China healthcare and pharmaceuticals sector under the 15th Five-Year Plan Report Interpretation

Overview

The report reviews China's newly released 15th Five-Year Plan for healthcare and pharmaceuticals. Nomura views its emphasis on innovation and globalization as supportive for the sector, particularly innovative drug developers and contract research, development and manufacturing organizations.

Core views

On 18 September 2026 before the market opened, ten Chinese regulatory bodies—including MIIT, NDRC, NMPA and NHSA—published an 18-page plan for the healthcare and pharmaceutical sector covering 2026-30. The document reiterates the pharmaceutical industry's designation as an emerging pillar industry. Nomura regards this elevation as encouraging and argues that, compared with the 14th Five-Year Plan, innovation and globalization now occupy a pivotal position, reflecting the sector's recent development and improved global competitiveness. The plan sets several quantitative ambitions. The average R&D-to-sales ratio for listed pharmaceutical companies should exceed 10%, compared with roughly 8% currently by Nomura's estimate. First-in-class drugs should account for more than 25% of global share, versus a current level likely in the teens. Innovative-drug sales should grow by more than 20%, substantially faster than the broad sector's 8% growth under the 14th Five-Year Plan; the new plan does not state a comparable broad-sector growth target. It also aims for more than five drugs to achieve global sales above USD1bn, compared with only two to three currently. Together, these targets imply greater research intensity, a larger global role for Chinese-origin innovation and more products reaching blockbuster scale. The plan gives priority to a broad set of advanced therapies and enabling technologies. These include siRNA/ASO, PROTACs and molecular glues, PDCs, radioligand conjugates, bispecific and multispecific therapies, ADC/RDC/AOC platforms, CAR-T therapies including in-vivo and universal approaches, iPSC, AAV, LNP and mRNA vaccines. Priority medical-device and technology areas include degradable stents, single-cell sequencing, AI pathology, surgical robots, closed-loop insulin pumps, brain-computer-interface exoskeletons, AI molecular design and DNA digital storage. Nomura interprets this breadth as a policy foundation for both innovative pharmaceutical development and the research and manufacturing service ecosystem. Nomura expects the policy's benefits to become more tangible as investors, local governments and other stakeholders act and as more detailed policies are released. It specifically identifies innovative pharmaceutical companies Innovent and Kelun Biotech, and CRDMOs Wuxi Apptec and Wuxi XDC, as likely beneficiaries. All four are rated Buy at the stock level, while the sector rating is N/A. The report's valuation appendix provides security-level context. Innovent was priced at HKD96.15 on 17 September 2026 against a DCF target of HKD123.17, discounted to end-2026 using a 10.3% WACC and 4.0% terminal growth. Wuxi XDC was at HKD76.50 against an HKD82.60 DCF target using a 10.3% WACC and 4.5% terminal growth. Wuxi Apptec's Hong Kong shares were at HKD198.00 against an HKD209.99 target, while its A-shares were at CNY160.49 against a CNY191.09 target; both valuations use a 10.1% WACC and 3.5% terminal growth. Kelun Biotech was at HKD461.40 against an HKD612.66 DCF target using a 10.8% WACC and 4.5% terminal growth. The Hang Seng Index is the stated benchmark for the Hong Kong securities, while SHSZ300 is the benchmark for Wuxi Apptec's A-shares. The disclosed downside risks are company-specific. For Innovent, Nomura cites intensifying GLP-1 competition, volume-based procurement for biosimilars and an IBI363 clinical-development setback. Wuxi XDC faces geopolitical tension, failure to obtain commercial-stage programs, declining attractiveness of the ADC modality and rising competition. Wuxi Apptec faces weaker growth from greater competition or lower demand, as well as geopolitical risk related to its inclusion on the U.S. Department of Defense's updated 1260H list, against which the company filed a lawsuit. Kelun Biotech's risks are a slower-than-expected sales ramp for sac-TMT and other drugs and unsatisfactory clinical progress.

Analysis framework

Nomura first identifies the policy event and compares the 15th Five-Year Plan's positioning with the prior plan. It then measures the ambition of the new plan by comparing its quantitative goals with current estimated levels or 14th-plan outcomes, reviews the prioritized technologies, and maps the expected policy transmission to innovative pharmaceutical companies and CRDMOs. The appendix supplements this industry view with DCF-based targets and company-specific downside risks.

Methodology notes

• Event-Driven and Behavioral FinanceEvent-driven analysis

  Policy-event analysis

  The report treats the release of the 2026-30 plan as the initiating event, compares it with the previous five-year plan and assesses which parts of the healthcare sector may benefit as implementation measures follow.

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  Nomura derives the disclosed company target prices by discounting forecast cash flows and applying company-specific WACC and terminal-growth assumptions. Innovent's model is discounted to end-2026.

• Other

  Policy target gap analysis

  The report compares the plan's goals with current estimated levels or prior-plan outcomes, including R&D intensity, global first-in-class share, innovative-drug growth and the number of USD1bn drugs.

Asset mapping & comparison

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

• Innovent (1801 HK)

  Named as a Buy-rated innovative pharmaceutical company expected to benefit from the plan; HKD123.17 DCF target versus HKD96.15 on 17-Sep-2026.

  Strengths

  Exposure to the innovative pharmaceutical priorities emphasized by the plan.

  Comparison

  The target uses a 10.3% WACC and 4.0% terminal growth and is discounted to end-2026.

  Risks

  Intensifying GLP-1 competition, volume-based procurement for biosimilars and an IBI363 clinical-development setback.

• Wuxi XDC (2268 HK)

  Named as a Buy-rated CRDMO expected to benefit from the plan; HKD82.60 DCF target versus HKD76.50 on 17-Sep-2026.

  Strengths

  Exposure to the research, development and manufacturing services that support innovative therapies.

  Comparison

  The target uses a 10.3% WACC and 4.5% terminal growth.

  Risks

  Geopolitical tension, failure to obtain commercial-stage programs, declining attractiveness of the ADC modality and rising competition.

• Wuxi Apptec (2359 HK / 603259 CH)

  Named as a Buy-rated CRDMO expected to benefit from the plan; targets are HKD209.99 and CNY191.09 versus respective prices of HKD198.00 and CNY160.49 on 17-Sep-2026.

  Strengths

  Exposure to the CRDMO ecosystem supporting pharmaceutical innovation and globalization.

  Comparison

  Both targets use a 10.1% WACC and 3.5% terminal growth; the Hong Kong benchmark is the Hang Seng Index and the A-share benchmark is SHSZ300.

  Risks

  Growth could slow because of greater competition or lower demand; geopolitical risk includes the company's inclusion on the U.S. Department of Defense's updated 1260H list, which it challenged through a lawsuit.

• Kelun Biotech (6990 HK)

  Named as a Buy-rated innovative pharmaceutical company expected to benefit from the plan; HKD612.66 DCF target versus HKD461.40 on 17-Sep-2026.

  Strengths

  Exposure to innovative drug development, including modalities prioritized by the plan.

  Comparison

  The target uses a 10.8% WACC and 4.5% terminal growth.

  Risks

  Slower-than-expected sales ramp-up for sac-TMT and other drugs, and unsatisfactory clinical progress.

Key data

• Plan release18 September 2026Ten Chinese regulatory bodies released an 18-page plan before market open.
• Plan period2026-30The 15th Five-Year Plan period.
• Listed pharmaceutical R&D-to-sales ratioAbove 10%Target average, versus about 8% currently by Nomura's estimate.
• First-in-class drug global shareMore than 25%Target, versus a current level likely in the teens.
• Innovative-drug sales growthAbove 20%Target, versus 8% growth for the broad sector under the 14th Five-Year Plan.
• Drugs exceeding USD1bn in global salesMore than 5Target number, versus two to three currently.
• Innovent valuationHKD123.17 target; HKD96.15 priceBuy; price as of 17-Sep-2026; DCF with 10.3% WACC and 4.0% terminal growth, discounted to end-2026.
• Wuxi XDC valuationHKD82.60 target; HKD76.50 priceBuy; price as of 17-Sep-2026; DCF with 10.3% WACC and 4.5% terminal growth.
• Wuxi Apptec Hong Kong valuationHKD209.99 target; HKD198.00 priceBuy; price as of 17-Sep-2026; DCF with 10.1% WACC and 3.5% terminal growth.
• Wuxi Apptec A-share valuationCNY191.09 target; CNY160.49 priceBuy; price as of 17-Sep-2026; DCF with 10.1% WACC and 3.5% terminal growth.
• Kelun Biotech valuationHKD612.66 target; HKD461.40 priceBuy; price as of 17-Sep-2026; DCF with 10.8% WACC and 4.5% terminal growth.

Impact & implications

Nomura believes the plan establishes a supportive foundation for China's healthcare and pharmaceutical sector by encouraging higher research intensity, globally competitive innovation and commercialization at larger scale. The institution expects innovative drug developers and CRDMOs to be the principal beneficiaries as detailed measures are issued and stakeholders act.

Risks

• Innovent faces intensifying GLP-1 competition, volume-based procurement for biosimilars and potential setbacks in IBI363 clinical development.
• Wuxi XDC faces geopolitical tension, difficulty obtaining commercial-stage programs, reduced attractiveness of the ADC modality and rising competition.
• Wuxi Apptec faces weaker growth from greater competition or lower demand and geopolitical risk related to its inclusion on the U.S. Department of Defense's updated 1260H list.
• Kelun Biotech faces a potentially slower-than-expected sales ramp for sac-TMT and other drugs and the risk of unsatisfactory clinical progress.

What to watch

• The release of more detailed policies implementing the 2026-30 plan.
• Actions by investors, local governments and other stakeholders in response to the plan.
• Progress toward the plan's R&D intensity, first-in-class share, innovative-drug growth and global blockbuster targets.