HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Hutchison China MediTech Ltd / Equity Bottom-Up

<ul>
<li>HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. </li>
<li>Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.</li>
<li>Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.</li>
</ul>


HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. 
Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.
Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.


Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

Thematic (Sector/Industry)

<ul>
<li>A document titled "<em>Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain</em>" attracted widespread attention, which is significantly different from past policies. </li>
<li>Restrictions on payment end and deteriorating investment and financing situations will be improved, marking a new starting point for China’s innovative drug business. We have reasons to start being optimistic.</li>
<li>If approved and implemented, it would be a significant reversal of the previous expectation and investment logic of innovative drugs. So, investors should not overlook the importance of this document.</li>
</ul>


A document titled "Soliciting Opinions on the Implementation Plan for Supporting the Development of Innovative Drugs throughout the Whole Chain" attracted widespread attention, which is significantly different from past policies. 
Restrictions on payment end and deteriorating investment and financing situations will be improved, marking a new starting point for China’s innovative drug business. We have reasons to start being optimistic.
If approved and implemented, it would be a significant reversal of the previous expectation and investment logic of innovative drugs. So, investors should not overlook the importance of this document.


Important New Policy for China’s Innovative Drugs – The Game Rule Is About to Change Radically

<ul>
<li>HUTCHMED's 2023 results are relatively certain. Fruquintinib had a strong start after obtaining approval in the US, with sales of about US$13-15 million in just more than a month.</li>
<li>Oncology/Immunology consolidated revenue would be in line with management’s performance guidance (US$450 to US$550 million) in 2023. There are promising data readout/NDA submission this year, which would be potential catalysts.</li>
<li>HUTCHMED has sufficient cashflow and does not require external financing. From 2024 to 2026, it will enter a period of accelerated growth in product revenue. Breakeven is achievable in 2025.</li>
</ul>


HUTCHMED's 2023 results are relatively certain. Fruquintinib had a strong start after obtaining approval in the US, with sales of about US$13-15 million in just more than a month.
Oncology/Immunology consolidated revenue would be in line with management’s performance guidance (US$450 to US$550 million) in 2023. There are promising data readout/NDA submission this year, which would be potential catalysts.
HUTCHMED has sufficient cashflow and does not require external financing. From 2024 to 2026, it will enter a period of accelerated growth in product revenue. Breakeven is achievable in 2025.


Hutchmed China Ltd (13.HK/​​HCM.US) - 2023 Results Preview and Catalysts in 2024

<ul>
<li>The market seems “not excited” with fruquintinib’s FDA approval.We analyzed the potential reasons behind.Beyond boosting market sentiment when license-out deal is announced initially,its practical impact on valuation could be limited.</li>
<li>HUTCHMED’s financial performance is good. The deal with Takeda helps to relieve cash-flow pressure. We think HUTCHMED is a relatively safe bet for investors as eventual breakeven is drawing near.</li>
<li>If based on conservative calculation, market value of about US$1,455-2,055 million is a good place to long.When market value is higher than US$3,500 million, it's time to consider taking profits.</li>
</ul>


The market seems “not excited” with fruquintinib’s FDA approval.We analyzed the potential reasons behind.Beyond boosting market sentiment when license-out deal is announced initially,its practical impact on valuation could be limited.
HUTCHMED’s financial performance is good. The deal with Takeda helps to relieve cash-flow pressure. We think HUTCHMED is a relatively safe bet for investors as eventual breakeven is drawing near.
If based on conservative calculation, market value of about US$1,455-2,055 million is a good place to long.When market value is higher than US$3,500 million, it's time to consider taking profits.


Hutchmed China Ltd (13.HK/​HCM.US) - A Valuable Option in the Portfolio

<ul>
<li>The 9th national VBP has begun. We analyzed the major big varieties with sales over RMB1 billion included in this VBP and the impact on related domestic pharmaceutical companies. </li>
<li>"Concept validation" of the business model of Chinese Biotech companies has been completed. Even under enormous pressure of medical insurance fee control policy, drug sales remain a reliable profit model.</li>
<li>Medlive's weak share price performance has a reason. The significant profitability increase in 23H1 wasn't from the improvement of main business. Its business model needs time to be further validated.</li>
</ul>


The 9th national VBP has begun. We analyzed the major big varieties with sales over RMB1 billion included in this VBP and the impact on related domestic pharmaceutical companies. 
"Concept validation" of the business model of Chinese Biotech companies has been completed. Even under enormous pressure of medical insurance fee control policy, drug sales remain a reliable profit model.
Medlive's weak share price performance has a reason. The significant profitability increase in 23H1 wasn't from the improvement of main business. Its business model needs time to be further validated.


China Healthcare Weekly (Sep.8)- 9th VBP, Reliable Profit Model of Biotech, Medlive, China's Outlook

Hong Kong

Hutchison China MediTech Ltd develops, manufactures, and sells pharmaceutical products. The Company offers drugs for oncology and autoimmune diseases treatment. Hutchison China MediTech markets its products globally.

Hutchison China MediTech Ltd (HCM US)

Hutchmed China Ltd (13.HK/HCM.US) 23H1 - This Company Is Becoming More Attractive

We have seen over 35% share price rally after this insight was published. Obviously, the market is optimistic about the upcoming fruquintinib's FDA...

Xinyao (Criss) Wang

Important New Policy for China’s Innovative Drugs – The Game Rule Is About to Change Radically

A new document about China's innovative drugs would change the game rule/outlook radically. We have reasons to start being optimistic that the...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) - 2023 Results Preview and Catalysts in 2024

HUTCHMED has entered a harvest period.Product revenue would grow rapidly in the next two years, with promising catalysts head.Together with...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) - A Valuable Option in the Portfolio

Despite market's lackluster response to fruquintinib’s FDA approval, we're optimistic about HUTCHMED’s outlook.Rich cash flow/future catalysts make...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.8)- 9th VBP, Reliable Profit Model of Biotech, Medlive, China's Outlook

9th national VBP has begun. We analyzed the impact on companies. 23H1 reports make us realize even with negative policy, China Biotech can still...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​HCM.US) 23H1 - This Company Is Becoming More Attractive

We have seen over 35% share price rally after this insight was published. Obviously, the market is optimistic about the upcoming fruquintinib's FDA...

Xinyao (Criss) Wang

Important New Policy for China’s Innovative Drugs – The Game Rule Is About to Change Radically

A new document about China's innovative drugs would change the game rule/outlook radically. We have reasons to start being optimistic that the...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​​HCM.US) - 2023 Results Preview and Catalysts in 2024

HUTCHMED has entered a harvest period.Product revenue would grow rapidly in the next two years, with promising catalysts head.Together with...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/​HCM.US) - A Valuable Option in the Portfolio

Despite market's lackluster response to fruquintinib’s FDA approval, we're optimistic about HUTCHMED’s outlook.Rich cash flow/future catalysts make...

Xinyao (Criss) Wang

China Healthcare Weekly (Sep.8)- 9th VBP, Reliable Profit Model of Biotech, Medlive, China's Outlook

9th national VBP has begun. We analyzed the impact on companies. 23H1 reports make us realize even with negative policy, China Biotech can still...

Xinyao (Criss) Wang

Hutchmed China Ltd (13.HK/HCM.US) 23H1 - This Company Is Becoming More Attractive

Hutchmed China Ltd (13.HK/HCM.US) - 2023 Results Preview and Catalysts in 2024

Hutchmed China Ltd (13.HK/HCM.US) - A Valuable Option in the Portfolio