HSBC: China Pharmaceutical – FY25 In-Line; Watch for ASCO Data and BD-Driven Margin Expansion
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
HSBC reports that Chinese pharmaceutical companies delivered fiscal 2025 results broadly in line with expectations despite stringent domestic healthcare cost controls. The firm anticipates that the 2026 ASCO conference and business development (BD) milestones will serve as key near-term catalysts. Growth in 2025 was primarily driven by innovative drug sales, with leading pharma companies achieving over 20% growth in this segment. HSBC projects an average revenue increase of 11% for covered companies in 2026, supported by new drug launches and additional BD opportunities. Current valuations remain attractive, with covered names trading at an average of 16 times 2026 earnings and projected earnings growth of 17%. HSBC maintains Buy ratings on Hengrui Pharma, Sino Biopharmaceutical, CSPC Pharmaceutical, Alphamab Oncology, and top pick Hansoh Pharma. Hold ratings were reaffirmed for Fosun Pharma A/H and Livzon Pharmaceutical A/H. Near-term estimate variations stemmed mainly from BD revenue recognition timing; Sino Biopharmaceutical and CSPC deferred approximately $300 million and $120 million in BD revenue, respectively, into 2026. Key ASCO data readouts to watch include Phase III trials for Hengrui’s ADCs and oral GLP-1/GIP, Hansoh’s B7H3 ADC in small cell lung cancer, and CSPC’s EGFR ADC. Target prices were adjusted across the coverage universe. Key downside risks encompass earlier-than-expected biosimilar volume-based procurement, generic price declines, tightening medical insurance policies, and geopolitical tensions.