HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Bottom-Up

Shanghai MicroPort MedBot Group / Equity Bottom-Up

<ul>
<li>New policy about surgical robots was released, which is conducive to the promotion and popularization of surgical robots in China. However, the situation is not as simple as it seems.</li>
<li>We deep dive the business environment of surgical robots in China.Even with favorable policies, both surgical robot systems and consumables have to reduce price largely so as to be affordable.</li>
<li>It’s difficult to make profits in China. Medbot could lose money for quite some time.Without solid internationalization, the rally cannot be sustained for a long time only by policy catalyst.</li>
</ul>


New policy about surgical robots was released, which is conducive to the promotion and popularization of surgical robots in China. However, the situation is not as simple as it seems.
We deep dive the business environment of surgical robots in China.Even with favorable policies, both surgical robot systems and consumables have to reduce price largely so as to be affordable.
It’s difficult to make profits in China. Medbot could lose money for quite some time.Without solid internationalization, the rally cannot be sustained for a long time only by policy catalyst.


Shanghai MicroPort MedBot Group (2252.HK) - Recognize the Reality but Don’t Give up Hope

Thematic (Sector/Industry)

<ul>
<li>New policy was released to support the development of surgical robots in China, which would be short-term catalyst for related companies, but it may not bring high profits.</li>
<li>In fact, since March, it may not be appropriate for healthcare companies to use the COVID-19 as a reason if their performance in the following months is not as expected.</li>
<li>Before DRGs/DIP policy becomes very “lethal”, there is a “policy vacuum period” in the next two or three years, which is a good opportunity to go long in China healthcare.</li>
</ul>


New policy was released to support the development of surgical robots in China, which would be short-term catalyst for related companies, but it may not bring high profits.
In fact, since March, it may not be appropriate for healthcare companies to use the COVID-19 as a reason if their performance in the following months is not as expected.
Before DRGs/DIP policy becomes very “lethal”, there is a “policy vacuum period” in the next two or three years, which is a good opportunity to go long in China healthcare.


China Healthcare Weekly (Jan.27) - Surgical Robots New Policy, COVID-19 Update, Policy Vacuum Period

<ul>
<li>China further optimized COVID policy. The main reason to ease the policy at this time could be to release risks in advance so as to recover as soon as possible.</li>
<li>The growth curve of biotech is not linear. We analyzed three situations to help investors better understand “the new story” of Biotech at different stages.</li>
<li>We reviewed the performance of Company listed under HKEX Chapter 18A since this year. We found some interesting points worth the attention.</li>
</ul>


China further optimized COVID policy. The main reason to ease the policy at this time could be to release risks in advance so as to recover as soon as possible.
The growth curve of biotech is not linear. We analyzed three situations to help investors better understand “the new story” of Biotech at different stages.
We reviewed the performance of Company listed under HKEX Chapter 18A since this year. We found some interesting points worth the attention.


China Healthcare Weekly (Dec.9) - COVID Policy Update, Biotech Growth Curve, HKEX Chapter 18A Review

<ul>
<li>The 7th National VBP released results. 60 kinds of drugs won the bidding successfully, with price reduction of 48% on average. We analyzed its impact on companies. </li>
<li>The newly issued document about the payment management measures for new technology out of CHS-DRG payment scope is a solid encouragement to innovation and an important policy reform signal.</li>
<li>The national centralized procurement of orthopedic spine consumables has officially started, which is beneficial to those leading companies with complete product line.</li>
</ul>


The 7th National VBP released results. 60 kinds of drugs won the bidding successfully, with price reduction of 48% on average. We analyzed its impact on companies. 
The newly issued document about the payment management measures for new technology out of CHS-DRG payment scope is a solid encouragement to innovation and an important policy reform signal.
The national centralized procurement of orthopedic spine consumables has officially started, which is beneficial to those leading companies with complete product line.


China Healthcare Weekly (July.15)-7th VBP, Policy Correction Signs, Orthopedic Spine Consumables VBP

<ul>
<li>To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.</li>
<li>The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&amp;D/selling/administrative expenses.</li>
<li>Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.</li>
</ul>


To achieve massive sales expansion, surgical robots and consumables have to reduce price largely to enter NRDL reimbursement. This is at odds with expectations that they will generate high profits.
The actual market share gained and revenue generated by Medbot may fall far short of expectations, resulting in an inability to cover years of rapid growth in R&amp;D/selling/administrative expenses.
Due to uncertainties on commercialization and profitability outlook, Medbot lacks an “anchor” for valuation.The large fluctuation in share price would continue. Surgical robots are not a good business for now.


MicroPort MedBot (2252.HK)- Lack an “anchor” for Valuation Due to Uncertainties in Commercialization

China

Shanghai MicroPort MedBot Group Co Ltd manufactures and sells medical equipment. The Companu produces and sells laparoscopic surgery robots, orthopedic surgical robots, and other products. Shanghai MicroPort MedBot Group markets its products throughout China.

Shanghai MicroPort MedBot Group (2252 HK)

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Shanghai MicroPort MedBot Group (2252 HK)