Summary of CSPC Pharma Earnings Review and Industry Insights Company Overview - **Company**: CSPC Pharma (1093.HK) - **Market Cap**: HK$121.1 billion / $15.5 billion - **Industry**: China Pharma, Biotech & Medtech Key Financial Highlights - **2Q Revenue**: Rmb 6.3 billion, down 14% year-over-year (y/y) - **Finished Drug Sales**: Rmb 4.4 billion, down 27% y/y, below expectations (GSe Rmb 5.4 billion) [1] - **CNS Drug Sales**: Declined by 27% y/y due to stricter regulatory monitoring, particularly affecting capsule sales [1] - **Oncology Sales**: Decreased by 54% y/y, impacted by value-based pricing (VBP) for Duomeisu / Jinyouli [1] - **Earnings**: Rmb 1.1 billion, down 24% y/y or 46% y/y excluding business development (BD) [1] - **R&D Expenses**: Rmb 1.4 billion, up 1% y/y; SG&A savings of 26% y/y partially offset the earnings decline [1] Management Guidance - **Sales Growth Resumption**: Expected in 2H25, with finished drug sales projected to grow by over 5% half-on-half (h/h) [1] - **Collaboration Income**: Potential for higher collaboration income for dividend payouts [1] Business Development (BD) Insights - **BD Progress**: Company is on track with three major BD deals expected in 2025, with one already delivered (platform collaboration with AZ) [3] - **SYS6010 (EGFR ADC)**: Smooth overseas development progress, with FDA approval for including China patients in trials [3][7] Metabolism Franchise Opportunities - **Licensing Deals**: Recent licensing-out deal of oral GLP-1 to Madrigal highlights potential deal-making opportunities [2] - **Pipeline Assets**: Includes oral small molecules for weight loss and muscle enhancement, monthly-dose formulations, and siRNA drugs [2] Earnings Estimates and Price Target - **Revised Earnings Estimates**: Decreased by 5.1% for 2025, 1.8% for 2026, and 9.9% for 2027 to reflect lower expectations on finished drug sales [8] - **12-Month Price Target**: Increased to HK$11.28 from HK$10.55, indicating a potential upside of 7.4% from the current price of HK$10.51 [10] Valuation Methodology - **SOTP Valuation**: - DCF-based valuation for NBP: HK$7.2 billion - New product wave: HK$69.3 billion - Legacy portfolio and generics: HK$37.0 billion - API business: HK$4.0 billion [9] Risks and Considerations - **Key Downside Risks**: - Earlier-than-expected VBP for NBP - Slower-than-expected ramp-up of new products - Failure of major R&D projects - Greater-than-expected price cut impacts on generic drug sales [9] Conclusion CSPC Pharma is navigating a challenging environment with declining sales in key segments but is positioned for potential recovery in the latter half of 2025. The company’s focus on business development and innovative product pipelines may provide avenues for growth despite current headwinds.

Summary of CSPC Pharmaceutical Group Conference Call Company Overview - **Company**: CSPC Pharmaceutical Group (1093.HK) - **Industry**: China Healthcare - **Current Stock Price**: HK$10.51 (as of August 22, 2025) - **Market Capitalization**: HK$125,653 million - **Price Target**: HK$9.60, indicating a downside of 9% from the current price [6][8] Key Financial Highlights - **2Q Revenue**: Decreased by 14% YoY, with finished drug sales down 27% YoY and 8% QoQ, which was 15% below estimates [8] - **Gross Profit Margin (GPM)**: Declined by 6.7 percentage points [8] - **Operating Expenses Ratio**: Increased by 8.7 percentage points YoY [8] - **Underlying Profit**: Fell by 39% YoY and 36% QoQ in 2Q; without business development (BD) income, the decline would have been 59% YoY and 24% QoQ [8] - **Fiscal Year Ending**: Expected EPS for 2025 is Rmb0.45, with revenue projected at Rmb29,036 million [6] Growth and Strategic Initiatives - **Revised Guidance**: CSPC recalibrated its target to achieve 5% half-on-half growth in 2H25, anticipating growth acceleration from 2026 [8] - **Sales Target for Mingfule**: On track to reach Rmb1 billion in sales in 2025 [2] - **Business Development (BD) Strategy**: Aims to complete two more BD deals, each exceeding US$5 billion by year-end 2025 [8] - **Focus on Retail Channels**: Plans to strengthen out-of-pocket retail channels to sustain Rmb2 billion in sales post-patent expiry [2] Clinical and Product Development - **EGFR ADC Updates**: Global Phase 3 trials for 3L+ EGFRm NSCLC and 2L+ EGFRwt NSCLC are set to begin in 2H25, with conditional approval based on Overall Response Rate (ORR) [3] - **Competitive Positioning**: Early data in China shows competitive Progression-Free Survival (PFS) and Overall Survival (OS) trends in 2L EGFRwt NSCLC compared to TROP2 ADCs [3] Technology and Pipeline - **Diverse Technology Platforms**: CSPC is nurturing eight technology platforms to support BD candidates across various therapeutic areas [4] - **Metabolic Portfolio**: Includes monthly-dosing semaglutide (Phase 1), GLP-1/GIP, and other innovative therapies [9] Risks and Challenges - **Market Risks**: Stricter reimbursement controls and Value-Based Pricing (VBP) headwinds are impacting legacy drug sales [8] - **Potential Downside Risks**: Include pipeline failures, rising operating costs, and further government price cuts [14] Analyst Ratings and Market Sentiment - **Stock Rating**: Overweight, indicating a positive outlook compared to the industry average [6] - **Industry View**: Attractive, suggesting favorable conditions for growth in the China healthcare sector [6] Conclusion CSPC Pharmaceutical Group is navigating a challenging market environment with a focus on strategic growth through business development and innovative product pipelines. The company is positioned for potential recovery and growth in the coming years, despite current financial setbacks and market pressures.