Summary of China Pharma and Biotech Sector Conference Call Industry Overview - The Chinese pharmaceutical and biotech sector is experiencing a significant rally, with the Hang Seng Biotech and MSCI China Healthcare indices showing year-to-date (YTD) returns of 57% and 38%, respectively, outperforming broader market indices which are at 16-20% [1][10][26] - Public financing has increased fourfold in the first half of 2025 compared to the same period in 2024, driving IPO activity on the Hong Kong Stock Exchange, particularly in biotech [1][40] - Despite the rally, valuations have sharply re-rated, with China's biotech price-to-sales multiples now aligning with global peers, suggesting limited further upside compared to the peaks of 2020-2021 [1][11] Key Growth Drivers - Oncology and metabolic diseases are identified as primary growth drivers, with significant market potential in PD-1-based bispecific antibodies and GLP-1 drug classes [3][4] - The global market for PD-1-based bispecific antibodies could reach US$70-80 billion, while the domestic GLP-1 market is projected to hit CNY87 billion by 2035 [3] - Chinese companies are competitive in clinical results, particularly in lung cancer treatments, and domestic GLP-1 drugs are matching international efficacy [3][4] Company Highlights - **Akeso**: Leading in PD-1/VEGF bispecific antibodies with multiple phase 3 trials; however, overall survival results remain uncertain [4] - **Innovent**: Offers a diversified portfolio across various disease areas and leads in advanced antibody modalities [4] - **Hansoh**: Transitioning to innovation-driven growth with strong sales in its 3rd-generation EGFR inhibitor and significant GLP-1 business development deals [4] R&D and Innovation - The sector is shifting from me-too drugs to best-in-class and first-in-class assets, focusing on novel targets and drug combinations [2][38] - Clinical trial activity is robust, with Chinese assets comprising over 50% of new global trials in 2025 [2][42] - The number of new clinical trials has shown stable growth, with a notable increase in innovative drug approvals [42][65] Policy Environment - Government policies have fluctuated but are currently favorable, balancing innovation stimulation with price control [2][43] - Recent supportive policies include initiatives to cover innovative drugs under commercial insurance, indicating a long-term positive outlook for the sector [43] Out-Licensing Trends - Out-licensing activity has surged in 2025, with total deal value reaching US$59 billion, surpassing the previous year's total [72] - The focus has shifted from PD-1 drugs to PD-1/VEGF and GLP-1 assets, with significant deal values and upfront payments [75][72] - Despite the increase in total deal value, upfront payments in China still lag behind developed markets, indicating a need for caution regarding the sustainability of this growth [73][81] Investment Implications - Companies such as Akeso, Hansoh, Innovent, and Hengrui are rated as Outperform, while BeiGene, CSPC, Sino Biopharm, and Zai Lab are rated as Market-Perform [7] - The current rally may require new catalysts beyond existing out-licensing deals to sustain momentum, as valuation headroom appears limited [5][22] Conclusion - The Chinese pharma and biotech sector is evolving into a mature, innovation-driven industry with growing global competitiveness, tempered by valuation caution and sector uncertainties [5][11]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **biopharmaceutical sector in China**, highlighting its resurgence driven by innovation and increased deal activity with multinational corporations (MNCs) [1][2]. Core Insights - **Global Competitiveness**: China's pharma sector is confirmed to be globally competitive, with significant partnerships such as Summit Therapeutics' licensing agreement with Akeso for ivonescimab (up to $5 billion) and Pfizer's deal with 3SBio for SSGJ-707 (up to $6 billion) [2]. - **Investment in Obesity Treatments**: Companies are investing in the obesity treatment space, with notable deals including Merck's $1.9 billion agreement with Hansoh Pharma and Novo's $2 billion deal with United Bio-Technology [2]. - **Long-Term Winners**: AstraZeneca (AZN) and Sanofi (SAN) are identified as long-term winners in the region, with both companies actively investing and expanding their R&D presence in China [7][11]. R&D and Business Development Opportunities - **Rapid R&D Advancement**: China's biopharma industry is shifting from generics to genuine innovation, with improved R&D efficiency and lower costs [8][41]. - **Rich Pipeline of Assets**: MNCs are increasingly seeking business development (BD) deals in China, with a wealth of attractive pipeline assets available for international partnerships [9]. - **Key Asset Types**: Bispecific antibodies, GLP-1 therapies, and antibody-drug conjugates (ADCs) are highlighted as prominent areas for BD opportunities [10][65]. Market Dynamics - **Market Share Growth**: The share of innovative drugs in China's core hospital pharmaceutical market increased from 21% in 2015 to 29% in 2024, with local companies' share rising from 18.7% to 27.8% [24][25]. - **Declining Contribution**: There is a modest decline in China sales as a percentage of global sales among large-cap EU pharma companies, with AstraZeneca's share dropping from 20% in 2020 to an estimated 12% in 2024 [29][31]. Strategic Collaborations - **M&A Activity**: The report notes a boom in M&A activity as companies seek to acquire innovative pipeline assets amid global pricing pressures and patent expirations [40]. - **Emerging Global Innovation Hub**: China is becoming a global hub for innovative drug R&D, with a significant increase in out-licensing deals, reaching a total value of $50.8 billion in 2024 [40][48]. Specific Therapeutic Areas - **Bispecific Antibodies**: The report emphasizes the growing interest in bispecific antibodies, particularly those targeting PD-1/VEGF pathways, with significant licensing deals indicating global confidence in these assets [66][68]. - **GLP-1 Therapies**: The report outlines the evolution of GLP-1 therapies, with a focus on long-acting formulations and oral small molecules, highlighting numerous ongoing clinical trials and licensing deals [70][72]. - **Antibody-Drug Conjugates (ADCs)**: China is emerging as a leader in ADC innovation, with approximately 40% of the global ADC pipeline originating from China and a significant increase in international licensing transactions [77][78]. Conclusion - The biopharmaceutical sector in China is positioned for growth, with strong R&D capabilities, a rich pipeline of innovative assets, and increasing global interest from MNCs. Companies like AstraZeneca and Sanofi are well-positioned to capitalize on these opportunities, while the landscape for innovative therapies continues to evolve rapidly.

Financial Data and Key Metrics Changes - Corteva reported a 15% year-over-year increase in Q1 EBITDA, with nearly 400 basis points of margin expansion driven by strong cost execution [7][20] - Organic sales were up 3% compared to last year, with seed sales increasing by 2% and crop protection sales by 3% [20][22] - Operating EBITDA margin reached nearly 27%, up 390 basis points, supported by organic sales growth and lower input costs [23] Business Line Data and Key Metrics Changes - The seed business saw organic sales increase by 2%, driven by pricing, while crop protection organic sales rose by 3%, supported by double-digit volume growth for new products and biologicals [11][12] - Seed volume decreased by 1% year-over-year, while crop protection volume increased by 5%, with notable double-digit volume gains from new products [21][22] Market Data and Key Metrics Changes - In the U.S., farmers are projected to shift planted area from soybeans to corn, resulting in a projected 5% increase in corn planting [9] - Enlist beans are expected to be planted on over 65% of U.S. soybean acres in 2025, indicating strong market demand [9] - The crop protection market is anticipated to remain flat with low single-digit volume gains, while Corteva expects high single-digit volume gains to offset low single-digit pricing headwinds [12][28] Company Strategy and Development Direction - Corteva aims to become the leading provider of soybean technology in Brazil, having sold over 3 million units of Conquesta E3 soybeans in the last three years [9] - The company is transitioning to a net out-licenser of technology, with expectations of generating $65 million in benefits this year [19] - The focus on operational excellence and cost improvements is expected to generate net cost savings of $400 million [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter performance, noting double-digit EBITDA gains and margin improvements despite potential risks in the second half of the year [18] - The tariff situation is viewed as manageable, with a direct cost impact of approximately $50 million anticipated for 2025 [15][16] - Management highlighted the importance of American farmers and the need for export markets to open up for North American grain and oilseeds [17] Other Important Information - The company plans to introduce approximately 500 new products to the market this year, including around 300 new seed hybrids and varieties [11] - Currency fluctuations posed a significant headwind, impacting sales by approximately 5% [20][24] - Corteva is on track for $1 billion in share repurchases in 2025 [34] Q&A Session Summary Question: Risks in the second half of the year - Management acknowledged the risks but noted that the second half has been derisked since the February guidance, with expectations for crop protection in Brazil to match last year's strong performance [41][42] Question: Price environment in crop protection - Management indicated that while pricing pressures are expected to continue, there are signs of stabilization in the market, particularly with generics from China [66][70] Question: Updates on new growth platforms - Management confirmed that the launch of hybrid red winter wheat is still on track for 2027, with significant revenue potential, and the pilot program for winter canola is expanding [80][81] Question: Tariff impact clarification - Management clarified that the $50 million tariff impact is manageable and not included in the current guidance, as they are working on mitigation strategies [85] Question: Positioning for soybean market shifts - Management noted that U.S. soybean production is essential to meet global demand, despite shifts in imports to Brazil, and emphasized the importance of reopening export markets [92][93]