-10.png?1596321328" class="editor-image img-responsive" data-smartkarma-image-id="149839"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>DOWNFALL</strong> - After one-third of quarterly earnings announcements, at the current pace forward aggregate operating and net income could reach ¥35 trillion and ¥20 trillion, respectively by the end of the month, taking the market multiple to 30x, absent any further correction in share prices. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/840/original/2020-08-02_07-52-16.png?1596322358" class="editor-image img-responsive" data-smartkarma-image-id="149840"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>SECTOR SCORES</strong> - As in past cycles, the <strong>Information Technology</strong>,<strong> Internet</strong>, and<strong> Healthcare</strong> Sectors have proved to be the most resilient. On the downside, the breadth of the lowest-scoring Sectors is abnormal, with <strong>Consumer Services</strong> and <strong>Transport &amp; Logistics</strong> joining <strong>Metals</strong>, <strong>Autos</strong>, <strong>Eletcial Equipment</strong> and<strong> Machinery</strong>. The trailing-twelve-month (TTM) results in the table below confirm the chart above but suggests some caution over <strong>Internet</strong> Sector margins.   </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/842/original/2020-08-02_07-59-45.png?1596322803" class="editor-image img-responsive" data-smartkarma-image-id="149842"></figure><div class="content-caption">Source • Japan Analytics</div><hr><p style="text-align: center;"><strong>•BEST &amp; WORST 31st JULY •</strong></p><p style="text-align: left;"><strong>BEST &amp; WORST</strong> - Combining the day's results, revisions and forecasts, we select the 'best' and the 'worst' announcements according to our scoring. On the podium were <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> and <a href="https://www.smartkarma.com/entities/infocom-corp" target="_blank" data-smartkarma-citation="entities:8412:1" rel="noopener">Infocom (4348 JP)</a>. In the pits were <a href="https://www.smartkarma.com/entities/casio-computer-co-ltd" target="_blank" data-smartkarma-citation="entities:18338:1" rel="noopener">Casio Computer (6952 JP)</a> and three railway lines - <a href="https://www.smartkarma.com/entities/odakyu-electric-railway-co" target="_blank" data-smartkarma-citation="entities:5405:1" rel="noopener">Odakyu (9007 JP)</a>, <a href="https://www.smartkarma.com/entities/west-japan-railway-co" target="_blank" data-smartkarma-citation="entities:12077:1" rel="noopener">West Japan (9021 JP)</a> and <a href="https://www.smartkarma.com/entities/central-japan-railway-co" target="_blank" data-smartkarma-citation="entities:13520:1" rel="noopener">Central Japan (9022 JP)</a> for which we will show the Peer Group's record-low long-term Scores.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/913/original/2020-08-02_08-30-42.png?1596324654" class="editor-image img-responsive" data-smartkarma-image-id="149913"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/914/original/2020-08-02_08-31-29.png?1596324699" class="editor-image img-responsive" data-smartkarma-image-id="149914"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/915/original/2020-08-02_08-33-28.png?1596324818" class="editor-image img-responsive" data-smartkarma-image-id="149915"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/149/916/original/2020-08-02_08-40-22.png?1596325251" class="editor-image img-responsive" data-smartkarma-image-id="149916"></figure><div class="content-caption">Source • Japan Analytics</div><div>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
<p style="text-align: left;"><strong>PERCENTAGES</strong> - <strong>66%</strong> of quarterly results,  <strong>71%</strong> of annual forecasts/revisions and <strong>75%</strong> of interim forecasts have negative Scores and <strong>26%</strong> of companies reporting lost money for the quarter.</p>
</div><hr><div><p style="text-align: center;"><strong>429 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 28% Positive / 6% Neutral / 66% Negative</li>
<li>
<strong>Average Results Score Change:</strong> -3.1 points</li>
<li>
<strong>Average % Change in Revenue:</strong> -9.3% Quarter YoY / -2.0% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -1.0 ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 26%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>153 Annual • 115 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 26% Positive / 3% Neutral / 71% Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change</strong>: 24% Positive / 1% Neutral / 75% Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -8.4 points</li>
</ul></div>

Source • Japan AnalyticsCORRECTION - The last day of July saw the TOPIX index fall by 2.8% to reach a new two-month low, 8.2% below the closing high of June 8th. A combination of a strong yen, peak COVID-19 cases, the continuing unedifying stream of results &amp; revisions, and month-end portfolio 'adjustments' proved toxic. Our Results Score lost a further 57 basis points, while bullish initial full-year forecasts from Takeda Pharmaceutical (4502 JP) and Denso (6902 JP) helped the Forecast/Revision Score recover by 51 basis points. Nevertheless, the market's correlation with earnings and revisions momentum remains distorted by central bank liquidity. As noted in Tired, we expect both our Scores to bottom nearer the 2009 lows, in which case the Bank of Japan's cumulative purchases could reach over 10% of market value.Source • Japan AnalyticsDOWNFALL - After one-third of quarterly earnings announcements, at the current pace forward aggregate operating and net income could reach ¥35 trillion and ¥20 trillion, respectively by the end of the month, taking the market multiple to 30x, absent any further correction in share prices. Source • Japan AnalyticsSECTOR SCORES - As in past cycles, the Information Technology, Internet, and Healthcare Sectors have proved to be the most resilient. On the downside, the breadth of the lowest-scoring Sectors is abnormal, with Consumer Services and Transport &amp; Logistics joining Metals, Autos, Eletcial Equipment and Machinery. The trailing-twelve-month (TTM) results in the table below confirm the chart above but suggests some caution over Internet Sector margins.   Source • Japan Analytics•BEST &amp; WORST 31st JULY •BEST &amp; WORST - Combining the day's results, revisions and forecasts, we select the 'best' and the 'worst' announcements according to our scoring. On the podium were Takeda Pharmaceutical (4502 JP) and Infocom (4348 JP). In the pits were Casio Computer (6952 JP) and three railway lines - Odakyu (9007 JP), West Japan (9021 JP) and Central Japan (9022 JP) for which we will show the Peer Group's record-low long-term Scores.Source • Japan Analytics

DAILY STATS
PERCENTAGES - 66% of quarterly results,  71% of annual forecasts/revisions and 75% of interim forecasts have negative Scores and 26% of companies reporting lost money for the quarter.
429 Quarterly Results

Results Score: 28% Positive / 6% Neutral / 66% Negative

Average Results Score Change: -3.1 points

Average % Change in Revenue: -9.3% Quarter YoY / -2.0% Rolling TTM YoY 

Average Operating Profit Margin Change: -1.0 ppt

Percentage Making Quarterly Losses: 26%
 153 Annual • 115 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 26% Positive / 3% Neutral / 71% Negative

Interim Forecast/Revision Score Change: 24% Positive / 1% Neutral / 75% Negative

Average Forecast/Revision Score Change: -8.4 points


🇯🇵 JAPAN • Results & Revisions 31st July - Takeda, Yamato/SG, Seria, FP, Keyence, Dai-Ichi Sankyo

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pharmaessentia-corp" target="_blank" data-smartkarma-citation="entities:16461:1" rel="noopener">Pharmaessentia Corp (6446 TT)</a> has started 2026 on strong note. 1Q26 revenue reached a record high of NT$5.1B, marking the 14th consecutive quarter of record-high performance with 57% YoY growth.</li>
<li>The company has appointed Incyte alumni Eric Vogel as U.S. Head of Commercialization, thereby strengthening commercial infrastructure ahead of the target action date for in ET on August 30, 2026.</li>
<li>By acquiring 100% of Forus, Pharmaessentia will fully integrate Canadian regulatory and medical affairs, marketing, and commercial channel resources — consolidating competitive advantages for Besremi and future products in the market.</li>
</ul>



Pharmaessentia Corp (6446 TT) has started 2026 on strong note. 1Q26 revenue reached a record high of NT$5.1B, marking the 14th consecutive quarter of record-high performance with 57% YoY growth.
The company has appointed Incyte alumni Eric Vogel as U.S. Head of Commercialization, thereby strengthening commercial infrastructure ahead of the target action date for in ET on August 30, 2026.
By acquiring 100% of Forus, Pharmaessentia will fully integrate Canadian regulatory and medical affairs, marketing, and commercial channel resources — consolidating competitive advantages for Besremi and future products in the market.


Pharmaessentia Corp (6446 TT): Strong 1Q Result; Commercialization Activity Ahead of Label Expansion

Duality Biotherapeutics / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/duality-biotherapeutics-inc" target="_blank" data-smartkarma-citation="entities:43878:1" rel="noopener">Duality Biotherapeutics (9606 HK)</a> is accelerating its core product candidates toward commercialization. Although superior clinical profile enhances approval prospects, competition holds key for market adoption.</li>
<li>Duality has multiple upcoming catalysts in 2026 to drive long-term growth. These are mostly various trial readouts and regulatory submissions. No approval is expected this year.</li>
<li>The company ended 2025 with sufficient cash balance of RMB3.3B, thanks to HKEX listing and business development deals. Duality Bio has announced $40M (~RMB270M) share buyback.</li>
</ul>



Duality Biotherapeutics (9606 HK) is accelerating its core product candidates toward commercialization. Although superior clinical profile enhances approval prospects, competition holds key for market adoption.
Duality has multiple upcoming catalysts in 2026 to drive long-term growth. These are mostly various trial readouts and regulatory submissions. No approval is expected this year.
The company ended 2025 with sufficient cash balance of RMB3.3B, thanks to HKEX listing and business development deals. Duality Bio has announced $40M (~RMB270M) share buyback.


Duality Biotherapeutics (9606 HK): Core Product Pipeline Is Progressing; Share Buyback Announced

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<div class="content-highlight"><h2>The potential for Merck and Roche looks underappreciated.</h2></div><hr><p>Innovation in immuno-oncology drugs has supported the moats for <a href="https://www.smartkarma.com/entities/merck-co-inc" target="_blank" data-smartkarma-citation="entities:1130:1">Merck &amp; Co Inc. (MRK US)</a>, <a href="https://www.smartkarma.com/entities/roche-holding-ltd" target="_blank" data-smartkarma-citation="entities:976:1">Roche Holding Ltd (ROG VX)</a>, <a href="https://www.smartkarma.com/entities/bristol-myers-squibb-co" target="_blank" data-smartkarma-citation="entities:1133:1">Bristol Myers Squibb Co (BMY US)</a>, and <a href="https://www.smartkarma.com/entities/astrazeneca-plc" target="_blank" data-smartkarma-citation="entities:21824:1">AstraZeneca PLC (AZN LN)</a>, and we expect expansion into the adjuvant/neoadjuvant settings to strengthen these moats. We project the lung adjuvant/neoadjuvant market to expand the potential by close to $10 billion in annual sales (not probability-weighted) by 2027, adding to almost $40 billion projected in the latestage metastatic settings. We estimate an 85% probability of success in this early-treatment setting based on early clinical data and the strength of the drugs in the late-stage setting. We view Merck and Roche as best positioned in the adjuvant setting due to a first-mover advantage with upcoming clinical data in 2020-21. While Bristol and Astra have earlier data in 2020 in the neoadjuvant setting, we are skeptical that these neoadjuvant studies without combination adjuvant chemotherapy will show strong enough efficacy to be competitive. Overall, including both early- and late-stage settings, we believe the potential of immuno-oncology drug sales is most underappreciated for Merck and Roche, and we see both of these companies as undervalued.</p><hr><h2>Key Points</h2><ul>
<li>Merck's and Roche's potential in immuno-oncology looks underappreciated versus consensus expectations, and the addition of the adjuvant lung potential strengthens the firms' positioning.</li>
<li>We estimate the lung neoadjuvant/adjuvant market share for Merck (35%), Roche (35%), AstraZeneca (15%), and Bristol-Myers (15%) based on timing and design of clinical studies, early-stage study results, and data in the metastatic disease setting.</li>
<li>Successful studies in neoadjuvant lung, nonresectable stage III lung (early but not as early as neoadjuvant and adjuvant), and adjuvant melanoma support an 85% probability of adding neoadjuvant and adjuvant lung cancer indications to the leading PD-1/PD-L1 drugs.</li>
<li>Data at ASCO 2019 strengthens the outlook for neoadjuvant/adjuvant treatment with a PD-1/PD-L1 drug, with Bristol's combination of Yervoy and Opdivo showing a stronger major pathological response rate (33%) than the historical trend seen with chemotherapy (27%) in the neoadjuvant setting.</li>
</ul>

The potential for Merck and Roche looks underappreciated.Innovation in immuno-oncology drugs has supported the moats for Merck &amp; Co Inc. (MRK US), Roche Holding Ltd (ROG VX), Bristol Myers Squibb Co (BMY US), and AstraZeneca PLC (AZN LN), and we expect expansion into the adjuvant/neoadjuvant settings to strengthen these moats. We project the lung adjuvant/neoadjuvant market to expand the potential by close to $10 billion in annual sales (not probability-weighted) by 2027, adding to almost $40 billion projected in the latestage metastatic settings. We estimate an 85% probability of success in this early-treatment setting based on early clinical data and the strength of the drugs in the late-stage setting. We view Merck and Roche as best positioned in the adjuvant setting due to a first-mover advantage with upcoming clinical data in 2020-21. While Bristol and Astra have earlier data in 2020 in the neoadjuvant setting, we are skeptical that these neoadjuvant studies without combination adjuvant chemotherapy will show strong enough efficacy to be competitive. Overall, including both early- and late-stage settings, we believe the potential of immuno-oncology drug sales is most underappreciated for Merck and Roche, and we see both of these companies as undervalued.Key Points
Merck's and Roche's potential in immuno-oncology looks underappreciated versus consensus expectations, and the addition of the adjuvant lung potential strengthens the firms' positioning.
We estimate the lung neoadjuvant/adjuvant market share for Merck (35%), Roche (35%), AstraZeneca (15%), and Bristol-Myers (15%) based on timing and design of clinical studies, early-stage study results, and data in the metastatic disease setting.
Successful studies in neoadjuvant lung, nonresectable stage III lung (early but not as early as neoadjuvant and adjuvant), and adjuvant melanoma support an 85% probability of adding neoadjuvant and adjuvant lung cancer indications to the leading PD-1/PD-L1 drugs.
Data at ASCO 2019 strengthens the outlook for neoadjuvant/adjuvant treatment with a PD-1/PD-L1 drug, with Bristol's combination of Yervoy and Opdivo showing a stronger major pathological response rate (33%) than the historical trend seen with chemotherapy (27%) in the neoadjuvant setting.


Immuno-Oncology Drugs in Adjuvant Lung: The Next Frontier in Strengthening Moats

United Kingdom

AstraZeneca PLC is a Swedish-British multinational pharmaceutical and biotechnology company focused on the discovery, development, manufacture, and commercialization of prescription medicines. The company specializes in therapeutic areas including oncology, cardiovascular, renal and metabolism, respiratory and immunology, rare diseases, and vaccines. AstraZeneca was founded in 1999 through the merger of Sweden's Astra AB and the UK's Zeneca Group PLC, and its headquarters are located in Cambridge, UK.

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AstraZeneca (AZN SS)

China Healthcare Weekly (Oct.23)

This article summarized important new China healthcare policy released last week, major industry viewpoints, company news and market review for...

Xinyao (Criss) Wang

🇯🇵 JAPAN • Results & Revisions 31st July - Takeda, Yamato/SG, Seria, FP, Keyence, Dai-Ichi Sankyo

CORRECTION - The last day of July saw the TOPIX index fall by 2.8% to reach a new two-month low, 8.2% below the closing high of June 8th. A...

Campbell Gunn

Pharmaessentia Corp (6446 TT): Strong 1Q Result; Commercialization Activity Ahead of Label Expansion

Pharmaessentia sees record-high revenue in 1Q26, appoints new U.S. Head of Commercialization, and strengthens commercial infrastructure in Canada...

Tina Banerjee

Immuno-Oncology Drugs in Adjuvant Lung: The Next Frontier in Strengthening Moats

The potential for Merck and Roche looks underappreciated.Innovation in immuno-oncology drugs has supported the moats for Merck & Co Inc. (MRK...

Morningstar, Inc.

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52-week Range

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China Healthcare Weekly (Oct.23)

This article summarized important new China healthcare policy released last week, major industry viewpoints, company news and market review for...

Xinyao (Criss) Wang

🇯🇵 JAPAN • Results & Revisions 31st July - Takeda, Yamato/SG, Seria, FP, Keyence, Dai-Ichi Sankyo

CORRECTION - The last day of July saw the TOPIX index fall by 2.8% to reach a new two-month low, 8.2% below the closing high of June 8th. A...

Campbell Gunn

Pharmaessentia Corp (6446 TT): Strong 1Q Result; Commercialization Activity Ahead of Label Expansion

​Pharmaessentia sees record-high revenue in 1Q26, appoints new U.S. Head of Commercialization, and strengthens commercial infrastructure in Canada...

Tina Banerjee

Duality Biotherapeutics (9606 HK): Core Product Pipeline Is Progressing; Share Buyback Announced

​Duality Bio is advancing core products towards commercialization, but faces competition for market adoption. Amid multiple catalysts in 2026 for...

Tina Banerjee

Immuno-Oncology Drugs in Adjuvant Lung: The Next Frontier in Strengthening Moats

The potential for Merck and Roche looks underappreciated.Innovation in immuno-oncology drugs has supported the moats for Merck & Co Inc. (MRK...

Morningstar, Inc.

Pharmaessentia sees record-high revenue in 1Q26, appoints new U.S. Head of Commercialization, and strengthens commercial infrastructure in Canada...

Duality Bio is advancing core products towards commercialization, but faces competition for market adoption. Amid multiple catalysts in 2026 for...