HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>We still haven’t seen the “industry clearing”. When an industry no longer has entry barriers/first mover advantage, it will inevitably bring about the collapse of expectations for the future.</li>
<li>If the total retail sales of consumer goods do not maintain well, the probability of endogenous growth problems is high, which will be reflected in the decline of companies’ valuation.</li>
<li>It’s more reasonable for the share prices of those companies that have entered VBP to rise. For those that haven’t been included in VBP, the risk is much higher.</li>
</ul>


We still haven’t seen the “industry clearing”. When an industry no longer has entry barriers/first mover advantage, it will inevitably bring about the collapse of expectations for the future.
If the total retail sales of consumer goods do not maintain well, the probability of endogenous growth problems is high, which will be reflected in the decline of companies’ valuation.
It’s more reasonable for the share prices of those companies that have entered VBP to rise. For those that haven’t been included in VBP, the risk is much higher.


China Healthcare Weekly (Sep.16) - Industry Clearing, Bottom of Healthcare Sector, Endogenous Growth

<ul>
<li>NHSA will set aside a certain market to provide space for innovative medical devices/consumables to explore the market in addition to centralized procurement. However, we tend to be cautiously optimistic.</li>
<li>We think it is important to clarify for investors what constitutes "commercialization success" – That is to generate revenue at scale and stable profitability through the sale of drugs.</li>
<li>All the products that covered by VBP begin to lose logic. Don't be fooled by those positive interpretations. We are bearish on the sectors with downward logic in long cycle. </li>
</ul>


NHSA will set aside a certain market to provide space for innovative medical devices/consumables to explore the market in addition to centralized procurement. However, we tend to be cautiously optimistic.
We think it is important to clarify for investors what constitutes "commercialization success" – That is to generate revenue at scale and stable profitability through the sale of drugs.
All the products that covered by VBP begin to lose logic. Don't be fooled by those positive interpretations. We are bearish on the sectors with downward logic in long cycle. 


China Healthcare Weekly(Sep9)-Innovative Device Policy,Commercial Success Definition,Don't Be Fooled

<ul>
<li>The NHSA issued a Notice on the investigation and registration of dental implant charges and service fees, paving ways for the subsequent centralized procurement, which would affect companies’ profit model.</li>
<li>As the pioneer of commercial insurance,Huimin Insurance is showing a decreasing marginal effect on improving the ability to pay the bills out of NRDL and improving bargaining power of companies.</li>
<li>To improve internationalization, China Biotech can choose to “Fast Follow” differentiated BIC candidates and also start MRCT in Phase I trials. This could be a path to strive for.</li>
</ul>


The NHSA issued a Notice on the investigation and registration of dental implant charges and service fees, paving ways for the subsequent centralized procurement, which would affect companies’ profit model.
As the pioneer of commercial insurance,Huimin Insurance is showing a decreasing marginal effect on improving the ability to pay the bills out of NRDL and improving bargaining power of companies.
To improve internationalization, China Biotech can choose to “Fast Follow” differentiated BIC candidates and also start MRCT in Phase I trials. This could be a path to strive for.


China Healthcare Weekly (Aug19)-Dental Implant VBP,Commercial Insurance,Biotech Internationalization

Equity Capital Markets

Dental Doctor Medical Holding Group / Equity Capital Markets

<ul>
<li>Dental Doctor has not established core competitiveness and high moat, and has to invest more on marketing and promotion to attract customers and drive growth.</li>
<li>The lack of dentists, weak talent and training system as well as high dentist turnover rate would be big concerns for the Company’s long term development, especially for nationwide expansion.</li>
<li>This industry has not yet entered the profit mode. Most of chain dental services providers are still in the stage of cash-burning expansion. So, we are conservative about the Company’s outlook.</li>
</ul>


Dental Doctor has not established core competitiveness and high moat, and has to invest more on marketing and promotion to attract customers and drive growth.
The lack of dentists, weak talent and training system as well as high dentist turnover rate would be big concerns for the Company’s long term development, especially for nationwide expansion.
This industry has not yet entered the profit mode. Most of chain dental services providers are still in the stage of cash-burning expansion. So, we are conservative about the Company’s outlook.


Pre-IPO Dental Doctor Medical Holding Group - An Uncertain Outlook and Concerns About Profitability

Equity Bottom-Up

<ul>
<li>Arrial's positioning at high-end private dental chain indicates limited growth space. The large investment in dental professionals drags down overall margins but fails to generate good word-of-mouth and expected returns.</li>
<li>Public hospitals with NRDL reimbursement and private dental chains with high cost performance would put more pressure on Arrail. Increasing marketing/promotion expenses cannot turn things around but further reduce margins.</li>
<li>Overall, the high-end strategy cannot bring high-end returns. We are not optimistic about Arrail's prospects and profitability. The Company may even keep losing money and hard to turn profitable.</li>
</ul>


Arrial's positioning at high-end private dental chain indicates limited growth space. The large investment in dental professionals drags down overall margins but fails to generate good word-of-mouth and expected returns.
Public hospitals with NRDL reimbursement and private dental chains with high cost performance would put more pressure on Arrail. Increasing marketing/promotion expenses cannot turn things around but further reduce margins.
Overall, the high-end strategy cannot bring high-end returns. We are not optimistic about Arrail's prospects and profitability. The Company may even keep losing money and hard to turn profitable.


Arrail Group (6639.HK) - The Development Strategy Cannot Generate High Returns

China

Topchoice Medical Investment Corporation provides dental and oral health care services.

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Topchoice Medical (600763 CH)

China Healthcare Weekly (Sep.16) - Industry Clearing, Bottom of Healthcare Sector, Endogenous Growth

We still haven’t seen the “industry clearing” of healthcare. The decline of total retail sales of consumer goods will lead to endogenous growth...

Xinyao (Criss) Wang

China Healthcare Weekly(Sep9)-Innovative Device Policy,Commercial Success Definition,Don't Be Fooled

We recommend cautiously optimistic about new innovative device policy. It's important to clarify what constitutes "commercialization success". All...

Xinyao (Criss) Wang

China Healthcare Weekly (Aug19)-Dental Implant VBP,Commercial Insurance,Biotech Internationalization

Dental implant VBP will affect companies' profit model/valuation elasticity. Commercial medical insurance faces challenges. China Biotech's...

Xinyao (Criss) Wang

Pre-IPO Dental Doctor Medical Holding Group - An Uncertain Outlook and Concerns About Profitability

Dental Doctor hasn't established core competitiveness.The lack of dentists/low profitability hinder expansion.As a reliable profit model hasn't...

Xinyao (Criss) Wang

Arrail Group (6639.HK) - The Development Strategy Cannot Generate High Returns

Arrail's development strategy cannot generate high returns, with limited growth space.High labor cost and marketing/promotion expense drag down...

Xinyao (Criss) Wang

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52-week Range

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