JPMorgan: China Healthcare — Positioning-driven pullback creates entry point ahead of a catalyst-heavy 2026
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JPMorgan views the sharp pullback in Chinese healthcare on April 23, where the Hang Seng Healthcare Index fell 3.5%, primarily as positioning-driven profit-taking rather than a fundamental shock. Akeso and 3SBio declined approximately 13% and 10%, respectively, significantly underperforming the Hang Seng Index. Analysts attribute the sell-off to crowded positioning ahead of ASCO, with investors locking in gains before data releases. Notably, this marks the sixth time in 2026 that the index has dropped over 3% without a clear fundamental catalyst.
The firm argues the sector is undergoing structural fundamental improvements, supported by a catalyst-heavy period through late 2026. Confirmed ASCO abstracts show Chinese oral presentations exceeding 2025 levels. Key upcoming catalysts include pivotal oncology readouts, particularly in first-line NSCLC, accelerated first-in-class and best-in-class development, and increasingly sustainable outbound licensing deals.
JPMorgan identifies biotech and CXO as preferred subsectors. Top picks include Innovent Biologics (Overweight, target HK$111) for its potential RMB 20 billion product sales by 2027 and comprehensive pipeline; Kelun-Biotech (Overweight, target HK$535) as a pure ADC play with 17 global Phase 3 trials alongside Merck; WuXi AppTec (Overweight, target Rmb150/HK$150) for leading small-molecule and peptide CDMO capabilities; and WuXi XDC (Overweight, target HK$77) for its integrated ADC CDMO leadership. The pullback is seen as a constructive entry point to build China healthcare exposure.