Overall weakness in 2Q26 for multinational pharma companies' China business, with marginal easing of policy pressure

Overview

This report is Nomura's interpretation of the China business in the June-quarter results of multinational healthcare companies. The overall conclusion is that the China business remained weak in 2Q26, with pharmaceutical VBP, healthcare pricing reform, pricing pressure in diagnostics, slower equipment tendering, and weak demand from government/academic customers still affecting growth. However, divergence emerged across subsegments: innovative drugs and NRDL-included products performed relatively well, demand from biotechnology and pharmaceutical customers remained relatively resilient, CDMO business grew strongly, and some companies expect policy headwinds to ease further in 2H26 or 3Q/4Q26E.

Core views

The report's core views include: first, the operating environment for multinational healthcare companies in China remains challenging, with AstraZeneca, Roche, and Abbott still disclosing VBP or pricing reform pressure; second, the policy shock is not worsening across the board, as management at Roche, Danaher, and Abbott all mentioned that pressure may ease or declines may narrow in the second half; third, innovative products can still drive structural growth—for example, Novartis's Leqvio benefited from NRDL inclusion, while the ADC and oncology pipeline progress disclosed by GSK and AstraZeneca also strengthens the medium- to long-term outlook; fourth, demand related to life science tools, CDMO, and biotechnology is relatively better than demand from government and academic customers; fifth, the medical equipment sector still faces uncertainty from tendering, domestic substitution, and governance actions.

Analysis framework

The report adopts a cross-company comparative approach based on earnings calls and quarterly financial data, focusing on sales growth in China, policy impact, business segment performance, management outlook for 2H26E or FY26E, and demand changes across subsegments such as innovative drugs, diagnostics, life science tools, CDMO, and surgical robots.

Methodology notes

• Earnings interpretationCross-company quarterly earnings read-through

  Inferring the health of China's healthcare industry through quarterly disclosures by multiple multinational healthcare companies.

  Rather than providing valuation or rating for a single company, the report compares the 2Q26 or 1H26 disclosures of GSK, AstraZeneca, Roche, Thermo Fisher, Lonza, Intuitive Surgical, Novartis, Danaher, and Abbott horizontally to distill demand, policy, and product trends in China's healthcare market.

• Policy impact analysisTracking the impact of VBP and healthcare pricing reform

  Observing the impact of centralized procurement, pricing reform, and tender centralization on sales of pharmaceuticals, diagnostics, and equipment.

  AstraZeneca, Roche, and Abbott all mentioned that their China business was affected by VBP or healthcare pricing reform; Danaher and Abbott believe subsequent policy pressure may ease marginally; Intuitive Surgical discussed the difference between centralized tendering for surgical equipment and traditional VBP.

• Product lifecycle analysisNRDL inclusion and innovative pipeline catalysts

  Assessing the contribution of reimbursement list inclusion, new approvals, and clinical data to sales growth and medium- to long-term competitiveness.

  Novartis's Leqvio ramped up quickly after NRDL inclusion, while AstraZeneca and GSK disclosed ADC and oncology pipeline progress, indicating that innovative products may still offset part of the pressure from mature products or pricing.

Asset mapping & comparison

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

• GSK (GSK LN)

  Reference name for multinational pharma companies' China business and innovative drug pipeline

  Strengths

  Nucala international sales grew 18%, with China providing support in severe asthma, nasal polyps, and COPD indications; the B7-H3 and B7-H4 ADC pipelines licensed from Hansoh have multiple late-stage clinical plans.

  Weaknesses

  The report does not provide total China sales growth or a Nomura rating.

  Comparison

  Compared with companies facing greater pressure in diagnostics and mature pharmaceuticals, GSK's disclosure focuses more on innovative pipelines and indication expansion.

  Risks

  There is uncertainty around clinical data, regulatory approval, commercialization progress, and the China reimbursement environment.

• AstraZeneca (AZN LN)

  Representative of policy pressure and innovative pipeline among multinational pharma companies in China

  Strengths

  Management remains positive on FY26E growth in China, based on additions to the NRDL and new regulatory approvals; sonesitatug vedotin delivered positive OS data in phase III for advanced gastric cancer.

  Weaknesses

  China sales in 2Q26 fell 7% YoY, or 13% excluding FX impact, and continued to be affected by VBP.

  Comparison

  This contrasts with Novartis's sales growth in China, showing significant differences in product mix under the same policy environment.

  Risks

  Slowing EGFRm TKI market, intensifying competition, continued VBP impact, and weaker-than-expected ramp-up of innovative drugs.

• Roche (ROG SW)

  Representative of pressure in China's pharmaceutical and diagnostics businesses

  Strengths

  Management expects the impact of pricing reform on the diagnostics business to ease in 2H26E.

  Weaknesses

  China pharmaceutical sales fell 33% YoY and diagnostics sales fell 15% YoY, indicating clear near-term pressure.

  Comparison

  Its China business performed weaker than Danaher and Thermo Fisher, especially with more pronounced declines on the pharmaceutical side.

  Risks

  Continued healthcare pricing reform, weaker-than-expected recovery in diagnostics demand, and competitive pressure in the pharmaceutical portfolio.

• Thermo Fisher (TMO US)

  Reference name for observing demand for life science tools and laboratory products

  Strengths

  2Q26 sales and profit grew 10% and 7% YoY, respectively; China sales returned to low-single-digit growth, with robust demand from pharmaceutical and biotechnology customers.

  Weaknesses

  Demand from academic and government customers remains weak.

  Comparison

  Similar to Danaher, it shows that demand from biotechnology and pharmaceutical customers is stronger than demand from the public sector.

  Risks

  China research budgets, government procurement, and macro demand fluctuations may drag on growth.

• Lonza (LONN SW)

  Reference name for CDMO industry conditions and outsourced manufacturing demand

  Strengths

  1H26 sales rose 16% YoY and net profit rose 40% YoY, with strong growth across all three major CDMO divisions, and it also raised its core EBITDA margin outlook.

  Weaknesses

  The report does not disclose detailed standalone China sales data.

  Comparison

  Compared with diagnostics and pharmaceutical companies affected by pricing pressure from China's policies, Lonza's performance is more driven by global CDMO demand.

  Risks

  Order cycles, capacity utilization, FX, and changes in outsourced biopharma demand.

• Intuitive Surgical (ISRG US)

  Reference name for China's high-end medical equipment and surgical robot market

  Strengths

  2Q26 sales and profit grew 19% and 24% YoY, respectively, and China Da Vinci procedure volume growth was slightly above the global average.

  Weaknesses

  Tendering activity in China was weak, competition from domestic robots increased, and the company was affected by governance actions.

  Comparison

  Unlike pharmaceutical VBP, management believes centralized tendering that surgical robots may be included in is not equivalent to traditional VBP.

  Risks

  Centralized tendering, domestic substitution, hospital procurement cadence, and uncertainty around policy governance.

• Novartis (NOVN SW)

  Reference name for NRDL-driven volume growth and innovative drug growth

  Strengths

  China sales grew 12% YoY to USD1.2bn, and Leqvio's market share doubled after NRDL inclusion versus before inclusion.

  Weaknesses

  Global net profit fell 19% YoY, and Cosentyx sales came under pressure amid intensifying competition.

  Comparison

  Under the same China market environment, Novartis performed significantly better than AstraZeneca and Roche, reflecting differences in product mix.

  Risks

  Intensifying competition, sustainability of reimbursement-driven volume growth, decline in mature products, and profit pressure.

• Danaher (DHR US)

  Reference name for observing recovery in biotechnology tools and diagnostics

  Strengths

  China revenue maintained mid-single-digit growth, the biotechnology business remained strong, and the diagnostics business improved sequentially due to stable pricing and better volumes.

  Weaknesses

  The diagnostics business still declined modestly.

  Comparison

  Together with Thermo Fisher, it demonstrates the structural resilience of demand for life science tools.

  Risks

  Policy pressure easing less than expected, volatility in biotechnology capital spending, and diagnostics pricing pressure.

• Abbott (ABT US)

  Reference name for VBP pressure in the diagnostics business

  Strengths

  Global 2Q26 sales rose 13% YoY, and adjusted profit rose 3.5% YoY.

  Weaknesses

  China's diagnostics business is still affected by VBP, and management expects it to remain down in 2H26E.

  Comparison

  Similar to Roche's diagnostics business, but Abbott expects the decline in the second half to be around mid-single digits, suggesting pressure may be easing versus earlier periods.

  Risks

  Continued VBP, cuts in diagnostics pricing, and insufficient improvement in volumes.

Key data

• GSK 2Q26 sales/net profitGBP8.4bn / GBP2.0bn, up 5% / 8% YoYNucala international sales grew 18% YoY, partly supported by its use in severe asthma, nasal polyps, and COPD in China.
• AstraZeneca 2Q26 revenue/profitUSD15.4bn / USD2.51bn, up 6% / 2% YoYChina sales fell 7% YoY to USD1.59bn, or down 13% excluding FX impact; China accounted for about 10% of global sales.
• Roche China business 2Q26Pharmaceuticals CHF522mn, down 33% YoY; diagnostics CHF390mn, down 15% YoYThe diagnostics business continues to be dragged down by healthcare pricing reform in China, with management expecting the impact to ease in 2H26E.
• Thermo Fisher 2Q26Sales USD12bn, up 10% YoY; adjusted profit USD1.7bn, up 7% YoYChina sales returned to low-single-digit growth, with strong demand from pharmaceutical and biotechnology customers and weak demand from academic and government customers.
• Lonza 1H26Sales CHF3.4bn, up 16% YoY; net profit CHF595mn, up 40% YoYIntegrated biologics, advanced synthesis, and specialized modalities businesses grew 10%, 28%, and 23% YoY, respectively.
• Intuitive Surgical 2Q26Sales USD2.89bn, up 19% YoY; profit USD818mn, up 24% YoYDa Vinci and Ion procedure volumes grew about 15% and 36%, respectively, with China Da Vinci procedure volume growth slightly above the global average.
• Novartis 2Q26Sales USD14.4bn, up 1% YoY; net profit USD3.3bn, down 19% YoYChina sales rose 12% YoY to USD1.2bn, with Leqvio's ramp-up after NRDL inclusion offsetting competitive pressure on Cosentyx.
• Danaher 2Q26Sales USD6.3bn, up 5.5% YoY; net profit USD870mn, up 57% YoYChina revenue maintained mid-single-digit growth, biotechnology remained strong, and diagnostics declines were modest with sequential improvement.
• Abbott 2Q26Sales USD12.6bn, up 13% YoY; adjusted profit USD2.3bn, up 3.5% YoYThe diagnostics business continues to be affected by VBP, with management expecting China diagnostics sales to remain down in 2H26E, but by roughly mid-single digits.

Impact & implications

For investment in China's healthcare sector, the report suggests the industry is neither undergoing a simple recovery nor a straightforward deterioration, but rather a coexistence of policy pressure and structural opportunities. Mature pharmaceuticals, diagnostics, and some equipment still face pricing and procurement pressure; however, NRDL-included products, innovative drug pipelines, ADCs, CDMO, life science tools, and businesses serving pharmaceutical/biotechnology customers show relative resilience. Investors need to distinguish between legacy businesses heavily affected by policy-driven price cuts and new growth drivers supported by innovation, volume ramp-up, or overseas orders.

Risks

• China VBP, healthcare pricing reform, and centralized tendering pressure may persist longer than management expects.
• Recovery in demand for diagnostics, mature pharmaceuticals, and high-end equipment may fall short of expectations.
• Domestic substitution and local competition may compress multinational companies' market share and pricing.
• Volume growth after NRDL inclusion may be offset by price cuts, competition, or limits on patient access.
• Innovative drugs and ADC pipelines still face uncertainty in clinical development, regulatory approval, and commercialization.
• Weak demand from academic and government customers may continue to affect life science tools companies.

What to watch

• Whether the impact of healthcare pricing reform and VBP in China eases in 2H26E as management expects.
• The boost to China sales from newly added NRDL products and new regulatory approvals for companies such as AstraZeneca and Novartis.
• The market share and clinical progress in China of Leqvio, Nucala, osimertinib, and ADC pipelines.
• Pricing stability, volume recovery, and sequential improvement trends in the diagnostics businesses of Roche, Danaher, and Abbott.
• Whether order strength from pharmaceutical and biotechnology customers for Thermo Fisher and Danaher continues.
• Whether surgical robots will be included in centralized tendering, and how that mechanism will affect the competitive landscape for Intuitive Surgical and domestic manufacturers.