Company Reports

Sino Biopharmaceutical was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement policy in 2018, which pushed down Sino Bio’s generic drug pricing by 50%-70% in exchange for bulk volume purchases using national public healthcare funds for hospitals, the company has increased its research and development spending to develop a more innovative pipeline. As a result, SBP pivoted toward an oncology portfolio and created Focus V (anlotinib) as its core innovative drug that was approved in 2018. Focus V is a tyrosine kinase inhibitor that is an oral therapy used to treat various cancers by blocking the tyrosine kinase enzymes that signal cancer cells to grow and divide. While still considered innovative, TKIs are now being replaced by antibody-drug conjugates and monoclonal antibodies as first-line treatments for many types of cancers. In addition, Focus V competes in a crowded industry within China and globally, having very little market share outside of China.

Sino Biopharmaceutical's first-half 2026 revenue grew 11% year on year to CNY 19.4 billion, while operating margin increased 1,300 basis points, mainly driven by out-licensing agreements made with Sanofi earlier this year.

Sino Biopharmaceutical, or SBP, was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement, or VBP, policy in 2018, which pushed down Sino Bio’s generic drug pricing by 50%-70% in exchange for bulk volume purchases using national public healthcare funds for hospitals, the company has increased its research and development spending to develop a more innovative pipeline. As a result, SBP pivoted toward an oncology portfolio and created Focus V (anlotinib) as its core innovative drug that was approved in 2018. Focus V is a tyrosine kinase inhibitor that is an oral therapy used to treat various cancers by blocking the tyrosine kinase enzymes that signal cancer cells to grow and divide. While still considered innovative, TKIs are now being replaced by antibody-drug conjugates and monoclonal antibodies as first-line treatments for many types of cancers. In addition, Focus V competes in a crowded industry within China and globally, having very little market share outside of China.

We initiate coverage of Sino Biopharmaceutical with no Morningstar Economic Moat Rating, a Very High Uncertainty Rating, and an HKD 5.60 fair value estimate, which reflects a 5% upside based on the July 22 closing price.

We will discontinue analyst coverage of Sino Biopharm 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.

Sino Biopharm's first-half revenue of CNY 17.6 billion grew 10.7% year over year, while net profit increased 101.1%.

Sino Biopharmaceutical was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement policy in 2018, Sino Biopharm has increased its research and development spending for a more innovative pipeline. VBP purchases pharmaceutical products in bulk from drugmakers at a lower price for national public hospitals using national public healthcare funds. Generic or biosimilar drugs have the most severe price cuts in VBP. In 2023, generics and biosimilars contributed around 70% of Sino Biopharm’s total revenue. Hence, we believe the company’s transformation strategy makes sense, as it will increase Sino Biopharm’s competitive advantage while helping to mitigate the impact of VBP.

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.

Sino Biopharmaceutical was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement policy in 2018, Sino Biopharm has increased its research and development spending for a more innovative pipeline. VBP purchases pharmaceutical products in bulk from drugmakers at a lower price for national public hospitals using national public healthcare funds. Generic or biosimilar drugs have the most severe price cuts in VBP. In 2023, generics and biosimilars contributed around 70% of Sino Biopharm’s total revenue. Hence, we believe the company’s transformation strategy makes sense, as it will increase Sino Biopharm’s competitive advantage while helping to mitigate the impact of VBP.

No-moat Sino Biopharmaceutical’s 2024 results slightly missed our forecast and PitchBook consensus. However, management provided a more robust pipeline update in the earnings call, improving our view of its oncology segment in the long run. Hence, we lift our oncology segment revenue growth assumptions for 2025 and beyond. The upward revision in revenue forecasts offset a few adjustments we made following the 2024 earnings release. Consequently, our fair value estimate is nudged up to HKD 3.93 from HKD 3.88. We now view the shares as fairly valued after a more than 15% jump in the share price since the beginning of the year.

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.

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.

No-moat Sino Biopharmaceutical’s 2024 interim results came in better than expected, especially on the margin front, due to its operation optimization. Hence, we lift our five-year average adjusted operating margin forecast to 24.3% from 18.5%. Consequently, our fair value estimate rises 29% to HKD 3.88 per share from HKD 3.01. We think it is now an attractive entry point for long-term investors, as Sino Biopharm started to show signs of early recovery after it entered the transition period in 2018. Management expects to have at least four new drugs entering the market in the following three years. As a pharmaceutical company, shares currently trade at a price/book value of 1.6 times—one of the historical lows—as of August 2024, with 12.8% of its total assets being cash and 1.1% goodwill.

Sino Biopharmaceutical was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement policy in 2018, Sino Biopharm has increased its research and development spending for a more innovative pipeline. VBP purchases pharmaceutical products in bulk from drugmakers at a lower price for national public hospitals using national public healthcare funds. Generic or biosimilar drugs have the most severe price cuts in VBP. In 2023, generics and biosimilars contributed around 70% of Sino Biopharm’s total revenue. Hence, we believe the company’s transformation strategy makes sense, as it will increase Sino Biopharm’s competitive advantage while helping to mitigate the impact of VBP.

We reinitiate coverage of one of the largest Chinese drugmakers, Sino Biopharmaceutical. We downgrade the moat rating to none from narrow. However, we think Sino Biopharm is potentially moaty if it successfully transforms its diversified generic-dominant drug portfolio into a patent-protected portfolio. Our fair value estimate is HKD 3.01 per share, underpinned by a 7.5% revenue compound annual growth rate in the next five years. We think the shares are fairly valued currently. The key upside to our current valuation depends on whether Sino Biopharm brings out more patent-protected new drugs.

Sino Biopharmaceutical was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement policy in 2018, Sino Biopharm has increased its research and development spending for a more innovative pipeline. VBP purchases pharmaceutical products in bulk from drugmakers at a lower price for national public hospitals using national public healthcare funds. Generic or biosimilar drugs have the most severe price cuts in VBP. In 2023, generics and biosimilars contributed around 70% of Sino Biopharm’s total revenue. Hence, we believe the company’s transformation strategy makes sense, as it will increase Sino Biopharm’s competitive advantage while helping to mitigate the impact of VBP.

We are placing coverage of narrow-moat-rated Sino Biopharmaceutical under review pending the transfer of coverage to a new analyst. We expect to revisit our coverage of this company over the next three months. Our most recent fair value estimate was HKD 6.50.

Sino Biopharmaceutical, or SBP, is one of the four "Big Pharma" drugmakers in China, and operates in a fast-growing and rapidly changing environment. Drug manufacturing is growing faster than the gross domestic product, and we project it to grow at high single digits over the next decade. Additionally, the industry is undergoing massive regulatory change. The most impactful policy is centralized procurement, which is drastically cutting prices for commonly used chemical generics and has hurt SBP's growth.

Narrow-moat Sino Biopharmaceuticals, or SBP, reported full-year earnings that exceeded our expectations due to significantly lower sales and distribution expense. Revenue for the second half and full year was CNY 13.6 billion and CNY 28.8 billion, respectively, or 8.6% and 7.1% growth. Although the top line was within 2% of our expectations, operating profit margin (calculated with cost of sales, other expenses, and sales, general, and administrative expenses) was 20.4% for the full year, which is a 4.8 percentage point improvement over 2021 and 2 percentage points better than our expectation. This was primarily driven by lower sales expenses in the second half. However, we expect this to be temporary as the company will likely need to increase spending to prepare for new product launches.