HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a>(CMS) recently performed very well. Last week, its stock priced increased about 23%, which was mainly driven by the positive outlook of its business. Meanwhile, the Company announced the annual results for the year ended 31 December 2020. According to the financial reports, turnover was up 14.4% to RMB6,946.0 million (2019: RMB6,073.6 million), which was mainly due to the overall increase in sales of various products. Gross profit was up 12.9% to RMB5,134.2 million (2019: RMB4,546.3 million); Profit for the year was up 30.7% to RMB2,555.7 million (2019: RMB1,955.7 million), which was above market expectation. However, besides the growth, there are some concerns on its star product PLENITY, an orally-administered weight management product.

China Medical System (867 HK)(CMS) recently performed very well. Last week, its stock priced increased about 23%, which was mainly driven by the positive outlook of its business. Meanwhile, the Company announced the annual results for the year ended 31 December 2020. According to the financial reports, turnover was up 14.4% to RMB6,946.0 million (2019: RMB6,073.6 million), which was mainly due to the overall increase in sales of various products. Gross profit was up 12.9% to RMB5,134.2 million (2019: RMB4,546.3 million); Profit for the year was up 30.7% to RMB2,555.7 million (2019: RMB1,955.7 million), which was above market expectation. However, besides the growth, there are some concerns on its star product PLENITY, an orally-administered weight management product.

China Medical System (867.HK) - The Concerns Are On "PLENITY"

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Zydus Lifesciences Ltd / Equity Bottom-Up

Cadila Healthcare reported its Q3FY21 earnings. Below, we note some of the key highlights from the earnings conference call.
Most promising aspect for Cadila is its focus on innovation that has been yielding good results with potential for launching a blockbuster drug in US. It has 4 NCEs (New Chemical Entities) in clinical development and 10+ NCEs/NBEs in pipeline. In particular, its NCE candidate, Saroglitazar Magnesium, for PBC disease has a USD 10bn+ global opportunity and Cadila has potential to be among the first wave of launches in US (represents 94%+ of the opportunity) with expected commercialization by FY23. Saroglitazar has potential to get approval for NASH disease in US by FY25. NASH has a much bigger opportunity with projected global market size of USD 27bn+. Another promising drug candidate is Desidustat where apart from large potential in treatment of anemia in CKD patients in India and China, there is orphan drug potential for niche chemotherapy-induced anemia condition in US.

Cadila Healthcare reported its Q3FY21 earnings. Below, we note some of the key highlights from the earnings conference call.
Most promising aspect for Cadila is its focus on innovation that has been yielding good results with potential for launching a blockbuster drug in US. It has 4 NCEs (New Chemical Entities) in clinical development and 10+ NCEs/NBEs in pipeline. In particular, its NCE candidate, Saroglitazar Magnesium, for PBC disease has a USD 10bn+ global opportunity and Cadila has potential to be among the first wave of launches in US (represents 94%+ of the opportunity) with expected commercialization by FY23. Saroglitazar has potential to get approval for NASH disease in US by FY25. NASH has a much bigger opportunity with projected global market size of USD 27bn+. Another promising drug candidate is Desidustat where apart from large potential in treatment of anemia in CKD patients in India and China, there is orphan drug potential for niche chemotherapy-induced anemia condition in US.

Cadila Healthcare: Q3FY21 Earnings - Innovation in Focus

Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Capital Markets

Sciclone Pharmaceuticals / Equity Capital Markets

SciClone Pharmaceuticals is a China-based company that has filed to list on the HKEX. The company primarily sells products in-licensed from third parties and provides promotion services. We expect concerns about Volume-Based Procurement for Zadaxin to weigh on the valuation until new products can offset potential pressures. As a result, we would pass on the deal.

SciClone Pharmaceuticals is a China-based company that has filed to list on the HKEX. The company primarily sells products in-licensed from third parties and provides promotion services. We expect concerns about Volume-Based Procurement for Zadaxin to weigh on the valuation until new products can offset potential pressures. As a result, we would pass on the deal. 

SciClone Pharmaceuticals: Caged by the Elephant

Thematic (Sector/Industry)

1. Industry viewpoints:<ul>
<li>Last week, the bidding for the 4th volume-based purchase (VBP) was officially opened.</li>
<li>China's CTLA-4 antibody drug industry is in the early stage, but is expected to expand rapidly from 2021. </li>
<li>China's orthopedic implant device market is in a stage of rapid growth in recent years. However, the future large price reduction if included in the volume-based purchase should also be take into consideration.</li>
</ul>2. Company news:News about the progress of new drugs, COVID-19 vaccine, strategic collaboration and acquisition from <a href="https://www.smartkarma.com/entities/innovent-biologics-inc" target="_blank" data-smartkarma-citation="entities:27452:1" rel="noopener">Innovent Biologics Inc (1801 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>, <a href="https://www.smartkarma.com/entities/cansino-biologics-inc" target="_blank" data-smartkarma-citation="entities:27739:1" rel="noopener">CanSino Biologics Inc (6185 HK)</a> and <a href="https://www.smartkarma.com/entities/china-medical-system-holdings" target="_blank" data-smartkarma-citation="entities:18736:1" rel="noopener">China Medical System (867 HK)</a>.3. Market review:Last week, stock price for healthcare sector in A share increased 3.75%, while CSI 300 increased 2.46% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:
Last week, the bidding for the 4th volume-based purchase (VBP) was officially opened.
China's CTLA-4 antibody drug industry is in the early stage, but is expected to expand rapidly from 2021. 
China's orthopedic implant device market is in a stage of rapid growth in recent years. However, the future large price reduction if included in the volume-based purchase should also be take into consideration.
2. Company news:News about the progress of new drugs, COVID-19 vaccine, strategic collaboration and acquisition from Innovent Biologics Inc (1801 HK), Antengene (6996 HK), CanSino Biologics Inc (6185 HK) and China Medical System (867 HK).3. Market review:Last week, stock price for healthcare sector in A share increased 3.75%, while CSI 300 increased 2.46% over the same period of time.4. Risk disclosure:Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

BeiGene has outlicensed ex-China rights to its PD-1 tislelizumab to Novartis on favorable terms, validating the competitive position of this compound in a crowded market. Further, the agreement marks a growing trend of Chinese companies outlicensing products to multinationals, which can have a leveraged benefit on their P&amp;Ls and valuations.

BeiGene has outlicensed ex-China rights to its PD-1 tislelizumab to Novartis on favorable terms, validating the competitive position of this compound in a crowded market. Further, the agreement marks a growing trend of Chinese companies outlicensing products to multinationals, which can have a leveraged benefit on their P&amp;Ls and valuations.

BeiGene: Novartis Grabs Tislelizumab Rights

China

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

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China Medical System (867 HK)