德意志银行中国医疗行业月度跟踪20170810DeutscheBankChinaHealthcare

10August2017Pharmaceuticals/BiotechnologyChinaHealthcareHealthCarePharmaceuticals/BiotechnologyIndustryUpdateAsiaChinaHongKongIndustryChinaHealthcareDate10August2017DeutscheBankMarketsResearchMonthlyplasmatracker:June2017Growthdeceleratedin2Q17;domesticplayerslaggedAlbuminapprovalvolumegrew16%YoYin2Q17,comparedwith22%/20%in1Q17/2016,respectively.MNCsgrew29%YoYin2Q17vs.18%/15%in1Q17/2016,respectively.However,growthofdomesticcompaniesdroppedto-2%YoYin2Q17from30%/28%in1Q17/2016.BellwethersCBPOandHualangrew-13%and59%YoY,respectively,in2Q17vs.22%/9%in1Q17.MNCssignificantlyoutperformed;mixedperformancefromdomesticplayersBaxalta,GrifolsandHualandeliveredexceptionalgrowthof97%,46%and59%YoYin2Q17vs.-5%,14%and9%in1Q17.Incomparison,growthofCSL,OctapharmaandCBPOdeceleratedto5%,-10%and-13%YoYin2Q17vs.38%,6%and22%in1Q17.Weattributethegrowthdivergencetovolatilitiesincustomreleases,approvaltimelineandtimingofplasmacollection/fractionation.Thatbeingsaid,weponderhowsustainablethegrowthfromMNCscouldbe.IVIGapprovalgrowthmoderatedin2Q17Theoverallindustrygrowthmoderatedto13%YoYin2Q17vs.29%/24%in1Q17/2016.HualanandCBPOrecordedYoYgrowthof39%and43%,respectively,in2Q17vs.58%and43%in1Q17.GrowthofRAASandCNBGslumpedto-47%/-22%in2Q17from74%/161%in1Q17,mainlyduetovolatileapprovaldataandfiercecompetition.Onmarketdynamics,themarketshareofCBPOandHualanexpandedby5%and1%,respectively,during1H17.Weremindinvestorsthatapprovaldatahasastrongcorrelationwithreportedsalesdataforalllistednames.MaintainingpricetargetsforCBPOandHualanWebaseourpricetargetofUSD130forCBPOon23.5x2018EEPS.WebelievethatCBPOdeservesavaluationpremiumoverotherpharmaceuticalpeersgivenitslong-termgrowthprospectsanditsstrongriskprofileamidsectorheadwinds.ForCBPO,keydownsiderisksincludepriceerosion,disruptioninplasmacollection,costinflationanddelaysinproductlaunches.OurpricetargetofRMB38forHualanisbasedon34xour2018EEPSestimate.ForHualan,downsiderisksincludelower-than-expectedplasmacollectionvolume,larger-than-expectedincreaseinplasmacosts,andsmaller-than-expectedASPincrease.JackHu,PhDResearchAnalyst+852-22036208ToppicksHengruiMedicine(600276.SS),CNY50.75BuyUniversalMedical(2666.HK),HKD6.37BuySinoBiopharmaceutical(1177.HK),HKD6.98BuySource:DeutscheBankCompaniesfeaturedChinaBiologicProducts(CBPO.OQ),USD93.21Buy2016A2017E2018EP/E(x)25.818.716.9EV/EBITDA(x)19.215.312.9Price/book(x)6.254.493.76HualanBiologicalEngineeri(002007.SZ),CNY29.00Buy2016A2017E2018EP/E(x)44.033.126.1EV/EBITDA(x)31.023.218.7Price/book(x)7.885.664.83Source:DeutscheBankDeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.Distributedon:09/08/201716:21:08GMT0bed7b6cf11c10August2017Pharmaceuticals/BiotechnologyChinaHealthcareMonthlyapprovaldataDatatrackerforhumanalbuminandIVIGWehavecollectedapprovaldataforplasmaproducts–humanalbuminandIVIG–fromtheNationalInstitutesforFoodandDrugControlandprovincialinstitutesforfoodanddrugcontrolfrom2012toMay2017.Weremindinvestorsthesedatapointslargelycorrelatetotherevenueandvolumegrowthofplasmaproductmanufacturers.Inaddition,wehighlightthefollowing:1)wehaveconvertedalldosagesintoone,themostcommondosage,i.e.,10gforhumanalbuminand2.5gforIVIG,forthepurposesofbettercomparison,and2)wehavemainlyusedthree-monthrollingaveragesforourdatatosmoothoutthevolatilityofapprovaldata.WesummarizekeydataforhumanalbuminandIVIGinFigure1.Figure1:GrowthratesforhumanalbuminandIVIGapprovals2Q171Q17Overall16%22%19%25%20%Domestictotal-2%30%12%18%28%MNCtotal29%18%23%30%15%CBPO-13%22%4%34%43%RAAS14%511%104%-14%29%Hualan59%9%36%60%43%CSL5%38%19%20%11%Baxalta97%-5%46%20%8%Grifols46%14%30%120%52%Octapharma-10%6%-2%-12%-13%ApprovalsforIVIG2Q171Q17Overall13%29%20%28%24%CNBG-22%161%30%13%37%CBPO43%43%43%15%4%RAAS-47%74%-11%-22%-14%Hualan39%58%48%52%80%ApprovalsforhumanalbuminSource:Source:DeutscheBank,InstitutesforFoodandDrugControlPage2DeutscheBankAG/HongKong10August2017Pharmaceuticals/BiotechnologyChinaHealthcareHumanalbuminDuring2Q17,albuminapprovalsgrew16%YoYvs.22%in1Q17and20%in2016.Previously,MNCsunderperformeddomesticplayersin1Q17withYoYgrowthof18%and30%,respectively;however,thetrendwasreversedin2Q17asMNCsgrew29%whiledomesticplayersweredown2%in2Q17.Asaresultofrobustoutperformance,marketshareofMNCsclimbedto64%in1H17vs.58%in2016.Asforthedomesticbellwethers,CBPOrecordeda13%dropinalbuminapprovalsin2Q17vs.22%/80%/22%/14%inthepreviousfourquarters.HualanshowedrobustYoYgrowthof59%in2Q17,comparedwith9%and43%in1Q17/2016,respectively.Figure2:Rollingthree-monthalbuminapprovalgrowthforCBPO&Hualanvs.overallindustryJun-16Jul-16Aug-16Sep-16Oct-16Nov-16Dec-16Jan-17Feb-17Mar-17Apr-17May-17Jun-17CBPO14%25%36%22%38%18%80%38%82%22%22%-3%-13%Hualan45%64%72%43%21%36%27%26%18%9%22%25%59%MNCs17%27%25%-3%-7%-22%11%14%13%18%-2%23%29%Domestics