Fosun Pharma Q1 Results in Line with Expectations; Innovative Drug Sales Grow Steadily

Overview

Goldman Sachs published a Q1 2026 earnings review report on Fosun Pharma. The company reported Q1 revenue of RMB10.1bn (+7% y/y) and net profit of RMB871mn (+14% y/y), both in line with market expectations. Innovative drug sales maintained steady growth, driving 10.5% revenue growth in the pharmaceutical segment; the medical device and services segments remained under pressure. Gross margin expanded by 1.9 percentage points on a higher mix of innovative drugs, while fair-value gains turned positive, supporting profit growth above revenue growth. The R&D pipeline continues to advance, with multiple clinical data readouts expected in 2026.

Core views

Performance: In Q1, revenue was RMB10.1bn (+8.6% y/y excluding FX impact) and net profit was RMB871mn, both slightly above Goldman Sachs' expectations (revenue RMB9.9bn, net profit RMB854mn). Earnings growth of 14% outpaced revenue growth, benefiting from two factors: first, gross margin expanded by 1.9 percentage points, reflecting a shift in product mix toward innovative drugs; second, fair-value gains were RMB161mn, a significant improvement from -RMB282mn in Q1 2025. Business divergence: The pharmaceutical segment performed strongly, with revenue growth of 10.5% y/y and innovative drug sales progressing as planned; the medical device segment fell 7% y/y and the services segment was flat but remained in net loss, with both still under pressure. Management maintains the 2026 innovative drug sales target of RMB11.23bn (from the incentive plan) and a RMB2bn capital gain target from non-core asset divestments (around RMB500mn completed in Q1, vs. about RMB3bn each in 2024/2025). R&D pipeline: Several important clinical data readouts are expected in 2026, including serplulimab (U.S. bridging study in small-cell lung cancer, China Phase III neoadjuvant gastric cancer), FXS4983 (PDE5 inhibitor, Phase III Alzheimer's disease), and FXS6837 (factor B inhibitor, Phase II PNH and IgA nephropathy). Early-stage R&D productivity remains solid, with 27 INDs expected to be submitted in 2026; 14 were submitted in Q1, covering small molecules, antibodies, and cell therapies. BD opportunities are not limited to Europe and the U.S. but are also expanding to regions with lower pricing thresholds; near-term candidate assets are mainly focused on oncology and early-stage programs.

Analysis framework

Goldman Sachs values Fosun Pharma using a sum-of-the-parts (SOTP) valuation approach, splitting the company into five parts: the pharmaceutical business (excluding Henlius stake) is valued at RMB20.6bn based on an exit PE of 8.0x in year 5; the Henlius stake is valued at RMB31.8bn; the medical device business at RMB847mn; the services segment at RMB6.4bn; and the Sinopharm stake at RMB13.2bn. This method is suitable for diversified holding companies and better reflects the true value of each segment. On earnings forecasts, based on Q1 results, Goldman Sachs made minor adjustments of +0.3%/+1.1%/-0.5% to its 2026/2027/2028 earnings estimates, reflecting results largely in line with expectations. The 12-month target price is maintained at H-shares HK$27.31 / A-shares Rmb35.32.

Methodology notes

• Valuation MethodSOTP Sum-of-the-Parts Valuation

  SOTP Sum-of-the-Parts Valuation Method

  A valuation approach that values each business segment or equity holding separately and then sums them; suitable for diversified companies with complex structures where different segments warrant different valuation methodologies. Fosun Pharma's pharmaceutical, medical device, and services businesses, as well as its stakes in Henlius and Sinopharm, are valued using different methods.

• Fundamental & Financial FrameworkEarnings Quality Analysis

  Earnings Quality Analysis

  Analyzes whether profit growth stems from core operations or non-recurring items. The report notes that Fosun Pharma's profit growth outpaced revenue growth partly due to fair-value gains turning positive (RMB161mn vs. -RMB282mn in the prior-year quarter), a non-recurring factor investors should monitor.

• Industry Analysis FrameworkVolume-price decomposition

  Volume-Price Decomposition

  Breaks revenue growth into volume and price drivers. The report notes revenue grew 7% y/y (8.6% y/y excluding FX), with innovative drug sales progressing as planned, indicating volume-driven growth, while monitoring the impact of centralized procurement on generic drug prices.

Asset mapping & comparison

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

• Fosun Pharma (2196.HK)

  Report coverage subject; driven by innovative drug sales growth and pipeline progress

  Strengths

  Innovative drug sales progressing as planned, rich R&D pipeline (27 INDs expected in 2026), continuous gross margin improvement

  Weaknesses

  Medical device segment declined 7%, services segment remained in net loss, relatively high reliance on non-core asset divestments

  Risks

  Pricing pressure from centralized procurement, slower-than-expected innovative drug sales ramp, slower growth at Sinopharm

• Henlius Biotech (Henlius)

  Fosun Pharma holding; contributes RMB31.8bn in SOTP valuation (second-largest component)

  Strengths

  PD-L1 ADC/HLX22 and other assets have BD potential

Key data

• Q1 RevenueRMB10.1bn+7% y/y (+8.6% y/y excluding FX), vs. expected RMB9.9bn
• Q1 Net ProfitRMB871mn+14% y/y, vs. expected RMB854mn
• Pharmaceutical Segment Revenue Growth+10.5% y/yDriven by innovative drug sales
• Medical Device Segment Revenue Growth-7% y/yContinues to face pressure
• Gross Margin Change+1.9 percentage pointsDriven by higher mix of innovative drugs
• Fair-Value GainsRMB161mnvs. -RMB282mn in Q1 2025
• R&D Expense Growth+22% y/y76% directed to innovative drug development
• 2026 Expected IND Submissions2714 submitted in Q1
• H-share Target PriceHK$27.31Maintained unchanged
• A-share Target PriceRmb35.32Maintained unchanged

Impact & implications

For Fosun Pharma, the steady growth in innovative drug sales validates its product commercialization capabilities, while continued pipeline progress supports medium- to long-term growth. However, the medical device and services segments remain under pressure, and their improvement warrants attention. Successful execution of non-core asset divestments could free up capital for core business development. For the industry, Fosun Pharma's R&D intensity (76% directed to innovative drugs) and pipeline progress reflect the trend of domestic pharmaceutical companies transitioning toward innovation, while expanding BD opportunities to lower-pricing regions demonstrates diversification of outbound strategy.

Risks

• Pricing pressure on generic/biosimilar drugs
• National centralized procurement renewal price cuts exceed expectations
• Innovative drug sales ramp slower than expected
• Slower growth at Sinopharm

What to watch

• Progress on multiple 2026 clinical data readouts (Serplulimab, FXS4983, FXS6837, etc.)
• Whether innovative drug sales achieve the RMB11.23bn annual target
• Progress on non-core asset divestments (RMB2bn annual target)
• Improvement in the medical device and services segments