New Regulations on Pharmaceutical Representatives Promote Industry Compliance

Overview

This UBS China Healthcare Weekly recap covers recent performance trends in the A/H share healthcare sector and focuses on the release of the 'Measures for the Administration of Pharmaceutical Representatives' by the National Drug Administration (NMPA) and six other ministries on May 7th. The report views the new rules as an expanded version of the 2020 trial edition, providing clearer guidelines through explicit educational requirements, registration management, and detailed violation penalties, which will help pharma companies conduct promotional activities within a compliant framework. Additionally, the report tracks progress in innovative drug R&D (such as Beijing Bio-pharma, Royalty Pharma, Colibri Therapeutics), dynamics in medical device procurement (high-value consumables’ sixth national bulk purchase, Guangdong’s cardiovascular price adjustments, Fujian’s CT/MRI procurement) and healthcare services data (Jin Xin Fertility). Currently, UBS recommends BeOne, Wuxi Biologics Alliance, JD Health, and Sanyuan Pharmaceuticals as top picks.

Core views

Policy Highlights: UBS believes the issuance of the 'Measures for the Administration of Pharmaceutical Representatives' provides a clearer and more detailed compliance roadmap for the industry. These measures consist of six chapters and thirty-five articles, with core changes including expanded registration requirements, mandatory qualifications for representatives holding degrees in pharmacy/medicine-related disciplines, and introducing specific penalty clauses for both individuals and organizations involved. The report argues these initiatives will enable pharma companies to engage in drug promotion activities in a more compliant manner. This policy takes full effect on August 1, 2026. Sector Performance: From May 4th to 8th, the A/H share healthcare sector saw slight adjustments overall. The Hang Seng Healthcare Index and Hang Seng Biotechnology Index dropped by 0.1% and 0.4%, respectively. The Sun Wah Medical A-Shares and Hong Kong Shares Index changed by +0.3% and -0.3%, ranking them 25th and 28th among all sectors. At the sub-sector level, the A-share medical equipment performed notably well with a gain of 1.9%, while the H-share pharmaceutical trade led with a rise of 1.4%. The report attributes this mainly to fund rotation during the biomedical conference season from late April to mid-May. R&D and Regulatory Updates: Several companies achieved significant milestones. Beijing Bio-pharma secured approval for its Kuralametinib (CDK2/4/6) for second-line HR+/HER2-negative breast cancer indications. LM-108 (CCR8 monoclonal antibody) entered phase III trials for gastric cancer, and M701 (CD3/EpCAM bispecific antibody) had its NDA accepted. Royalty Pharma completed enrollment for the first patient in its phase III trial of RC148 (PD-1/VEGF) for squamous non-small cell lung cancer. Colibri Therapeutics obtained priority review for the fifth NDA of Sac-TMT (TROP2 ADC) covering first-line NSCLC combined with Keytruda, with OptiTROP-L05 study data slated for presentation at ASCO. BeOne outperformed expectations while Zai Lab underperformed. Medical Device & Procurement Dynamics: The sixth batch of high-value medical consumable national bulk procurement is scheduled for mid-to-late May, with coated balloon tender prices ranging between 1677-6015 yuan in Hunan province, and urological intervention supplies priced at 60-1537 yuan. Guangdong announced revised pricing for cardiovascular health services, reducing costs for FFR, IVUS, OCT projects by 40-80%. Fujian launched its 2025-2026 CT/MRI procurement, budgeting 340 million and 310 million yuan respectively, excluding imported products from participation. United Imaging formed a strategic partnership with SynuSight focusing on diseases like Parkinson's. Service-wise, Jin Xin Fertility reported year-on-year increases of 7.5% in new consultations and 5.2% in egg retrieval cycles for January-April 2026.

Analysis framework

This report adopts a bottom-up industry monitoring approach combined with a top-down analysis driven by individual company events. At the policy level, by comparing the incremental content of the new regulations against the 2020 pilot version (e.g., educational thresholds, penalty provisions), we infer their long-term effects on the industry's compliance ecosystem and judge how they facilitate normalized operations. On the sector front, observing weekly percentage changes across various pharmaceutical sub-sectors on A/H shares, along with key dates around dense biomedical conferences in late April and mid-May, explains the logic behind fund rotations between sub-sectors. For corporate-level insights, tracking milestone events such as NDAs acceptance, commencement of phase III trials, and approvals for new indications alongside each covered company's performance allows us to select our preferred stock picks based on empirical evidence.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Analysis of the impact of procurement policies on medical device and drug prices

  By monitoring provincial procurement policies (e.g., the sixth batch of high-value medical consumable procurements, Fujian's CT/MRI procurements, Guangdong's revisions to cardiovascular service pricing), this report analyzes supply-side price fluctuations affecting relevant enterprises and markets. It embodies the classical supply-demand and price regulation analytical model common in pharmaceutical industry analyses, where policy-driven reconfiguration of the supply side shapes pricing structures.

• Industry/Industrial Analysis FrameworkUpstream-Midstream-Downstream Industrial Chain Transmission

  Biomedical Conferences and Sub-Sector Fund Rotation

  Observations indicate that during biomedicine-intensive periods such as late April and mid-May, certain sub-sectors like A-share medical equipment and H-share pharmaceutical commerce exhibit noticeable fund rotation patterns. This reflects short-term funding allocation shifts influenced by event-driven transmission and switching effects across different stages of the industrial chain.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• BeOne

  One of UBS's top picks; Q1/26 results exceeded expectations

  Strengths

  Outperformance relative to market expectations

  Comparison

  Contrasted with Zai Lab (results below expectations)

• Wuxi Biologics Alliance

  One of UBS's top picks

• JD Health

  One of UBS's top picks

• Sanyuan Pharmaceuticals

  One of UBS's top picks

• Colibri Therapeutics

  Beneficiary of Innovative Pipeline Progress

  Strengths

  Sac-TMT (TROP2 ADC) secured NDA eligibility for its fifth submission with priority review; clinical data to be presented at ASCO

Key data

• Hang Seng Healthcare/Biotechnology Index Weekly Change-0.1% / -0.4%Performance from May 4th to 8th
• Sun Wah Medical A-Shares/Hong Kong Shares Index Weekly Change+0.3% / -0.3%Ranked 25th and 28th among all industries, respectively
• A-Shares Medical Equipment Sub-Sector Weekly Gain+1.9%Best-performing sub-sector among A-shares
• H-Shares Pharmaceutical Commerce Sub-Sector Weekly Gain+1.4%Best-performing sub-sector among H-shares
• Coated Balloon Tender Price Range1677-6015 YuanSixth Batch of High-Value Consumables Procurement in Hunan Province
• Cardiovascular Function and Imaging Assessment Project Reduction40-80%Price Adjustment in Guangdong's Cardiovascular Healthcare Services Directory
• January-April Operational Data Year-on-Year Increases for Jin Xin FertilityNew Consultations +7.5% / Egg Retrieval Cycles +5.2%Operational Data for January-April 2026

Impact & implications

We believe the implementation of the 'Measures for the Administration of Pharmaceutical Representatives' will establish clearer compliance boundaries for drug promotion activities, assisting compliant operating pharma companies in achieving sustainable growth. In terms of procurement, ongoing price reductions for high-value consumables and imaging devices coupled with import substitution policies (such as Fujian's CT/MRI procurement excluding imported products) will further reshape the medical device landscape. The concentration of pipeline milestones among innovators (like Colibri Therapeutics securing NDA eligibility for its fifth TROP2 ADC application) signals continued progress in domestic innovation exportation and deepened pipelines.

Risks

• Procurement policy-driven price drops exceeding expectations
• Intensified industry competition
• Pricing for innovative drugs included in medical insurance negotiations coming in lower than anticipated
• Slower-than-expected recovery of Chinese consumption
• Stricter regulatory announcements and implementations than expected
• Unexpected escalation of geopolitical tensions impacting company operations

What to watch

• Implementation status of the 'Measures for the Administration of Pharmaceutical Representatives' post-effective date of August 1, 2026
• OptiTROP-L05 study data from Colibri Therapeutics to be presented at the upcoming ASCO annual meeting
• Progress of the sixth batch of national high-value consumable procurements set for mid-to-late May
• Advancement of Fujian’s 2025-2026 CT/MRI procurement and import substitution outcomes