Shanghai Fosun Pharmaceutical (Group) Co., Ltd. -------------- Maintain OUTPERFORM
Notes from the CIC: Pharmaceutical and hospital businesses are the major growth drivers
Fosun Pharma attended the CIC on 2 November. Management highlighted that the company had a strong 3Q16, mainly driven by the fast growth in the pharmaceutical and hospital businesses.
The gross margin increased by 3% pp in 1-3Q16. The growth of high-margin products, such as Youdier and Youlitong, is accelerating, thanks to winning tenders in additional provinces.
Management expects the gross margin to continue to increase for new product launches, e.g. Rituxan biosimilar in 2018E and Herceptin biosimilar in 2019E.
Hospital business is expected to maintain fast growth, given the supply shortage of high-quality healthcare services in China.
The company’s strategy is to collaborate with renowned local hospitals to expand this business.
Management guides company net profit growth in 2017 will be no less than 13%. We believe upside in its pharmaceutical pipeline and strong operation capabilities in hospitals are not fully priced inyet. Maintaining our OUTPERFORM rating.
Source: CS