Daily Brief Health Care: Chongqing Zhifei Biological Products, Shinpoong Pharmaceutical, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Zhifei Biological Products (300122.CH) – More Downside Ahead, with Untenable Logic in HPV Vaccine
Shinpoong Pharmaceutical (019170 KS): Late Entry in COVID Drug Market; Legal Overhang Still Persists
Human Capital Investment Is Also Necessary to Remind Valuations of Growth-Based Corporate Value

Zhifei Biological Products (300122.CH) – More Downside Ahead, with Untenable Logic in HPV Vaccine

Due to the lack of competitiveness, Zhifei’s self-developed products cannot contribute solid performance to make up for the shrinking revenue of HPV vaccines when more competing products gradually launched.
The real potential of HPV vaccine market in China is not as big as imagined. So, the companies involved have the problem of inflated market values.
Due to low demand of COVID-19 vaccine/negative impact of pandemic on HPV vaccination, Zhifei’s revenue YoY growth could be 10%-20%; Net profit YoY growth could be negative in 2022.

Shinpoong Pharmaceutical (019170 KS) is re-purposing its existing anti-malarial drug Pyramax as an oral treatment for the COVID-19. The company is conducting phase 3 study in six countries, including Korea.
South Korean oral COVID-19 treatment market is currently dominated by Paxlovid. Other domestic companies are also in race to develop homegrown oral COVID-19 drugs, thereby creating a crowded market.
With declining cases and hospitalizations, Pyramax has muted growth prospect as a treatment for COVID-19. Shinpoong is reporting operating loss due to accelerated R&D expenditures.

Human investment, the engine of medium-to-long-term growth, was burden for companies without high profit margins, and it wasn’t of much interest to investors seeking stock price returns from short-term perspective.
Today, where people are required to do jobs that machines and robots cannot do and to think about mechanisms for making them work, investing in people is becoming more important.
The fact that investors have focused more on short-term earnings volatility indicates that they have failed to assume growth-based corporate value in valuations. Growth investing is essential to raising valuations.

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