Zhi Tong Cai Jing·2025-09-30 07:07Core Viewpoint - UBS maintains an optimistic outlook on the long-term potential of China's healthcare market, but due to a 64% increase in the pharmaceutical sector driven by licensing optimism, along with rising risks from potential U.S. executive orders and high valuations, the market focus is expected to shift back to organic revenue/profit growth [1] Company Ratings - The ratings for CSPC Pharmaceutical Group (01093) and Kelun Pharmaceutical (002422) have been downgraded to "Neutral" due to weak fundamentals [1] - The preferred stock in the industry has shifted from 3SBio (01530) to Hansoh Pharmaceutical (03692) because of its stable traditional business and innovative pipeline reserves [1] Long-term Pipeline Potential - The report indicates that the best performers in terms of long-term pipeline potential are Hengrui Medicine (600276) and Hansoh Pharmaceutical [1] Valuation and Market Focus - Chinese pharmaceutical stocks have a forward P/E ratio higher than the five-year average, but the rising risk of U.S. executive orders is shifting market focus back to organic growth [1] - CSPC and Kelun are expected to have the lowest compound annual growth rate (CAGR) in revenue from 2024 to 2034, at half the average rate of 13% for 3SBio, Hansoh, and Innovent Biologics [1] Company-Specific Challenges - CSPC's core traditional product NBP, which accounts for 32% of its 2024 finished drug revenue, continues to lose market share, increasing uncertainty due to high reliance on unconfirmed business development revenue [1] - Kelun Pharmaceutical faces weak demand and intense competition, which may lead to the lowest revenue growth among peers by 2025 [1]