Summary of the Conference Call for Sanofi Pharmaceutical Company Overview - **Company**: Sanofi Pharmaceutical - **Date**: September 25, 2025 - **Industry**: Pharmaceutical, specifically oncology and biopharmaceuticals Key Points and Arguments Clinical Research and Product Development - Sanofi's CFL2 platform is conducting 4 domestic Phase 2/3 clinical studies covering various cancer indications, including non-small cell lung cancer (NSCLC) [2][3] - The Phase 3 clinical trial for first-line NSCLC is benchmarked against PD-1 K, indicating active exploration in tumor treatment [2][3] - The company has achieved a collaboration agreement with Pfizer worth $60.5 billion, along with a $100 million investment, highlighting global recognition of its innovation capabilities and international product potential [2][3] - The PD-1 VEGF dual antibody drug 707 has set a domestic record for licensing amounts [2] Financial Performance - Revenue growth from 5.3 billion RMB in 2019 to 9.1 billion RMB in 2024, with a compound annual growth rate (CAGR) of 11% [2][6] - Gross margin remains stable at over 80%, with 2024 gross profit projected to reach 7.8 billion RMB [6] - The core product, TEBIO, is the only commercialized TPO product globally, generating over 5 billion RMB annually and maintaining a strong market position [2][5] Market Trends and Competitive Landscape - The global interest in PD-L1 VEGF dual antibodies is increasing, with companies like Summit, Kanyin, BMS, and Merck showing significant engagement in this area [4][9] - Sanofi is advancing multiple innovative pipelines, including PD1 and HER2 dual antibodies, with projected revenues reaching 10 billion, 11 billion, and 12.2 billion RMB in the coming years [4][13] Product Performance - TEBIO's revenue increased from 2.3 billion RMB in 2019 to 5 billion RMB in 2024, with a market share of approximately 30% in the platelet production market [12] - The hair growth product, Mandi, has maintained rapid growth, with a market share exceeding 70% and revenue projected to rise from 250 million RMB in 2019 to 1.35 billion RMB in 2024 [12] - New products, including Claretone cream for acne and oral paclitaxel, are expected to enter commercialization, with peak sales potential estimated at 10 billion RMB [5][14] Future Outlook - Sanofi's future development potential is significant, with validated innovative assets and a solid market position for core products [13] - The company is actively pursuing multiple innovative pipelines, which are in various clinical stages, expected to yield outstanding data and drive growth [13] - The internal business is projected to generate revenues of 10 billion, 11 billion, and 12.2 billion RMB in the next few years, maintaining a buy rating [13] Additional Products and Market Contributions - Other products like EPO and Yisai Psaipin are contributing to revenue, with several in late-stage clinical or approval phases [14] - The introduction of Semaglutide for weight management will further enrich the product line [14] Conclusion Sanofi Pharmaceutical demonstrates strong growth potential through its innovative drug development, solid financial performance, and strategic collaborations, positioning itself favorably in the competitive pharmaceutical landscape.

Core Viewpoint - The article emphasizes the emergence of a new paradigm in China's economy, termed the "new new three samples," which includes robotics, artificial intelligence (AI), and innovative pharmaceuticals, as key drivers for high-quality economic development and a shift from traditional growth models to technology-led advancements [1][4][29]. Robotics Sector - The robotics sector has seen significant market capitalization growth, with companies like Huichuan Technology exceeding 200 billion yuan and several stocks doubling in price within the year [2][13]. - The market for industrial robots in China is projected to reach 302,000 units in 2024, maintaining its position as the largest industrial robot market globally [30]. - Key challenges include reliance on imported high-end servo motors and precision components, which need to be addressed to enhance domestic capabilities [33]. Artificial Intelligence Sector - The AI sector is characterized by a large number of high-value companies, with six firms exceeding a market cap of 100 billion yuan, including Cambricon and Hikvision [19]. - The demand for AI capabilities has surged, particularly in large model applications, leading to significant revenue growth for companies like Industrial Fulian and Cambricon, with year-on-year increases of 35.58% and 4347.82%, respectively [20]. - The sector is supported by national policies aimed at integrating AI into various industries, with a comprehensive action plan released to enhance AI's role in economic development [22]. Innovative Pharmaceuticals Sector - The innovative pharmaceuticals sector is represented by major players like Heng Rui Medicine, which is nearing a market cap of 500 billion yuan, and BeiGene, which recently achieved profitability [24][28]. - Recent policy measures have been introduced to support the development of innovative drugs, including streamlined approval processes and enhanced reimbursement mechanisms [27]. - The sector is witnessing a shift from loss-making to profitability, with companies like BeiGene demonstrating the commercial viability of innovative drug models [28]. Strategic Importance - The "new new three samples" signify a transition from scale-driven manufacturing to technology-driven innovation, crucial for enhancing China's global competitiveness and economic resilience [7][9][31]. - The collaboration among robotics, AI, and innovative pharmaceuticals creates a synergistic effect that strengthens overall productivity and fosters new business models [8][31]. - Addressing the "bottleneck" issues in these sectors is essential for sustaining growth and achieving leadership in global technology competition [32][33]. Policy Recommendations - To enhance competitiveness, policies should focus on data openness, regulatory reforms, and infrastructure development to support AI and innovative pharmaceuticals [35][38]. - Establishing a robust talent pipeline and fostering interdisciplinary education will be critical for sustaining innovation in these sectors [37][38]. - Encouraging public-private partnerships and international collaboration will further strengthen China's position in the global market [39].

Group 1 - The Hong Kong Innovative Drug ETF (159567) closed with a gain of 1.50% on September 22, with a trading volume of 1.263 billion yuan [1] - The fund was established on January 3, 2024, with a management fee of 0.50% and a custody fee of 0.10% [1] - As of September 19, 2024, the fund's latest share count was 8.17 billion shares, with a total size of 7.676 billion yuan, reflecting a year-to-date increase of 1966.38% in shares and 1931.78% in size compared to December 31, 2023 [1] Group 2 - The current fund manager is Ma Jun, who has managed the fund since its inception, achieving a return of 87.92% during the management period [2] - The top holdings of the fund include Innovent Biologics (9.52%), WuXi Biologics (9.47%), BeiGene (8.73%), and others, with their respective market values and share counts detailed [2] - The cumulative trading amount over the last 20 trading days reached 37.235 billion yuan, with an average daily trading amount of 1.862 billion yuan [1][2]

Investment Rating - The report maintains an "Outperform" rating for the biopharmaceutical industry [1] Core Viewpoints - The growth of healthcare expenses, which reached 9.06 trillion yuan in 2023, is outpacing GDP growth, indicating that commercial health insurance may provide a solution to the pressures faced by the medical insurance system [3][15] - The commercial health insurance sector is expected to grow significantly, with premiums projected to reach 97.74 billion yuan by 2024, driven by low penetration rates and the need for additional funding sources [20][24] - Policies are increasingly supportive of commercial health insurance, particularly in relation to innovative drugs, which are now being included in the commercial health insurance directory [71][76] Summary by Sections Part 1: Healthcare Financing System - The healthcare financing system in China consists of government, social, and personal contributions, with social contributions being the main driver for future growth [10][15] Part 2: Growth of Health Insurance - The commercial health insurance market is expected to fill a significant funding gap, with an estimated shortfall of over 1.7 trillion yuan by 2030 [21][22] - Medical insurance is the primary source of compensation within commercial health insurance, with a compensation rate of approximately 68.79% in 2022 [27][31] Part 3: Core Products of Medical Insurance - The report highlights the importance of medical insurance as a key focus area, noting that it directly compensates for medical expenses, unlike critical illness insurance [31][35] Part 4: Policy Support for Health Insurance Development - A series of policies since 2009 have aimed to promote the development of commercial health insurance, with specific targets for market size and coverage [71][72] Part 5: Investment Recommendations - The report suggests focusing on innovative drug companies with rich pipelines, DTP pharmacies, and companies in the TPA industry, as well as innovative medical devices and high-end medical service providers [77]

Group 1 - The core viewpoint of the article highlights that Sanofi Pharmaceutical has been awarded the "Hong Kong Stock Value Demonstration Case" for its robust corporate governance and forward-looking innovation strategy, positioning it as a model enterprise in the Hong Kong stock market with both growth potential and investment value [1][2] - The "2025 China Listed Company Yinghua Demonstration Case Selection" aims to promote high-quality development of China's capital market, advocate for value and long-term investment, and contribute to the development of the real economy [1] - The evaluation process involved a comprehensive assessment of A-share and H-share listed companies based on authoritative, objective, and accurate evaluation indicators, with participation from institutional investors managing assets exceeding 50 trillion yuan [1] Group 2 - In 2025, Sanofi Pharmaceutical demonstrated steady performance with accelerated innovation outcomes, achieving breakthrough data in clinical research across core treatment areas such as oncology and autoimmune diseases, alongside significant progress in internationalization and overseas licensing [2] - The company emphasizes its mission of making innovative biopharmaceuticals accessible, continuously increasing investment in research and development, and solidifying the technical strength of its R&D platform, laying a solid foundation for future growth [2] - Sanofi Pharmaceutical currently holds over 100 national invention patents and has more than 40 listed products covering various treatment areas, including nephrology, oncology, autoimmune diseases, ophthalmology, and dermatology [2]

Core Viewpoint - The Hong Kong Innovative Drug ETF (159567) has shown significant growth in both share volume and fund size since its inception, indicating strong investor interest in the innovative drug sector [1][2]. Fund Performance - As of September 18, 2024, the fund's share volume reached 8.17 billion shares, with a total size of 7.839 billion yuan, reflecting an increase of 1966.38% in share volume and 1974.81% in size compared to its initial figures on December 31, 2023 [1]. - The fund manager, Ma Jun, has achieved a return of 90.14% since taking over management on January 3, 2024 [2]. Trading Activity - The ETF recorded a trading volume of 12.58 billion yuan on September 19, 2024, with an average daily trading amount of 18.71 billion yuan over the last 20 trading days [1]. - Year-to-date, the ETF has accumulated a total trading amount of 206.404 billion yuan over 176 trading days, averaging 11.73 billion yuan per day [1]. Top Holdings - The ETF's major holdings include: - Innovent Biologics (9.52% holding, 263 million yuan market value) - WuXi Biologics (9.47% holding, 258 million yuan market value) - BeiGene (8.73% holding, 238 million yuan market value) - CanSino Biologics (7.62% holding, 208 million yuan market value) - China National Pharmaceutical Group (7.17% holding, 196 million yuan market value) [2].

Core Viewpoint - The recent semi-annual adjustment of the FTSE Global Equity Index Series has included several Hong Kong stocks, indicating a shift in market dynamics and highlighting the performance of certain sectors, particularly gold and biopharmaceuticals [1][2][3]. Group 1: Index Adjustments - Chifeng Jilong Gold Mining (06693) and Laopuhuang Gold (06181) have been included in the FTSE China Large Cap Index for the first time, while 11 Hong Kong stocks, including SF Express (09699) and SOTY Technology (02498), have been added to the FTSE China Small Cap Index [1][2]. - The FTSE Global Equity Index Series categorizes stocks into four market capitalization tiers based on free float market capitalization, which excludes strategic holdings and locked shares [1]. Group 2: Market Performance - The newly included stocks have shown significant price increases this year, with Chifeng Jilong Gold rising over 120% and Laopuhuang Gold increasing by over 200%, reflecting strong sector performance [3]. - The biopharmaceutical sector has also seen substantial growth, with companies like Rongchang Bio (09995) and Sanofi (01530) experiencing stock price increases of nearly 670% and a market capitalization exceeding 77 billion HKD, respectively [3][5]. Group 3: Company Highlights - Chifeng Jilong Gold focuses on gold mining and resource recovery, reporting a net profit of 1.107 billion RMB in the first half of 2025, a year-on-year increase of 55.79% [4]. - Laopuhuang Gold, which went public on June 28, 2024, has seen its stock price surge by 204.65% this year, making it the highest-priced stock in the Hong Kong market [4]. - SF Express, as the largest third-party instant delivery platform in China, has seen steady growth in market capitalization and liquidity since its listing in December 2021, with a target price of 20 HKD set by Daiwa [4]. - Sanofi has gained attention due to a significant business development deal with Pfizer, leading to a market capitalization of 77 billion HKD [5]. - Fourth Paradigm (06682) has received positive outlooks from multiple brokerages, with target prices raised due to its strong position in the AI sector [6].

Core Viewpoint - FTSE Russell has updated its semi-annual adjustment list for the FTSE Global Equity Index Series, with several Hong Kong stocks being included in the FTSE China Large Cap and Small Cap indices, effective after the market close on September 19 [1][2]. Group 1: Index Adjustments - Chifeng Jilong Gold Mining (06693) and Laopu Gold (06181) are newly included in the FTSE China Large Cap Index, marking their first inclusion [1]. - Eleven Hong Kong stocks, including SF Express (09699) and SOTY Technology (02498), have been added to the FTSE China Small Cap Index [1][2]. - The adjustments reflect a focus on companies with large market capitalization and high liquidity, indicating a strategic selection of industry leaders [1]. Group 2: Market Performance - The newly included stocks have shown significant price increases this year, outperforming the broader market, with Chifeng Jilong Gold Mining rising over 120% and Laopu Gold increasing by over 200% [3]. - The biopharmaceutical sector has also seen strong performance, with companies like Rongchang Biopharmaceutical (09995) and 3SBio (01530) experiencing substantial stock price increases, with Rongchang Biopharmaceutical rising nearly 670% [3]. Group 3: Company Highlights - Chifeng Jilong Gold Mining reported a net profit of 1.107 billion RMB for the first half of 2025, a year-on-year increase of 55.79%, benefiting from a bullish gold market [4]. - Laopu Gold, which went public on June 28, 2024, has seen its stock price soar by 204.65% this year, making it the highest-priced stock in the Hong Kong market [4]. - SF Express has established itself as a leading third-party instant delivery platform, with a stable increase in market capitalization and liquidity since its listing in December 2021 [4]. Group 4: Future Outlook - The inclusion in international indices is expected to attract more capital and enhance liquidity for the newly added companies, potentially leading to further stock price support [3]. - Companies like 3SBio and Fourth Paradigm (06682) are anticipated to benefit from their strong market positions and growth potential in their respective sectors, with analysts raising target prices for these stocks [5][6].

Core Viewpoint - The innovative drug sector in Hong Kong has become a market focus again, with significant stock price increases following a prolonged period of adjustment and low valuations [2][3]. Group 1: Market Performance - Beihai Kangcheng-B (01228.HK) has surged nearly 19 times, while other companies like Deqi Pharmaceutical-B (06996.HK) and Hengrui Medicine (01276.HK) have also shown impressive gains, with some stocks increasing over four times [2]. - The overall profitability of the Hong Kong innovative drug sector has significantly improved in 2025, with many companies reporting substantial increases in net profit [6][7]. Group 2: Policy Support - The Chinese government has included "innovative drugs" in key emerging industries, with policies introduced to support the development of innovative drugs, including price management and financing [3]. - In June 2025, the National Healthcare Security Administration and the National Health Commission launched measures to support the high-quality development of innovative drugs, providing robust policy backing [3]. Group 3: Company Performance - Hengrui Medicine reported a 29.67% increase in net profit to 4.45 billion RMB in the first half of the year, achieving record highs in revenue and profit [4]. - Baijie Shenzhou's net profit increased by 115.63% to 450 million RMB, marking its first half-year profit, primarily due to the strong performance of its core product [5]. Group 4: Financing Trends - Many innovative drug companies are launching placement financing plans to raise funds for ongoing research and daily operations, driven by improved stock prices [8][10]. - As of 2025, nearly 60 companies in the Hong Kong medical and biopharmaceutical sectors have announced placement financing plans, with innovative drug companies being the main contributors [8]. Group 5: Future Outlook - The innovative drug sector is expected to continue its rapid development, supported by favorable external conditions and ongoing policy support [12][14]. - The recent interest rate cuts by the Federal Reserve may facilitate easier financing for innovative drug companies, which is crucial for those yet to achieve commercialization [13].

Core Viewpoint - The Trump administration is drafting an executive order that will impose three major restrictions on commercial transactions involving Chinese innovative drug patents or rights, focusing on national security reviews by the Committee on Foreign Investment in the United States (CFIUS) [1][2]. Summary by Sections Executive Order Details - The draft includes three main provisions: 1. Inclusion of Chinese innovative drug BD transactions in the CFIUS mandatory review list, ending the previous "low-risk automatic exemption" practice [2]. 2. FDA will implement "racial sensitivity supplementary reviews" for drugs relying on Chinese clinical data, requiring at least 20% comparative data from non-Asian populations [2]. 3. Establishment of a "key drug domestic production fund" to provide production subsidies for 15 categories of drugs, including antibiotics and acetaminophen, while implementing a "domestic priority" principle in federal procurement [2]. Market Reaction - The market reacted swiftly to the policy risks, with the Hong Kong innovative drug index (HK1105) dropping 3.82% on September 11, 2025, and the A-share innovative drug sector (BK1106) declining 2.17%, with over 80% of stocks in the sector experiencing pullbacks [3]. - The following day, the indices showed signs of recovery, indicating investors' responses to policy uncertainties and rational corrections [3]. Globalization Trends - Despite the geopolitical risks, the trend of Chinese innovative drugs going global remains intact, with total license-out transactions to Europe and the U.S. reaching $9.43 billion as of September 2025 [3]. - Major transactions include a $950 million licensing deal between BeiGene and Royalty Pharma, and a $6 billion global licensing agreement between 3SBio and Pfizer, highlighting a shift towards milestone payments and regional licensing [3]. Industry Challenges - The domestic market faces challenges, with annual growth in medical insurance fund spending (approximately 12%) lagging behind the growth in innovative drug R&D investment (approximately 25%) [4]. - The average reduction in medical negotiations remains high at 54%, and commercial health insurance coverage for innovative drugs is below 15%, creating a supply-demand imbalance that necessitates going global [4]. Risk Resilience Assessment - Goldman Sachs has categorized Chinese innovative drug companies into three risk resilience tiers based on their sensitivity to policy changes and operational capabilities [4][5]. - Companies with mature global layouts exhibit the strongest resilience, while those heavily reliant on domestic markets show the weakest resilience [5][10]. Strategic Defense Framework - A three-dimensional defense system is proposed to address risks associated with the executive order, focusing on transaction review, data compliance, and supply chain security [13]. - Strategies include conducting national security risk pre-assessments for transactions over $50 million and establishing partnerships with U.S. law firms to navigate regulatory challenges [14][15]. Conclusion - The construction of a quantifiable "risk resilience index" is essential for Chinese innovative drugs in the global 2.0 era, emphasizing the need for companies to embed policy hedging clauses in transaction structures and consider racial diversity data in clinical stages [23].