Chinese pharmaceutical 2025 results broadly met expectations, with ASCO data and BD acting as 2026 catalysts

Overview

The report reviews 2025 results of leading Chinese pharmaceutical companies and updates 2026-2028 forecasts, target prices, and investment views. It concludes that despite tighter domestic medical insurance cost containment, most large peers still delivered high single- to low double-digit product sales growth, mainly driven by more than 20% growth in innovative-drug sales. In 2026, the focus shifts to clinical data readouts from meetings such as ASCO, launch ramp-up of innovative drugs, and margin expansion from BD income and licensing deals.

Core views

The core view is that drug sales were broadly in line with expectations, while BD revenue recognition has some ambiguity and timing lag; innovation drugs and BD will be the main catalysts in 2026; sector valuation remains relatively attractive versus profit growth. At the stock level, the report prefers companies with durable growth and strengthening R&D/BD capabilities, with Hansoh as the top pick, and maintains Buy for Hengrui, CMS, CSPC, and SBP. It keeps Fosun A/H and Livzon A/H on Hold, mainly due to uncertainty around competition, VBP, and growth sustainability.

Analysis framework

The analytical framework combines a comparison of 2025 actual results against consensus expectations, revisions to 2026-2028 revenue and net profit forecasts, product-segment decomposition, review of clinical-pipeline catalysts, and DCF or H/A-share discount valuation. The report focuses particularly on innovative-drug revenue contribution, BD revenue recognition timing, medical insurance catalog and VBP price pressure, R&D progress, and upside implied by target prices.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  SBP, CSPC, Livzon A, and Fosun A all use DCF valuation, with key assumptions including WACC, risk-free rate, equity risk premium, beta, terminal growth rate, and exchange rates.

• Valuation methodsH-A share discount

  H-share versus A-share discount valuation

  Livzon H and Fosun H use A-share valuation combined with H-A discount and RMB-HKD exchange rates to derive target prices.

• earnings_reviewestimate revision

  earnings forecast adjustment

  The report revises 2026-2028 revenue and net profit forecasts based on 2025 actual results, BD revenue recognition timing, VBP and NRDL pricing pressure, new-drug launches, and R&D spending.

• catalyst_analysispipeline readout tracking

  clinical data catalyst tracking

  The report tracks potential lineups of ADC, GLP1/GIP, and PD1/VEGF data that Hengrui, Hansoh, CSPC, SBP, Fosun, and others may disclose at ASCO, AACR, and ESMO.

Asset mapping & comparison

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

• Sino Biopharm / SBP / 1177 HK

  covered name, Buy rating

  Strengths

  Ongoing innovation transformation, with an expected four innovative-drug launches in 2026; post-LaNova acquisition has synergy potential in early assets in breast, lung, and gastric cancer.

  Weaknesses

  2025 revenue was below forecast, with delayed recognition of a USD300m BD upfront payment; impairment on financial assets dragged down adjusted net profit.

  Comparison

  Target price was cut from HKD9.60 to HKD9.00, but still implies about 56% upside.

  Risks

  Earlier-than-expected biosimilar national VBP, slower-than-expected uptake of new-drug sales, delayed BD progress, and delays in major R&D programs.

• CSPC / 1093 HK

  covered name, Buy rating

  Strengths

  Commercial sales are expected to resume double-digit growth from 2027; pipeline and BD progress such as EGFR-ADC may provide upside.

  Weaknesses

  Revenue and net profit declined in 2025, with NBP, DMS, and JYL under NRDL price pressure, and delayed BD revenue recognition.

  Comparison

  Target price was raised from HKD11.00 to HKD11.90, implying about 32% upside.

  Risks

  Biosimilar VBP, slower-than-expected NBP generic launch, weaker-than-expected new-drug ramp and hospital adoption, R&D delays, and stronger-than-expected anti-corruption impact.

• Livzon Pharmaceutical A/H / 000513 CH / 1513 HK

  covered name, Hold rating

  Strengths

  2025 revenue rose 1.8% y/y and was broadly in line with expectations; there is upside risk if generic competition eases or R&D milestones accelerate.

  Weaknesses

  Limited upside runway from existing products; Ilaprazole generics and moderate PPI price cuts create pressure, while sales spending was higher than expected.

  Comparison

  A-share target was reduced from RMB39.50 to RMB37.00, and H-share target from HKD33.70 to HKD30.80.

  Risks

  Slower-than-expected ramp of Leuprolide microspheres and Ilaprazole, delays in R&D or generic approvals, operating cost ratio expansion, and adverse effects from tighter medical insurance cost controls.

• Fosun Pharma A/H / 600196 CH / 2196 HK

  covered name, Hold rating

  Strengths

  Higher BD income and a later-than-expected VBP timing led to upward revisions in revenue forecasts; innovation transformation investments have strengthened.

  Weaknesses

  Higher R&D spend; biosimilar VBP may still affect sustainable growth; H-share liquidity is flagged as a cautionary item in the report.

  Comparison

  A-share target was cut from RMB30.00 to RMB28.50, and H-share target from HKD24.30 to HKD22.50.

  Risks

  Impact of biosimilar and other-drug VBP on earnings, slower-than-expected ramp of new-drug sales, Fosun Henlius and Gland commercialization or R&D progress, and stronger-than-expected anti-corruption policy effects.

• Chinese pharmaceutical sector

  sector coverage and relative allocation view

  Strengths

  Innovative-drug volume expansion, ASCO/AACR/ESMO data readouts, BD licensing deals, and globalization of early-stage pipelines are key catalysts.

  Weaknesses

  Medical insurance cost containment, NRDL price pressure, generic competition, and uncertainty in BD revenue recognition suppress near-term earnings visibility.

  Comparison

  The sector is valued at about 16x 2026E PE, implying roughly 17% profit growth; the report views valuation as still attractive.

  Risks

  Earlier-than-expected biosimilar VBP, more severe generic price cuts, tighter medical insurance cost controls, and geopolitical risk.

Key data

• Expected average revenue growth for covered peers in 2026about 11%Supported by more new innovative-drug launches and volume ramp-up, and BD opportunities in early-stage pipelines.
• Sector valuationabout 16x 2026e PEThe report sees this as corresponding to around 17% profit growth, and still attractive.
• SBP 2025 revenueRMB31.8bn, up 10.3% y/yAbout 6% below HSBC forecast, mainly due to delayed recognition of the USD300m LaNova PD1-VEGF upfront payment.
• SBP target price and ratingBuy, HKD9.00Reduced from HKD9.60 to HKD9.00, implying about 56% upside versus current share price.
• CSPC 2025 revenueRMB26.0bn, down 10.4% y/yAbout 5% below HSBC forecast, mainly due to delayed BD revenue recognition; product sales of RMB24.2bn, down 16.5% y/y.
• CSPC target price and ratingBuy, HKD11.90Raised from HKD11.00 to HKD11.90, implying about 32% upside.
• Livzon 2025 revenueRMB12.0bn, up 1.8% y/yRevenue in line with expectations, while net profit was 7% below forecast mainly due to higher-than-expected sales spending from new-drug launches.
• Livzon A/H target price and ratingHold, RMB37.00/HKD30.80Both A-share and H-share target prices were cut due to fierce competition in 2026-2027 and limited catalysts.
• Fosun Pharma A/H target price and ratingHold, RMB28.50/HKD22.50Both A-share and H-share targets were lowered; the report remains cautious about the impact of biosimilar VBP on sustainable growth.

Impact & implications

For investors, a key theme in 2026 is no longer whether near-term earnings hit expectations, but whether innovative-drug sales can continue to expand, whether data from meetings like ASCO strengthens global competitiveness, and whether BD income and licensing deals can improve margins and valuation. Buy-rated names are concentrated among companies with stronger innovation transformation, pipeline readouts, and BD capability, while Hold-rated names face more constraints from generic competition, VBP, operating cost ratios, or limited catalysts.

Risks

• Earlier-than-expected biosimilar VBP, which may compress prices and margins.
• More severe generic-drug price cuts, especially in older products and competitive categories such as PPIs.
• Tighter domestic medical insurance cost-control policies may limit product sales growth and hospital-level ramping.
• BD revenue recognition timing uncertainty may cause short-term volatility in revenue and profit.
• Delays in major R&D programs or clinical-data readouts could weaken valuation catalysts.
• New-drug launches, hospital entry, and sales ramping slower than expected.
• Anti-corruption policies may have a stronger negative impact on sales ramp than expected.
• Geopolitical risk could affect overseas collaboration, BD transactions, and globalization progress.

What to watch

• Clinical data readouts from 2026 meetings such as ASCO, AACR, and ESMO, including ADC, GLP1/GIP, PD1/VEGF, and PDL1 ADC.
• Whether SBP confirms the USD300m BD upfront payment in 2026 and delivers synergy after LaNova consolidation.
• Progress on CSPC EGFR-ADC SYS6010 licensing and key pipeline clinical advancement.
• The launch pace and sales ramp of innovative drugs at Hansoh, Hengrui, CSPC, and SBP.
• NRDL price pressure, the pace of VBP expansion, and changes in biosimilar procurement policy.
• Livzon's Ilaprazole generic competition, Leuprolide microsphere ramp, and operating cost ratio changes.
• Fosun Pharma's innovation transformation spending, BD income, new-drug ramp, and H-share liquidity dynamics.