HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

1. Industry viewpoints:
<ul>
<li>There is no doubt that the next step is to include biosimilar drugs in the volume-based purchase (VBP).</li>
<li>With the increasing prevalence of diabetes in China and the improvement of people's living and medical standards, the market size of diabetes drugs in China is expanding year by year.</li>
<li>As the penetration of interventional surgery continues to increase, the market of support devices across all interventional fields has a promising future.</li>
</ul>
2. Company news:
News about the new agreements 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/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/huadong-medicine-co-ltd-a" target="_blank" data-smartkarma-citation="entities:18522:1" rel="noopener">Huadong Medicine Co Ltd A (000963 CH)</a>. 
3. Market review: 
Last week, stock price for healthcare sector in A share decreased 2.83%, while CSI 300 decreased 0.5% over the same period of time.
4. Risk disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

1. Industry viewpoints:

There is no doubt that the next step is to include biosimilar drugs in the volume-based purchase (VBP).
With the increasing prevalence of diabetes in China and the improvement of people's living and medical standards, the market size of diabetes drugs in China is expanding year by year.
As the penetration of interventional surgery continues to increase, the market of support devices across all interventional fields has a promising future.

2. Company news:
News about the new agreements from BeiGene Ltd (6160 HK),Luye Pharma (2186 HK), and Huadong Medicine Co Ltd A (000963 CH). 
3. Market review: 
Last week, stock price for healthcare sector in A share decreased 2.83%, while CSI 300 decreased 0.5% over the same period of time.
4. Risk disclosure:
Policy risk, R&amp;D risk, Company risk and COVID-19 risk.

China Healthcare Weekly (Feb.19) - VBP on Biosimilar Drugs, Poor Performance of Healthcare Sector

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

MetaX Integrated Circuits / Index Rebalance

<ul>
<li>With the review period nearly complete, we forecast 4 constituent changes for the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> and 10 constituent changes for the STAR100 Index in June.</li>
<li>Estimated turnover is 6.7% for the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">SSE STAR50 (STAR50 INDEX)</a> and 13.9% for the STAR100 Index. The estimated round-trip net trade is CNY 20.15bn (US$2.95bn).</li>
<li>The forecast adds have outperformed the forecast deletes over the last few weeks and months. The forecast deletes have been pressured by ETF redemptions as momentum continues in the adds.</li>
</ul>


With the review period nearly complete, we forecast 4 constituent changes for the SSE STAR50 (STAR50 INDEX) and 10 constituent changes for the STAR100 Index in June.
Estimated turnover is 6.7% for the SSE STAR50 (STAR50 INDEX) and 13.9% for the STAR100 Index. The estimated round-trip net trade is CNY 20.15bn (US$2.95bn).
The forecast adds have outperformed the forecast deletes over the last few weeks and months. The forecast deletes have been pressured by ETF redemptions as momentum continues in the adds.


STAR50/STAR100 Index Rebalance Preview: Huge Outperformance, ETF Redemptions & Fast Entry Conundrum

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

MicroPort Scientific / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP)</a> aims to raise around US$150m via selling its remaining shares in <a href="https://www.smartkarma.com/entities/microport-scientific-corp" target="_blank" data-smartkarma-citation="entities:4487:1" rel="noopener">Microport Scientific (853 HK)</a>.</li>
<li>Otsuka had sold the majority of its stake earlier this year.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



Otsuka Holdings (4578 JP) aims to raise around US$150m via selling its remaining shares in Microport Scientific (853 HK).
Otsuka had sold the majority of its stake earlier this year.
In this note, we will talk about the placement and run the deal through our ECM framework.


Microport Scientific Placement - Should Be Well-Flagged, Will Lift Overhang

Equity Bottom-Up

<ul>
<li>The third batch of VBP results of the National TCM Patent Medicines were released. Some products experienced over 90% price reduction. The price decline of exclusive varieties was moderate.</li>
<li>The VBP results of cochlear implants and peripheral vascular stents were released. Both foreign and domestic companies participated in the VBP actively, hoping to increase market share in China. </li>
<li>The key is to see whether 2024 full-year performance can meet expectations, which is the bottom line for WuXi Bio. Without a definitive long-term logic, short-term trading is recommended.</li>
</ul>


The third batch of VBP results of the National TCM Patent Medicines were released. Some products experienced over 90% price reduction. The price decline of exclusive varieties was moderate.
The VBP results of cochlear implants and peripheral vascular stents were released. Both foreign and domestic companies participated in the VBP actively, hoping to increase market share in China. 
The key is to see whether 2024 full-year performance can meet expectations, which is the bottom line for WuXi Bio. Without a definitive long-term logic, short-term trading is recommended.


China Healthcare Weekly (Jan.5)-TCM VBP Update, Medical Device VBP Result Is Out, WuXi Bio's Outlook

<ul>
<li>Since the domestic revenue scale of PD-1 has been much lower-than-expected, the market seems no longer willing to offer GLP-1 weight loss drug high expectations. However, that's not right. </li>
<li>For China healthcare, the emergence of negative domestic policies is a time for reassessment and seeking opportunities, rather than a time of blind pessimism.</li>
<li>Issuing convertible bonds is clearly a bad decision for Microport, which chose to sacrifice the interests of minority shareholders. Together with weak fundamentals/cashflow pressure, the management needs to take responsibility.</li>
</ul>


Since the domestic revenue scale of PD-1 has been much lower-than-expected, the market seems no longer willing to offer GLP-1 weight loss drug high expectations. However, that's not right. 
For China healthcare, the emergence of negative domestic policies is a time for reassessment and seeking opportunities, rather than a time of blind pessimism.
Issuing convertible bonds is clearly a bad decision for Microport, which chose to sacrifice the interests of minority shareholders. Together with weak fundamentals/cashflow pressure, the management needs to take responsibility.


China Healthcare Week (Mar.8) - GLP-1s, “Crowding Out Effect” in Healthcare, Microport's Trouble

China

Shanghai MicroPort Endovascular MedTech (Gruop) Co., Ltd. develops and sells medical instruments. The Company manufactures and sells peripheral vascular stents, aortic balloon dilation catheters, aortic stent grafts, and other related products. Shanghai MicroPort Endovascular MedTech (Gruop) markets its products primarily throughout China with limited overseas.

Shanghai MicroPort Endovascula (688016 CH)

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Shanghai MicroPort Endovascula (688016 CH)

China Healthcare Weekly (Feb.19) - VBP on Biosimilar Drugs, Poor Performance of Healthcare Sector

This article analyzed the new document about VBP for biosimilar drugs, diabetes drugs market, support devices market in interventional fields,...

Xinyao (Criss) Wang

STAR50/STAR100 Index Rebalance Preview: Huge Outperformance, ETF Redemptions & Fast Entry Conundrum

There could be 4 changes for the STAR50 and 10 for the STAR100 in June. Fast Entry inclusions depend on the index committee. ETF redemptions...

Brian Freitas

Microport Scientific Placement - Should Be Well-Flagged, Will Lift Overhang

Otsuka Holdings (4578 JP) aims to raise around US$150m via selling its remaining shares in Microport Scientific (853 HK). In this note, we run the...

Sumeet Singh

China Healthcare Weekly (Jan.5)-TCM VBP Update, Medical Device VBP Result Is Out, WuXi Bio's Outlook

VBP result of TCM Patent Medicine is released. VBP of cochlear implant/peripheral vascular stent is good for companies. Only when Li Ge buys big...

Xinyao (Criss) Wang

China Healthcare Week (Mar.8) - GLP-1s, “Crowding Out Effect” in Healthcare, Microport's Trouble

The drug combination based on GLP-1s has become the largest target in history. “Crowding out effect” on non-rigid consumption is the key reason for...

Xinyao (Criss) Wang

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