Healthcare 02 (May 15 - Dec 23)

[winston]

China Healthcare Sector – Key takeaways of the 2020 National Reimbursement Drug List

Effective 1 March 2021 to 31 December 2022, the new NRDL list covers ~2800 drugs (vs 2019’s 2713), as regulators continue to work on increasing coverage of key drugs.

For the latest round of drug price negotiation qualifying for medical insurance reimbursement, 119 drugs (from 162 candidates) were successfully added to the NRDL list with an average price cut of -50.6% for negotiated drugs.

14 proprietary drugs originally on the previous list (with more than CNY1bn of estimated annual sales) were retained (e.g. AstraZeneca (Buy)’s prostate cancer drug Zoladex/goserelin and CSPC (Buy)’s NBP (capsule and injection, for acute ischemic stroke), while 29 drugs were taken out of the list.

Covid-19 treatments recommended in the national treatment guidelines were added, while previously unlisted domestic PD-1 inhibitor drugs from Hengrui (unrated), Junshi (unrated) and Beigene (unrated) were added. Most of the agreed cuts in drug prices have not yet been disclosed as details of the new NRDL prices will be released by March 2021.

Pricing pressure will remain a continuous headwind for the pharma sector in China. In addition to regular NRDL negotiation exercises (mostly affects newer drugs), centralized group procurement exercises (mostly applied for common generics) are also annual recurring events and will exert ongoing pricing pressure on drug prices while pharmaceutical companies work on growing their pipeline of new innovative drugs.

In such an environment, leading pharmas with stronger drugs pipeline and commitment to research and development are better positioned and should fare better (e.g. Sino Biopharm 1177 HK).

We expect a more modest year ahead for CSPC (fair value HKD10.60) following the latest NRDL price cuts announced for its NBP drug (~51.3% and 55.6% price cut for NBP injectable and capsules respectively, effective 1st March 2021), which will require a period of transition for volume expansion to come through over the year as the new pricing takes effect while the company works on increasing its penetration in lower tier cities.

Elsewhere in the sector, while we see more growth opportunities and less policy headwinds in sub-segments such as contract research organisations (CRO), valuations are rich (e.g. Wuxi Biologics) at this point and we prefer to accumulate new positions on pullback.

Drug distributors offer long term value (buy-rated ideas in this segment are Sinopharm Group/1099 HK and Shanghai Pharmaceuticals/2607 HK) but are expected to see earnings volatility ahead driven by higher write-downs and/or rise in finance costs due to impact from the pandemic (higher accounts receivable balances expected to come through resulting from distributors’ credit extension to public hospitals).

Source: OCBC

[winston]

Health care

The novel coronavirus pandemic triggered renewed interest in the health care and pharmaceutical sector. Specific investment themes within the health care sector are worth considering for the portfolio.

Virtual health care has gained traction during the pandemic. Currently, 95% of large U.S. employers are covering telehealth as compared to 56% in 2016. I remain bullish on Teladoc Health (NYSE:TDOC) stock, which has already surged by 170% in the last year.

Mental health is another segment within the health care sector that will remain a key investment theme. It’s estimated that mental disorder impact more than 264 million people globally. In the U.S., an increasing number of people have reported a negative impact on mental health due to “worry and stress over the coronavirus.”

Compass Pathways (NASDAQ:CMPS) stock is worth considering in the psychedelic stocks space. After touching a high of $59 in December, CMPS stock currently trades at $44. The company is developing a psilocybin therapy for treatment-resistant depression. Currently, Phase IIb is underway with trials to be completed late this year.

Overall, there are interesting plays within the health care sector. Importantly, the sector is worth considering in the portfolio not just for the year, but for the long term.

Source: Investor Place

[winston]

Chinese syringe producers under pressure as vaccination programmes drive order surge

by Sophie Yu, Roxanne Liu & Brenda Goh

China and India are the world's biggest producers of syringes, industry executives said.

The US effort to squeeze more doses from Pfizer Inc's vaccine vials, is spurring unanticipated demand for specialized syringes, which U.S. syringe supplier Becton Dickinson and Co says exceeds existing capacity.

Prices of syringes have more than tripled from 0.1 yuan (1.55 cents) each before the outbreak to more than 0.3 yuan now, KangKang's Guo said.

Source: Reuters

https://www.theedgemarkets.com/article/ ... rder-surge

[investar]

Health care

The novel coronavirus pandemic triggered renewed interest in the health care and pharmaceutical sector. Specific investment themes within the health care sector are worth considering for the portfolio.

Virtual health care has gained traction during the pandemic. Currently, 95% of large U.S. employers are covering telehealth as compared to 56% in 2016. I remain bullish on Teladoc Health (NYSE:TDOC) stock, which has already surged by 170% in the last year.

Mental health is another segment within the health care sector that will remain a key investment theme. It’s estimated that mental disorder impact more than 264 million people globally. In the U.S., an increasing number of people have reported a negative impact on mental health due to “worry and stress over the coronavirus.”

Compass Pathways (NASDAQ:CMPS) stock is worth considering in the psychedelic stocks space. After touching a high of $59 in December, CMPS stock currently trades at $44. The company is developing a psilocybin therapy for treatment-resistant depression. Currently, Phase IIb is underway with trials to be completed late this year.

Overall, there are interesting plays within the health care sector. Importantly, the sector is worth considering in the portfolio not just for the year, but for the long term.

Source: Investor Place

Mental Health?

SAVA absolutely rocketing in the last days: from 7 a few weeks ago, to 115 now in AH after good (but early!!!) data for their Alz treatment

Then it is probably better to take a deep look into the pipeline of AXSM with two drugs very near to market entry/ FDA approval

[winston]

Global Healthcare Sector – Defensive earnings quality, reviewing relevant ESG factors

Our neutral stance on the global healthcare sector due to extended valuations and a relatively slower pace of earnings growth post pandemic, has panned out this year with the sector’s modest year-to-date returns of 9.5% and relative under-performance of -4% to world equities.

In terms of earnings growth outlook, the global healthcare sector is still forecast to see relatively more moderate FY21E and FY22E earnings growth of 17% & 7% respectively partly driven by pandemic demand normalization, lagging world equities’ FY21E and FY22E estimated earnings recovery of 37.4% and 10.4% respectively.

Looking ahead, while we still think a neutral sector stance is appropriate in view of the sector’s more modest earnings growth outlook from 2022E, as Covid-19 impact on sector earnings eases further and rotational flows continue to favour value/cyclical sectors amid further economic re-opening, we believe healthcare sector’s defensive earnings quality should be increasingly relevant, to provide portfolio diversification benefits particularly as we expect risk assets to see higher volatility, as markets adjust to a new normal featured by inflationary pressures and peaking growth.

Selective stance is maintained: Within this report, apart from recent results highlights, we provide an updated list of bottom-up picks with potential double-digit upside to fair values across the different industries within the global healthcare sector and highlight key ESG and pipeline considerations that are applicable to the sector over the medium term.

Preferred sector picks with attractive upside to fair values include Roche Holding (ROG SW: fair value CHF438), Merck & Co (MRK US: fair value USD94), Biomarin Pharmaceuticals (BMRN US, fair value USD101), Fresenius SE & Co (FRE GY: fair value EUR52), Becton Dickinson (BDX US: fair value 296), 3SBIO (1530 HK: fair value HKD11.70) and Sino Biopharm (1177 HK: fair value HKD10.20).

Source: OCBC

[winston]

China Healthcare Sector – Constructive outlook despite near term policy worries

Chinese healthcare sector share prices - and in particular internet healthcare related names - have corrected of late with the broad equity market as investor sentiment turned more cautious in the wake of turbulence from policy changes in the property and education technology sector (‘China Education Tech Sector:

Tough restructuring path ahead’ published on 27 July 2021). Xinhua news on 28th July evening stated that regulatory policies are aimed to promote best practices and support sustainable economic and social development (as opposed to fears that industries will be diminished), which has helped to restore some calm following recent jitters in investor sentiment in the broad market.

Our house view is one of caution near term on the broad Chinese equity market (‘How to position amid regulatory overhangs to linger on’, 28 July 2021) and a constructive stance over the medium term favouring domestic consumption and sectors relatively more sheltered from policy headwinds.

In terms of year-to-date returns, the Chinese healthcare sector remains in positive territory (+11.8% year to date) despite the recent correction, outperforming MSCI China index (-11.4% decline year to date) by +23%.

We advise a selective approach given ongoing concerns over policy risks and more extended sector valuations, which has risen beyond +2 standard deviation to the sector’s 10Y historical average price/earnings multiple.

While the healthcare sector’s solid outperformance year to date may provide some scope for profit taking pressures near term, we retain our constructive longer-term stance on the sector, which has already been undergoing strict regulatory scrutiny over the past years and continue to contribute a positive social development purpose while benefiting from favourable medium term demographics of an ageing population and improving middle incomes in China.

In this report, we provide our thoughts on recent healthcare policy developments and highlight potential areas we expect more updates.

For the pharmaceutical/biotech segment, we expect pricing pressure to be sustained through existing cost control measures (group purchasing organization/GPO and national reimbursement drug list/NRDL exercises), which could be increasingly be broadened nation-wide across more drug/device product types – however, this should not surprise investors in our view, given regulators’ well flagged-out cost optimisation approach while the related programmes to support public healthcare needs have been key parts of China’s healthcare reforms over the past few years.

Within the drug developer segment, we think companies focused on developing innovative drugs and affordability should be better positioned. Despite some recent worries on clinical trials following CDE’s oncology draft guidelines, we believe actual impact on the CRO/CDMO industry should be manageable and the industry remains aligned with the government’s stated goal to develop innovative, globally competitive and cost-effective drugs.

While the broad equity market overhang may weigh on the performance of the healthcare sector near term, we highlight preferred sector picks with positive fundamental outlook for investors looking to accumulate positions with a longer-term time frame.

Preferred picks include key pharma players trading at undemanding valuations such as CSPC Pharma (1093 HK: Buy, fair value HKD13) and Sino Biopharm (1177 HK: Buy, fair value HKD10.2);

Biotech pick Innovent Biologics (1801 HK: Hold, fair value HKD80) which should benefit from positive sentiment from PD-1 sales;

CRO/CDMO leading players Wuxi Biologics (2269 HK: Buy, fair value HKD160) and Wuxi Apptec (2359 HK: Hold, fair value HKD 188.50) for more aggressive investors, which should have strong years of growth ahead from increasing global pharma outsourcing demand and exposure to capture opportunities from China’s biotech/pharma’s shift towards higher innovation although valuations are notably more extended.

Source: OCBC

[behappyalways]

Sacklers Reach $6 Billion Deal Over Purdue Pharma's OxyContin Lawsuits
https://www.zerohedge.com/medical/sackl ... n-lawsuits

[behappyalways]

China Dominates The Antibiotics Market
https://www.zerohedge.com/medical/china ... ics-market

[winston]

This Sector Will Produce Some of the Market’s Biggest Winners

by Dr. David Eifrig

Health care and medicine are taking off exponentially. New therapies, methods of drug development, payment mechanisms, and even the real estate of health care offer vast investment opportunities.

In the U.S. alone, health care is a $4 trillion market (and growing).

n 2010, 40 million folks in the U.S. were over the age of 65 (just 13% of the population). By 2030, we’ll have 72 million (or 19% of the population) at that age.

Source: DailyWealth.com

https://dailytradealert.com/2022/07/29/ ... t-winners/

[behappyalways]

Sanofi, GSK Plummet After Zantac Lawsuit Concerns Wipe Out $40 Billion In Value
https://www.zerohedge.com/medical/sanof ... lion-value