UBS: China Healthcare — Biotech and CRO Marketing Book
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UBS published a comprehensive China healthcare marketing book highlighting biotech, CRO, and online pharmacy as preferred sectors, expecting their fundamentals to remain resilient following strong 2025 performance. The firm ranks biotech and CRO as its most favored subsectors, while blood products and medical aesthetics are least favored.
Biopharma business development momentum is expected to continue, with global expansion representing a significant opportunity. CROs stand to benefit from recovering global biopharma funding and growing backlogs. Online pharmacies are accelerating as online penetration rises and consumption recovers.
On the policy front, NRDL 2025 negotiations were mild, with only 15 of 148 renewed drugs seeing price cuts averaging 8.4%. However, VBP pricing pressures persist, with the 11th batch of generic drug GPO and the 5th batch of medical consumable VBP showing steeper-than-expected reductions. The BioSecurity Act passed with the NDAA 2026, though UBS expects limited operational impact even if companies are listed.
Within biotech, UBS covers 11 companies, all rated Buy, with top picks including BeOne, Innovent, Kelun Biotech, and Akeso. Key near-term catalysts include US approval of BeOne's Sonrotoclax, Akeso's Ivonescimab data, and Kelun Biotech's TROP2 ADC trial readouts. Chinese biotech cash runways improved to a median of 2.8x from 2.2x at end-2024, though dispersion remains wide.
Other Buy-rated names include Wuxi XDC, JD Health, 3SBio, Yifeng, Yuyue Medical, Gushengtang, Dong-E-E-Jiao, SH Pharma, and CanSino, reflecting broad optimism across the healthcare value chain.