证券-中国医疗保健：中国会议第一天的关键要点

KeytakeawaysfromChinaConferenceDay 1 Industry Overview 05 November 2024 SBP:expectrobustbiosimilargrowthin2024 Based on solid development in 9M24, Sino Biopharm (SBP) is confident on achieving itsprevious guidance of double-digit revenue/net profit growth and net profit growth couldoutpace the revenue growth thanks to its cost-saving strategy. In particular, biosimilarproducts saw robust growth in 9M24 and mgmt. expects the total biosimilar productssales to hit RMB2bn/RMB3bn+ in 2024/25. With stabilized impact from the anti-corruption campaign and smooth hospital entrance, sales of Yilishu could reach overRMB500mn in 2024. Regarding new product approvals, 1) its pertuzumab biosimilarcould receive NDA approval by YE24 with the potential to become the first to launch thebiosimilar; sales contribution could reach over RMB800mn in 2025, per mgmt:; 2)Garsorasib (KRAS G12C) may also obtain NDA approval in 4Q24; and 3) overall, mgmt.believes that they are likely to receive approval for seven new products in total in 2024. EquityChinaHealthcare David Li >>Research AnalystMerill Lynch (Hong Kong)+85235084531davidbo.li@bofa.com Ethan Cui >>ResearchAnalystMerill Lynch (Hong Kong)ethan.cui@bofa.com Sandra Sun >>Research AnalystMerill Lynch (Hong Kong)sandra.sun@bofa.com Yifeng:a net increase of c.2000stores expected in2024 Mgmt. observed that Yifeng's performance in 9M24 was negatively impacted by theNHSA's enhanced inspection, the weak macro environment and enhanced competition inthe retail pharmacy industry. Specifically, mgmt. noted that the sales performance ofhealthcare supplements and TCM in 9M24 was strongly hurt by the consumptiondowngrade. With respect to the impact of the medical insurance pooling account reform,mgmt. holds a positive view, given that the retail pharmacies with pooling accountaccess could attract patients (from those without the access), but the above-mentionedimpact differs a lot amongst different cities/provinces due to the variations in thepolicy's detail from the local governments. Meanwhile, regarding the recent news on theNHSA's inspection of Fufang Ejiaojiang, mgmt. believes that there would be a limitedimpact on its operation. On its online business, mgmt. said that the growth in onlinesales is relatively higher than in its offline business in 9M24, meanwhile mgmt. sharedthat the online business' GPM is improving since they have adopted methods to avoidprice competition, Regarding the expansion plan, mgmt. still expects a net increase ofc.2,000 stores in 2024, including opening 3,000 new stores and closing c.500 - 1000stores depending on operating performance. Changyang Ji >>Research AnalystMerrill Lynch (Hong Kong)changyang.ji@bofa.com PVA: Polyvinyl alcohol NDA: new drug application KRAS: K-Rasprotein TCM: traditional Chinese medicine NHSA: National Healthcare SecurityAdministration Imeik:signalsofrecoveryobservedinOctober Management has observed recovery from medical institutions in Oct, after the weak3Q24 performance. And the recovery is mainly led by the increase in patient volume. Thehigh-end products, CureWhite and Renew White, faced more pressure during theconsumption downgrade trend than its low-end product, Hearty. However, it has retainedthe stable ex-factory price of the products. The ex-factory price of CureWhite and RenewWhite is RMB2700 and RMB3200, respectively. Regarding 4Q24 performance, mgmt.expects 4Q24 sales to increase QoQ compared with 3Q24's. Regarding the salesnetwork, as of 3Q24, the sales team of Hearty covers c.7,000 medical institutions andCureWhite covers c.1,500 medical institutions. (Continued on next page.) For the key pipeline products, mgmt. has high expectation on the cross-linked sodiumhyaluronate gel containing microspheres of PVA product approved in Oct 2024. Mgmt.expects the product to hit the market in 1Q25. In addition, mgmt. expects approval for4-5 new products in 2025, including botulinum toxin, minoxidil, etc. Disclosures ImportantDisclosures FUNDAMENTAL EQUITY OPINION KEY: Opinions include a Volatility Risk Rating, an Investment Rating and an Income Rating. VOLATILITY RISK RATINGS, indicatorsof potential price fluctuation, are: A - Low, B - Medium and C - High. INVESTMENT RATINGS reflect the analyst's assessment of both a stock's absolute total returnare expected to have a total return of at least 10% and are the most attractive stocks in the coverage cluster; 2 - Neutral stocks are expected to remain flat orincrease in value and are less attractive than Buy rated stocks and 3 - Underperform stocks are the least attractive stocks in a coverage cluster. An investment ratingof 6 (No Rating) indicates that a stock is no longer trading on the basis of fundamentals. Analysts assign investment ratings considering, among other things, the O-12 month total return expectation for a stock and the firm's guidelines for ratings dispersions (shown in the table below). The current price objective for a stockshould be referenced to