In today’s briefing:
- STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
- China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails
- Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine
- HEC Pharma (1558 HK): Core Product Saw Volume Recovery in 1H 2022; New Launches to Accelerate Growth
STAR50 Index Rebalance: Adds Outperform Deletes in the Last Week
- The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in December.
- All changes are in line with our forecasts and there appears to be some pre-positioning over the last week as the deletes have sold off hard.
- One-Way turnover is estimated at 5.34% and will result in a one-way trade of CNY 3,766m. The estimated impact on the deletes is higher than that on the adds.
China Healthcare Weekly (Nov25)-Wuxi Biologics, Valuation Logic Changed by NRDL, Biotech Model Fails
- NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.
- Wuxi Biologics (2269 HK) has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.
- The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.
Shionogi & Co (4507 JP): Oral COVID-19 Drug Got Approval; Files Approval for COVID-19 Vaccine
- On November 22, Shionogi & Co (4507 JP) received emergency regulatory approval for Xocova in Japan for COVID-19. It is Japan’s first homegrown oral antiviral for SARS-CoV-2 infection.
- On November 24, Shionogi has filed for manufacturing and sales approval of S-268019, a recombinant protein-based preventive vaccine, for use in priming and booster (third) doses, against COVID-19.
- Although Shionogi continues to expect ¥110 billion revenue from COVID-19-related products in FY23, the company has raised overall revenue guidance to ¥410 billion from ¥400 billion.
HEC Pharma (1558 HK): Core Product Saw Volume Recovery in 1H 2022; New Launches to Accelerate Growth
- During H1 2022, Yichang HEC Changjiang Pharma (1558 HK) recorded revenue of RMB1.3 billion, representing 540% y/y growth, driven by 1,776% y/y revenue growth from its core product Kewei.
- With gradual recovery of patient traffic in medical institutions and increasing number of flu cases, Kewei showed a trend of recovery in its sales volume leveraging on its market leadership.
- HEC Pharma has a comprehensive insulin portfolio, which covers both second and third generations of insulin. With 116 million diabetes patients, China has significant market opportunity for insulin.
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