Pharma Company Research: Optimism Surrounding BD–Driven Global Expansion, with ASCO as an Upcoming Catalyst

Overview

This research report summarizes Morgan Stanley’s key findings from its coverage of three leading Chinese pharmaceutical companies—Hengrui Medicine, Hansoh Pharmaceutical, and Henlius. The central conclusion is that, despite the short-term adjustment pressures stemming from the new sales representative management policies, these measures are expected to have only a limited impact on top-tier pharmaceutical firms that possess innovative drugs with clear clinical value and well-established, compliant operating frameworks. Meanwhile, licensing‑in/out (BD) discussions between Chinese pharmaceutical companies and global biopharmaceutical players remain robust, boding well for future growth. The upcoming ASCO conference is viewed as a significant near‑term catalyst.

Core views

Policy impacts are diverging, with leading pharmaceutical companies demonstrating greater resilience. Survey feedback indicates that new requirements for sales representative registration and appointment may prolong the transition period at certain lower-tier hospitals, thereby affecting sales of some traditional drugs. However, for innovative medicines with clear clinical value and for large pharmaceutical firms—such as Hengrui—that have established robust internal control systems, the impact is relatively limited. Hengrui’s management even views this policy change as a long-term positive, believing it will further differentiate drugs with proven clinical utility and benefit biopharmaceutical companies equipped with comprehensive, compliant sales‑management capabilities. Business development (BD) overseas continues to deepen, bolstering global recognition. Hengrui Medicine and Bristol‑Myers Squibb (BMS)’s collaboration is seen by management as evidence of growing international acknowledgment of the breadth and quality of China’s biopharmaceutical innovation pipeline. The scope of cooperation has expanded from specific assets to broader platform technologies and joint development of next‑generation assets. Despite proposed U.S. restrictions on using Chinese data to support Investigational New Drug (IND) submissions, research reports suggest that, under flexible global development strategies, such measures are unlikely to materially affect BD prospects. Hansoh Pharmaceutical has also reaffirmed its target of closing at least one new BD deal by 2026. Key company pipeline updates and catalysts: Hengrui Medicine: Phase II data for HRS‑1893, a myosin inhibitor, presented at ESC 2026 for non‑obstructive hypertrophic cardiomyopathy (nHCM), showed significant symptom improvement in the high‑dose group with a favorable safety profile. Its RAS inhibitor strategy aims to minimize rash‑related adverse events through differentiated tissue distribution. Hansoh Pharmaceutical: Reaffirms its guidance of double-digit growth in both product sales and BD revenue by 2026. Ameile’s EU approval underscores the value of China‑originated proprietary assets. In the oncology space, HS‑20093, a B7H3 ADC, is expected to report Phase III results in 2026; in the non‑oncology segment, a GLP‑1/GIP injectable is slated for approval in 2027, while an oral IL‑23 peptide demonstrated strong Phase I data in psoriasis trials. Henlius: With the ASCO conference as its recent focus, the company will update data on HLX43, a PD‑L1 ADC, in non‑small cell lung cancer (NSCLC). Additionally, sotorasib, a PD‑1 inhibitor, is anticipated to receive Chinese approval for perioperative gastric cancer indications before the end of June, positioning it to participate in upcoming national reimbursement negotiations. The company aims to generate $1 billion in overseas biosimilar revenues by 2030, driven primarily by the U.S. and Japanese markets.

Analysis framework

Institutional investors gather first-hand insights from company management on policy shifts, business outlooks, and R&D progress through on-site field visits (Trip Takeaways). The analysis is structured around three key dimensions: “policy impact assessment,” “international BD capabilities,” and “clinical data for core product pipelines.” First, the analysis evaluates the differentiated effects of new sales policies across hospital tiers and between innovative drugs and traditional therapeutics, gauging their actual impact on financial performance. Second, by examining specific BD partnerships—such as Hengrui–BMS—and global regulatory developments—like U.S. IND‑related requirements—the study assesses the sustainability of Chinese pharmaceutical companies’ international expansion and identifies potential hurdles. Finally, in light of upcoming academic conferences (e.g., ASCO, ADA), the report maps out the timelines for key clinical data releases across companies, pinpointing near-term catalysts for stock price movements.

Methodology notes

• Event-Driven Trading and Behavioral FinanceEvent-driven analysis

  Academic conferences serve as catalysts.

  Research reports view the release of abstracts and the presentation of data at top-tier medical conferences such as ASCO as short-term catalysts for stock prices. This is because the unveiling of pivotal clinical data often directly validates a drug’s efficacy, reshapes market expectations, and thereby triggers volatility in share prices.

• Industry/ Sector Analysis FrameworkSupply-and-Demand Framework

  The impact of policies on compliance costs at the supply side

  This analysis examines how the new guidelines for managing sales representatives increase pharmaceutical companies’ compliance costs and administrative complexity. The research report notes that this supply-side tightening of compliance thresholds favors leading firms with robust, well‑established compliance frameworks—thereby optimizing supply—while potentially weeding out or discouraging smaller, non‑compliant players and traditional drug‑sales models.

Asset mapping & comparison

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

• Hengrui Medicine (600276.SS / 1276.HK)

  Benefiting from the deepening of BD collaborations and the ramp-up in sales of innovative drugs, the company demonstrates strong policy adaptability.

  Strengths

  Collaboration with BMS underscores global recognition; HRS‑1893 data are highly promising; AI‑driven drug discovery; robust compliance framework.

  Risks

  Policy adjustments at lower-tier hospitals may impact the sales of certain traditional pharmaceuticals.

• Hansoh Pharmaceutical (3692.HK)

  Earnings growth is highly certain, with a robust pipeline of ADC and metabolic programs.

  Strengths

  Double-digit growth guidance for 2026; Ameile receives EU approval; ADC development targeting B7H3/B7H4 is progressing smoothly; positive data on GLP-1/GIP and oral IL-23.

  Risks

  Sales of generic drugs have experienced a slight decline due to the impact of centralized procurement.

• Henlius (2696.HK)

  Globalization strategy is gaining momentum, and ASCO data are strongly fueling market expectations.

  Strengths

  HLX43 NSCLC data update; sotorasib’s gastric cancer indication is poised for approval; overseas biosimilars boast a clear monetization model (with high royalty rates).

  Risks

  Anhui’s lead in the centralized procurement of biosimilars remains on an uncertain timeline, while access for lower-tier hospitals remains constrained.

Key data

• Hengrui HRS-1893 nHCM Phase II DataKCCQ-CSS improved by 5.5 points, and pVO2 improved by 0.9 mL/kg/min.High-dose group (20–40–60 mg) vs. placebo: 52% of patients experienced a symptom improvement of ≥20 points.
• Hansoh Pharmaceutical’s 2026 Generic Drug Sales ForecastApproximately RMB 2.1–2.2 billionIt is expected to decline slightly before stabilizing at around RMB 2 billion in off-cycle years.
• Huiling Hansoh’s Overseas Biosimilar Revenue TargetUS$1 billionThe target year is 2030, primarily driven by the U.S. and Japanese markets.
• Domestic peak sales forecast for srelumabRMB 2–3 billionManagement’s estimated domestic peak sales revenue

Impact & implications

The research report argues that China’s leading pharmaceutical companies are transitioning from a sales‑driven model to one anchored in innovation and global expansion. While the new policies may entail short‑term challenges, they are expected to bolster industry consolidation and reinforce the competitive advantages of compliant, market‑leading firms over the long term. The deepening of BD partnerships underscores the rising position of Chinese innovative drug assets within the global value chain. For investors, the focus should be on companies that boast differentiated clinical data, robust BD execution capabilities, and well‑stocked late‑stage pipelines, with particular attention to stocks that could benefit from data catalysts during key conferences such as ASCO.

Risks

• The implementation and timing of adjustments to the new sales representative policy at lower-tier hospitals have exceeded expectations, thereby impacting traditional drug sales.
• Changes in U.S. regulatory policies, such as restrictions on IND data, could have unintended implications for global development strategies that rely heavily on Chinese data.
• There remains uncertainty regarding the timing of the implementation of the centralized procurement policy for biosimilars and the extent of price reductions.
• Clinical trial data fall short of expectations, or the competitive landscape deteriorates.

What to watch

• During the ASCO Conference (May 29–June 2), companies released key summaries and late-breaking abstracts (LBAs).
• Updated data related to the ADA Conference (June 5–8).
• The approval of Hansoh Pharma’s sotorasib for the perioperative treatment of gastric cancer in China, along with progress in national medical insurance negotiations.
• The release date of the Phase III clinical data for Hansoh Pharmaceutical’s HS-20093 (a B7H3 ADC) in China.
• The specific implementation timetable for Anhui’s lead initiative on centralized procurement of biosimilars.