Healthcare Author: Tommy Mi Apr 07, 2022 01:44 PM (GMT+8)

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China Innovation Update- Healthcare


With the increase of China's per capita disposable income and the improvement of national health awareness, the health industry has gradually become an important development target of the country and a new engine of the economy. Especially after the pandemic, the penetration rate of Internet diagnosis and treatment and online drug purchase in China has increased significantly, which provides a stronger driving force for the development of my country's big health industry. According to data from iiMedia Research, the overall revenue of China's healthcare industry will exceed CNY 7 trillion in 2020, and the market size is expected to reach CNY 9 trillion by 2024.

In the first section, we listed 14 leading players in China's healthcare sectors and their current tech-related updates in Q1 2022; in the second section, we gathered the investment and financing events in China's consumer sectors that happened in the past three months; in the third and the final section, we demonstrated other relevant events in the healthcare sector that are drawing people's attention, some of which focus on the state policies on healthcare.

Main Players Updates and Analysis

Mindray (300760: SH)

Mindray is continuing to expand its businesses. Recent registration indicates that a new company named Shenzhen Mindray Scientific Research Institute Co., Ltd. was created with a registered capital of CNY 50 million. The company services include technical service, technology development and consultation, and software development. The new company is 100% controlled by its parent Mindray, which gives Mindray full control of Shenzhen Mindray's finance and operation strategies. As one of the leading players of China's healthcare industry, Mindray has bought and established over 27 subsidiaries that extend to various fields within the industry. Mindray realizes the trend of China's booming pet healthcare wave and its potential. The giant has invested heavily in pet healthcare's related products and research.

Wuxi Apptec (2359: HK)

Wuxi Apptec sees immense growth despite regulatory headwinds. According to the company, Wuxi Apptec recorded a CNY 22.9 billion in revenue with a profit of CNY 509.7 million, a year-over-year increase of 38.5% and 72.19%, respectively. Wuxi Apptec expects the CAGR between 65% to 70% for 2022, which is based on the company's immense amount of backlog orders. In addition, Wuxi Apptec has been successful in reducing its operating cost. Wuxi saw an 0.51%, 1.5%, 2.77% decrease in its sales, management and financial expenses, respectively. Per the CEO of WUxi, the company’s unique CRDMO and CTDMO operating format has given Wuxi an advantage in the healthcare industry. As of 2021, Wuxi Apptec ranked first in its preclinical, clinical outsourcing, and small molecule CDMO market in China. Wuxi ranked fourth globally in the cell and gene therapy segment. 

Wuxi Biologics (2269: HK)

Wuxi Biologics reported positive 2021 results. Per release, Wuxi Biologics recorded a revenue of CNY 10.3 billion, a year-over-year increase of 83.3%. The company said that there are several major factors driving its growth in performance. First, the production business has achieved a significant increase in revenue; second, the new non-COVID-19 comprehensive projects have led to an increase in revenue and market share; third, the execution of existing and new crown projects brought orders. The fourth is the implementation of the strategy "following and winning molecules", adding more late-stage clinical projects to improve recent income; the fifth is to improve capacity utilization and operational efficiency. Similar to Wuxi Apptec, Wuxi Biologics also has an extraordinary backlog of orders that will drive the company's growth in 2022. 

Hengrui Medicine (600276: SH)

Hengrui Medicine recently received the Drug Registration Certificate approved and issued by the State Drug Administration, which approved the company's gadobutrol injection. The gadobutrol injection was first submitted by Hengrui in 2012. In 2020, the NMPA rejected Hengrui's submission of its generic drug. 2022 marks a milestone for the company as the drug administration finally approves of the injection. Hengrui recorded a CNY 27.02 billion revenue in 2021, a year-over-year increase of 20.55%. 

ZFSW (300122: SH)

Chongqing Zhifei Bio released its first quarter performance forecast in 2022. The company is expected to achieve a net profit of CNY 1.78 billion to CNY 1.97 billion attributable to shareholders of listed companies from January to March, a year-on-year increase of 90% to 110%; net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses will be approximate CNY 1.79 billion to CNY 1.98 billion, an increase of 90%-110%. ZFSW aims to maintain its focus on the production and sales promotion of products. The company also wants to continue to increase the procurement of agency products to ensure the supply of various products can meet the needs of national disease prevention.

Aier Eye Hospital (300015: SH)

Aier Eye registers new company in Guangzhou. According to Tianyancha, Guangzhou Aier Eye Co., Ltd. has registered with a capital of CNY 21 million. The new company will be fully controlled by Aier Eye Hospital Group. As of 2022, Aier Eye is the largest ophthalmic chain medical group in China. Many of the company's subsidiary hospitals have gradually occupied the largest market share in their respective local market in terms of outpatient volume, operation volume and operating income.

Wantai (603392: SH)

Rising demand for HPV vaccines bodes well for Wantai. As the first domestic bivalent HPV vaccine manufacturer approved in China, Wantai Bio will generate more than CNY 3 billion in revenue from just one bivalent HPV vaccine in 2021, and the company's net profit attributable to the parent in 2021 will also nearly double with 198% increase. According to Huaxi Securities, only 7% of the 381 million females aged 9 to 45 in China are reaching for HPV vaccines, which Wantai specializes in. But penetration rate is expected to increase by 40% by 2025 for women aged 9 to 15, 25% for women aged 16 to 26, and 15% for women aged 27 to 45. The untapped potential for the HPV market is close to CNY trillions. 

JD Health (6618: HK)

JD Health's self-selling medicine revenue records over 80% of total revenue. The financial release of the company indicates that the self-operated business with JD Pharmacy as the carrier is the main source of income of JDHealth. In 2021, the company recorded a revenue of CNY  26.2 billion in its own pharmacy, accounting for more than 85% of the total revenue. JD Health has remained relying on its retail aspect of healthcare by providing medicine and related products to customers. The company has yet to set foot in the diagnosis side of the industry. In addition, JD Health is laying off a large percent of its employees. Report says 20% of pharmacy staff and 60% to 70% of e-healthcare staff will be laid off.

BeiGene (BGNE: NYSE)

BeiGene announces European Mmdicines Agency Acceptance of marketing authorization applications (MAA) for Tislelizumab for the treatment of patients with ESCC and NSCLC. The MAA have been validated for regulatory review by the European Medicines Agency (EMA) for patients with advanced or metastatic esophageal squamous cell carcinoma (ESCC) after prior systemic chemotherapy and for patients with non-small cell lung cancers (NSCLC)

Fosun Pharma (600196: SH)

Fosun gets ready to make generic Pfizer and Merck Covid-19 pills. Fosun, as one of China's leading private conglomerates, is stepping up preparation to produce generic Covid-19 medications developed by Pfizer and Merck. Fosun Pharma is one of the five Chinese drug companies licensed to make generic versions of the American giants' medications. However, Fosun is the only firm to have the exclusive rights to distribute Pfizer and BioNTech mRNA vaccine in China, Hong Kong, Macau and Taiwan. But distribution to Hong Kong, Macau, and Taiwan has yet to receive the approval of Chinese regulators. Fosun saw a 26% year-over-year increase in net profit to CNY 10.1 billion in 2021.

IMEIK (300896: SH)

Imeik publishes a new social responsibility report. On March 8th, 2022, Imeik published its second social responsibility report.  Imeik is a leading innovative company of biomedical soft tissue materials in China which has successfully realized the industrialization of sodium hyaluronate fillers and facial implant threads. In the report, Imeik emphasizes prioritizing product safety. The company is also incorporating ESG management and strengthening its communication with stakeholders. Imeik is also looking to increase the scale of its green operations to help tackle climate change. In 2021, Imeik saw a revenue of CNY 1.45 billion, a year-over-year increase of 104.13%. The net profit attributable to shareholders of the listed company was about CNY 958 million, a year-over-year increase of 117.81%.

Yunnan Baiyao (000538: SH)

Shanghai Pharmaceuticals joins hands with Yunnan Biayao. The issuance and underwriting summary and related documents of the non-public issuance of A shares in 2021 have been filed and approved by the China Securities Regulatory Commission. According to the issuance plan, Shanghai Pharmaceuticals issued a total of about 852,626,796 A-shares to Yunnan Baiyao and its related party Shanghai Tandong Enterprise Consulting Service Co., Ltd., raising a total of about CNY 13.98 billion. Among them, Yunnan Baiyao subscribed CNY 10.91 billion as a strategic investor. And the lock-up period of the shares issued this time is 36 months. For Shanghai Pharmaceuticals, this cooperation will not only bring capital replenishment, but also bring a good helper in the field of traditional Chinese medicine health business. It will further promote the reform of the system and mechanism, and inject new momentum into its future medium and long-term development.

Tigermed (300347: SH)

Tigermed reports strong 2021 results. Revenue in 2021 for Tigermed reached CNY 5,213 million, a year-over-year increase of 63.3%. Adjusted Non-IFRS net profit attributable to owners increased by 60.6% year-over year to CNY 1,585.3 million during the Reporting Period. Segment revenue generated from Clinical Trial Solutions reached CNY 2,993.7 million and that from Clinical-related and Lab Services reached CNY 2,219.8 million, representing a year-over-year growth of 97.1% and 32.7%, respectively. Geographically, China's revenue increased by 44.5% year-over-year to CNY 2,756.1 million. The company's overseas revenue increased by 91.1% to CNY 2,457.4 million. Tigermed's new bookings reached CNY 9,645.5 million, representing a 74.2% year-over-year growth.

Pharmaron (300759: SH)

Pharmaron acquires API manufacturing facility in UK. Pharmaron acquired Aesica Pharmaceuticals' Cramlington site from Recipharm. Pharmaron's chemical and manufacturing capabilities, which are a significant part of its fully integrated platform, will be expanded as a result of this purchase. The Cramlington site's synergistic integration with Pharmaron's current Hoddesdon service capabilities of discovery, process development, and early-stage cGMP API manufacture will provide a full end-to-end chemistry and manufacturing service offering in the UK. Pharmaron's global service network is now much stronger, allowing us to deliver tailored solutions to fit our clients' geographic and strategic demands.

Capital Market Calendar


Key Events

Guideline for Healthy Aging during the 14th Five-Year Plan Period Issued

On February 2022, the National Health Commission, together with the Ministry of Education, the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Human Resources and Social Security, the Ministry of Housing and Urban-Rural Development, the Ministry of Veterans Affairs, the State Administration for Market Regulation, the State Administration of Radio, Film and Television, Sports The General Administration, the National Medical Insurance Administration, and other 18 departments jointly issued the "14th Five-Year Plan for Healthy Aging", which made it clear that the allocation of resources for elderly health services will be more reasonable, comprehensive, continuous, and comprehensive by 2025.

Nine main tasks are put forth in the Guideline. First, the active health ability of the elderly will be improved by strengthening health education. Second, a preventive health care service system that pays equal attention to physical and mental health of the elderly will be refined. Third, the medical care service level for the elderly will be higher by focusing on continuous services. Fourth, a health care system involving home, community, and institutions for the incapacitated elderly will be perfected. Fifth, the integration of medical and nursing care services will be strengthened. Sixth, health services supported by traditional Chinese medicine for the elderly will be developed. Seventh, the construction of elderly health service institutions will be strengthened. Eighth, the capacity of elderly health service will be enhanced by strengthening the building of teams for elderly health care, among others. Ninth, the development of sciences & technologies and industries in healthy aging will be promoted.

China readies for the 9th Beijing International Health Service Expo

The Beijing International Health Service Expo, founded in 2011, has been in existence for more than ten years. It is the first industry trade exchange event with the theme of "Health Industry" in China. With the theme of "vigorously developing the national health industry and promoting the development of China's national health cause", the conference is rooted in Beijing, China, and opens to the global health consumer market. The expo now covers over 140 countries and regions around the world. The expo attracts thousands of health industry organizations, associations and enterprises to participate in the exhibition. The on-site transaction scale is CNY billions. 

The planned 2022 exhibition area is 45,000 square meters, with more than 1,500 booths set up, which can accommodate more than 800 organizations and companies to participate in the exhibition The event will focus on displaying nearly 4,000 health products and technologies. and service. Approximately 50,000 buyers from more than 100 countries and regions will participate during the three day event, which will garner over CNY 7 billion of on-site transactions.

Shanghai deploys digital healthcare measures to aid in pandemic containment

With the joint efforts of communication companies such as Shanghai Telecom, Shanghai Unicom, Shanghai Mobile, Shanghai Tower, and several others, the 4G/5G network, optical fiber network, cloud WiFi, etc. deployed in the makeshift hospital of Shanghai New International Expo Center are now used by medical staff, patients and robots.

Shanghai Unicom is also developing a "digital twins command cabin" for the construction of Pudong Lingang Fangcang Hospital. The hospital is able to carry out more efficient management with the data collected by robots through technologies, such as big data, artificial intelligence, and the digital twins command cabin. In addition, over 50 autonomous vehicles are deployed to help deliver supplies to patients and medical staff.