AsiaPacificEquityResearch03May2019ChinaHealthcareSectorBiotech101:China’sPD1/PD-L1SectorHealthcareLingWangAC(852)28008599ling.wang@jpmorgan.comBloombergJPMALWANGLeonChik,CFA(852)2800-8590leon.hk.chik@jpmorgan.comDavidXYLi(852)2800-8546david.xy.li@jpmorgan.comSherryYin(852)2800-8681sherry.yin@jpmorgan.comChristineWang(852)2800-8528christine.qy.wang@jpmorgan.comAlexTso,CFA(852)2800-0496alex.tso@jpmorgan.comJ.P.MorganSecurities(AsiaPacific)LimitedSeepage105foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.www.jpmorganmarkets.comWithinChina’sPharmaceuticalindustry,webelieveearlysignsofashiftfromvolume-driventoinnovation-drivengrowthareemerging.Weexpectthistrendtointensify,drivenbyfavorableregulatorypoliciesandimprovedpatientaccesstoinnovativedrugs.Webelieveleadingthiswaveisthemarketforbiologicsoncologytreatment/theemergingPD-1/PD-L1monoclonalantibody(mAB)market.Weseethisspacegrowing28%p.atoRmb79.9bn(orUS$11.6bn)revenuesby2030;bigenoughformultiplewinnersridingthiswave.Weexpandourcoverageofthebiologicsspace;initiatingcoverageonShanghaiJunshi(OW,HK$37)andCStone(OW,HK$18)andassumingcoverageonBeiGene(OW,HK$93(H)US$155(N))andInnovent(OW,HK$33).Allhaveintegratedplatformsandbroadpipeline,whichwethinkarekeystosuccess.FastgrowingChinabiologicsmarketofferssignificantopportunities.TheChinabiologicsmarketisatanearlystage.Eightofthetop10drugsintheUSAareBiologics,versustwoinChina.Withthemarket(excl.TCM)stilldominatedbygenericproducts,weexpectstronggrowthforthebiologicsmarketdrivenbyasupportiveregulatoryenvironment,improvedreimbursement,andincreasingdemandfornoveldrugs,includingbiologicsandtargetedtherapies.StronggrowthexpectedforChina’sPD-1/PD-L1mABmarket.TheglobalPD-1/PD-L1m...
