Company Reports

We will discontinue analyst coverage of CSPC on or about Nov. 12, 2025.

The Trump Administration is drafting a potential executive order that would put "severe restrictions" on investigational drugs from China. Global biopharma companies have been buying these clinical-stage assets/pipelines from Chinese biotech companies.

CSPC's first-half revenue declined 18.5% year over year, while net profit declined 15.6%.

US President Donald Trump said that the US tariffs on pharmaceutical imports may increase to 150% or even further to 250% in one to one and a half years.

CSPC share price jumped 15% after its 2025 first-quarter results, despite a revenue of CNY 7.0 billion with a 21.9% annual decline.

CSPC is one of the largest and oldest pharmaceutical companies in China. Anchored by its nervous system business segment due to its flagship drug NBP, CSPC has a portfolio of innovative and generic drugs covering a wide range of diseases. NBP is a Class 1 new chemical drug for acute ischemic stroke. Class 1 drugs under the Chinese classification system are innovative drugs that have never been marketed globally. Thanks to its portfolio breadth, CSPC has been growing its revenue with a 10-year historical compounded annual growth rate of 12.8%, exceeding GDP growth.

CSPC is one of the largest and oldest pharmaceutical companies in China. Anchored by its nervous system business segment due to its flagship drug NBP, CSPC has a portfolio of innovative and generic drugs covering a wide range of diseases. NBP is a Class 1 new chemical drug for acute ischemic stroke. Class 1 drugs under the Chinese classification system are innovative drugs that have never been marketed globally. Thanks to its portfolio breadth, CSPC has been growing its revenue with a 10-year historical compounded annual growth rate of 12.8%, exceeding GDP growth.

We cut CSPC’s fair value estimate to HKD 6.00 per share from HKD 6.90 following its 2024 revenue miss. The miss is largely attributable to its three finished drugs, which were negatively affected by the volume-based procurement and price cuts. While our view of CSPC being able to deliver positive revenue growth in 2025 remains unchanged, we think the challenges are greater than we initially expected. As such, we lower both our near-term and long-term revenue growth rates. We continue to see CSPC shares as modestly undervalued. However, the near-term concern of whether CSPC can bring enough new product launches to offset the NBP patent cliff will likely weigh on its share performance.

China healthcare stocks under our coverage, with the exception of medical distributors, have surged 10% to 50% since the end of January, following excitement over DeepSeek. While artificial intelligence may help improve efficiency in the sector, we don’t know if and when the benefits will materialize, so we believe the recent share price rally reflects a shift in investor sentiment on previously oversold stocks. Namely, Sino Biopharm (up 19%), WuXi Biologics (up 34%), and KingMed (up 56%), are reaching or surpassing our fair value estimates. However, we think CSPC (up 10%), Innovent (up 16%), and Adicon (up 21%) are still attractive.

CSPC is one of the largest and oldest pharmaceutical companies in China. Anchored by its nervous system business segment due to its flagship drug NBP, CSPC has a portfolio of innovative and generic drugs covering a wide range of diseases. NBP is a Class 1 new chemical drug for acute ischemic stroke. Class 1 drugs under the Chinese classification system are innovative drugs that have never been marketed globally. Thanks to its portfolio breadth, CSPC has been growing its revenue with a 10-year historical compounded annual growth rate of 25.0%, exceeding GDP growth.

We have cut our fair value estimate for narrow-moat CSPC Pharmaceutical to HKD 6.90 from HKD 8.30 following its third-quarter revenue and margin miss. We initially forecast a revenue growth of 6.6% for 2024, based on an assumed 38% contribution from its nervous system drug sales of CNY 10.9 billion. Still, sales fell short in the third quarter as hospitals tightened their budgets. Hence, we think sales are unlikely to rebound in the fourth quarter, given the high inventory levels that distributors are holding. Along with weak performance in its oncology segment, we now expect a revenue decline of 4.6% for 2024 but keep our 2025 low-single-digit growth forecast unchanged. Consequently, we lower our near-term gross margin and increase long-term research and development margin due to operating leverage. We continue to see shares as undervalued.

China’s National Medical Products Administration issued another supportive pilot policy earlier this week. Similar to other updates since the beginning of 2024, the policy aims to support innovative biological drugs, from regulatory approvals to manufacturing processes. While the policy could affect CSPC Pharmaceutical (narrow moat), China Resources Pharmaceutical (narrow moat), Shanghai Pharmaceuticals (narrow moat), Innovent Biologics (no moat), and Sino Biopharmaceutical (no moat), which derive most of their revenue from China and whose businesses develop or manufacture innovative biologic drugs, we don’t believe it's enough to change our fair value estimates for biotech companies or big pharmaceutical names. In our view, the fundamental shifts depend on (1) fewer price cuts on innovative drugs, (2) more customized public healthcare reimbursement policies, and (3) less uncertainty about whether an innovative drug will be adopted by hospitals once it is included in the public reimbursement.

We keep our fair value estimate of narrow-moat CSPC at HKD 8.30 per share following largely in-line interim results. We note that the market was disappointed leading to a 5.7% drop in CSPC’s share price, and we think management’s less optimistic tone on sales growth following lagging oncology drug sales may weigh on near-term sentiment. However, we think the shares are undervalued and the slowdown in oncology drug sales should be temporary. Our long-term view on CSPC remains unchanged.

CSPC is one of the largest and oldest pharmaceutical companies in China. Anchored by its nervous system business segment due to its flagship drug NBP, CSPC has a portfolio of innovative and generic drugs covering a wide range of diseases. NBP is a Class 1 new chemical drug for acute ischemic stroke. Class 1 drugs under the Chinese classification system are innovative drugs that have never been marketed globally. Thanks to its portfolio breadth, CSPC has been growing its revenue with a 10-year historical compounded annual growth rate of 25.0%, exceeding GDP growth.

CSPC’s 2024 first-quarter revenue increased 11.5% year on year, exceeding our assumed 4.6% growth. The positive surprise comes from its finished drug sales, primarily its nervous system and oncology drugs. CSPC also managed to further expand sales of its flagship drug, NBP (for treating acute ischemic stroke), to more county-level hospitals and retail stores after nearly two decades of commercialization. Hence, we push back previously expected NBP sales slowdown to 2026 and 2027, two years later than our initial forecasts, while keeping margins unchanged. However, we still expect CSPC’s 2024-26 earnings to decline by an annual average of 3.8%, and we note that this may limit near-term investor interest.

CSPC’s 2023 results were mixed. While the top and bottom lines were in line with our forecasts, we lower our 2024 revenue growth forecast to 5% from 8% as we see nervous system and oncology drugs setting the pace. While profit was below market consensus, we view CSPC’s performance largely favorably as the decline in net margin was driven by record-high research and development spending composed of CNY 4.8 billion on clinical trial adjustments, such as adding weight-loss drug pipelines or filling market approvals in North America. We don’t think it will instantly boost growth in 2024 and 2025, but we view it positively from a long-term perspective. Similar to its global big pharma peers, it is a necessary step to offset patent loss and remain competitive. We slightly lower our CSPC fair value estimate to HKD 7.8 per share from HKD 8.4 after fine-tuning 2024 and 2025 assumptions. The current share price is about a 15% discount to our fair value estimate.

CSPC is one of the largest and oldest pharmaceutical companies in China. Anchored by its nervous system business segment due to its flagship drug NBP, CSPC has a portfolio of innovative and generic drugs covering a wide range of diseases. NBP is a Class 1 new chemical drug for acute ischemic stroke. Class 1 drugs under the Chinese classification system are innovative drugs that have never been marketed globally. Thanks to its portfolio breadth, CSPC has been growing its revenue with a 10-year historical compounded annual growth rate of 25.0%, exceeding GDP growth.

We transfer coverage of narrow-moat CSPC following its third-quarter earnings results with our fair value estimate only slightly changed to HKD 8.40 per share. We think CSPC’s shares are undervalued with long-term potential supported by its increasing research and development spending. With its flagship drug NBP exclusivity expiring soon, 2024 is a pivotal year for CSPC with seven new expected product launches.

CSPC is one of the largest and oldest pharmaceutical companies in China. Anchored by its nervous system business segment due to its flagship drug NBP, CSPC has a portfolio of innovative and generic drugs covering a wide range of diseases. NBP is a Class 1 new chemical drug for acute ischemic stroke. Class 1 drugs under the Chinese classification system are innovative drugs that have never been marketed globally. Thanks to its portfolio breadth, CSPC has been growing its revenue with a 10-year historical compounded annual growth rate of 25.0%, exceeding GDP growth.

CSPC operates in a fast-growing and rapidly changing environment. Like most healthcare sectors in China, drug manufacturing has grown faster than GDP, and is projected to continue this trend over the next two decades. Additionally, this industry is undergoing massive regulatory change, which will likely be supportive of CSPC's drug portfolio and pipeline for at least the next decade. As of 2022, about 80% of revenue comes from finished drugs, and the remainder comes from bulk drugs like vitamin C, caffeine, and antibiotics. The firm's flagship drug is NBP, which is indicated for acute ischemic stroke and constitutes approximately 25% of total revenue. CSPC also boasts a fast-growing portfolio of chemotherapy drugs, mostly early-to-market generics or new preparations.