[ET Net News Agency, 16 July 2019] Morgan Stanley initiated coverage on Hansoh
Pharmaceutical (03692) with an "overweight" rating and a target price of HK$29.
The research house sees strong catalysts ahead for the giant pharma company - the launch
of 30+ drugs in 2019-20, including 4 Class 1.1 drugs and 8 first-to-market (FTM) generics,
driving 36% and 28.7% earnings growth.
Morgan said Hansoh is a leading company, by sales revenue, for drugs related to the
central nervous system (CNS), oncology, infectious diseases, and diabetes, which,
combined, accounted for >60% of China drug sales in 2018. Hansoh has a commanding lead in
CNS and a strong position in oncology, both underpinned by strong demand from an aging
population.
It added that Hansoh is a rare drug company with minimal exposure to adjuvant drug
sales; this makes it more resistant to continued pressure from stringent government
control of insurance reimbursement and the drug sales ratio on hospital revenue.
Morgan modeled revenue and earnings CAGRs of 18.3% and 29% from 2018 to 2021. These
numbers are underpinned by robust growth forecasts of Hansoh's oncology, anti-infectives,
diabetes, and CNS portfolios, as well as margin expansion. (KL)