HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>Jiangsu Provincial Medical Insurance Bureau organized the 7th round of centralized procurement of medical consumables, mainly including spring coil, endoscopic stapler, ultrasound knife and vacuum blood collection tube.</li>
<li>
<a href="https://www.smartkarma.com/entities/cstone-pharmaceuticals" target="_blank" data-smartkarma-citation="entities:27882:1" rel="noopener">CStone Pharmaceuticals (2616 HK)</a> is considering a potential sale of the business. We analyzed the logic behind this deal.</li>
<li>For biotech, Mr Market can never be rational enough to see the big picture. Maybe we should be "dumb". Buy low and sell high works for all investors.</li>
</ul>


Jiangsu Provincial Medical Insurance Bureau organized the 7th round of centralized procurement of medical consumables, mainly including spring coil, endoscopic stapler, ultrasound knife and vacuum blood collection tube.

CStone Pharmaceuticals (2616 HK) is considering a potential sale of the business. We analyzed the logic behind this deal.
For biotech, Mr Market can never be rational enough to see the big picture. Maybe we should be "dumb". Buy low and sell high works for all investors.


China Healthcare Weekly (July22)-Jiangsu Province VBP, CStone's Potential Sale, Irrational Mr Market

Equity Bottom-Up

Innovent Biologics Inc / Equity Bottom-Up

<ul>
<li>Innovent is expected to transform from a biotech to a biopharma. From the present point of view, the Company is a better comprehensive choice of certainty, elasticity and safety.  </li>
<li>With high R&amp;D efficiency, strong sales capability, top talent teams, and mindset keeping pace with the times, investors could consider to replace Hengrui with Innovent in the portfolio.  </li>
<li>Innovent’s valuation anchor is HK$40 billion, below which it's undervalued. Its market value could reach about RMB80 billion to RMB120 billion, based on sales of RMB10 billion to RMB15 billion. </li>
</ul>


Innovent is expected to transform from a biotech to a biopharma. From the present point of view, the Company is a better comprehensive choice of certainty, elasticity and safety.  
With high R&amp;D efficiency, strong sales capability, top talent teams, and mindset keeping pace with the times, investors could consider to replace Hengrui with Innovent in the portfolio.  
Innovent’s valuation anchor is HK$40 billion, below which it's undervalued. Its market value could reach about RMB80 billion to RMB120 billion, based on sales of RMB10 billion to RMB15 billion. 


Innovent Biologics Inc (1801.HK) - Innovent Is Not Optional but Necessary in Portfolio

<ul>
<li>The increasing expenditure for pandemic prevention and quarantine adds further pressure on the medical insurance fund. So, the NHSA will have more incentive to reduce payment standard.</li>
<li>We analyzed our interpretation on the new policies/bidding rules/impact on companies of 2022 NRDL adjustment, which would be very intense as more high-priced drugs voluntarily reduce prices to enter NRDL.</li>
<li>This year's NRDL negotiations will take place between September and October. The results will be announced in November.Investors can pay attention to relevant time nodes and get prepared in advance.</li>
</ul>


The increasing expenditure for pandemic prevention and quarantine adds further pressure on the medical insurance fund. So, the NHSA will have more incentive to reduce payment standard.
We analyzed our interpretation on the new policies/bidding rules/impact on companies of 2022 NRDL adjustment, which would be very intense as more high-priced drugs voluntarily reduce prices to enter NRDL.
This year's NRDL negotiations will take place between September and October. The results will be announced in November.Investors can pay attention to relevant time nodes and get prepared in advance.


Policy Interpretation of 2022 National Medical Insurance (NRDL) Negotiation

<ul>
<li>There could be investment opportunities for influenza vaccines due to supply-demand mismatch this year, but there is no long-term logic in this industry.</li>
<li>The NRDL adjustment in 2022 has been officially launched. We need to point out a change in favor of the primary drugs (or original drugs).</li>
<li>CXO's prosperity may have problems in the next few years. The point is that it is difficult to predict how long this “low momentum” would last if it comes.</li>
</ul>


There could be investment opportunities for influenza vaccines due to supply-demand mismatch this year, but there is no long-term logic in this industry.
The NRDL adjustment in 2022 has been officially launched. We need to point out a change in favor of the primary drugs (or original drugs).
CXO's prosperity may have problems in the next few years. The point is that it is difficult to predict how long this “low momentum” would last if it comes.


China Healthcare Weekly (July.8)- CXO Outlook, 2022 NRDL Adjustment, Logic of Influenza Vaccine

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lepu-biopharma-co-ltd" target="_blank" data-smartkarma-citation="entities:33231:1" rel="noopener">Lepu Biopharma (2157 HK)</a> has filed NDA for its lead drug candidate pucotenlimab (HX008) for two indications in China, having a combined estimated market opportunity of RMB8 billion by 2030.</li>
<li>Overcrowded PD-1 mAb drugs market in China, with 10 marketed drugs, may limit the growth potential of pucotenlimab. However, pucotenlimab has better efficacy than existing drugs.</li>
<li>Lepu’s other core assets are also progressing and the company has sufficient cash to fund its R&amp;D and commercialization initiatives.</li>
</ul>



Lepu Biopharma (2157 HK) has filed NDA for its lead drug candidate pucotenlimab (HX008) for two indications in China, having a combined estimated market opportunity of RMB8 billion by 2030.
Overcrowded PD-1 mAb drugs market in China, with 10 marketed drugs, may limit the growth potential of pucotenlimab. However, pucotenlimab has better efficacy than existing drugs.
Lepu’s other core assets are also progressing and the company has sufficient cash to fund its R&amp;D and commercialization initiatives.


Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing

China

Shanghai Junshi Biosciences Co., Ltd. operates as a biopharmaceutical company. The Company develops and sells small molecule drugs, antibody drug conjugates, and other products. Shanghai Junshi Biosciences markets its products worldwide.

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Shanghai Junshi Biosciences (1877 HK)

China Healthcare Weekly (July22)-Jiangsu Province VBP, CStone's Potential Sale, Irrational Mr Market

Jiangsu Province released VBP results on medical consumables. CStone proposed a potential sale of the business.We analyzed the logic behind. Maybe...

Xinyao (Criss) Wang

Innovent Biologics Inc (1801.HK) - Innovent Is Not Optional but Necessary in Portfolio

Innovent would transform from a biotech to biopharma. It is a better comprehensive choice of certainty, elasticity and safety than Hengrui. Its...

Xinyao (Criss) Wang

Policy Interpretation of 2022 National Medical Insurance (NRDL) Negotiation

We analyzed the new policies, bidding rules, logic and impact on companies of 2022 NRDL adjustment,which will be very intense.The results will be...

Xinyao (Criss) Wang

China Healthcare Weekly (July.8)- CXO Outlook, 2022 NRDL Adjustment, Logic of Influenza Vaccine

CXO's prosperity may have problems in the next few years. We analyzed the logic. There is no long-term logic for influenza vaccine. A change in...

Xinyao (Criss) Wang

Lepu Biopharma (2157 HK): Lead Candidate Marching Toward Commercialization; Pipeline Is Progressing

Lepu is preparing for commercialization of pucotenlimab for two indications in China, after approval. The indications targeted by Lepu’s core drug...

Tina Banerjee

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