Jiangsu Hengrui Pharmaceuticals and BMS reach 13-project global collaboration, UBS reiterates Buy rating

Overview

This report focuses on the global collaboration announced on 2026-05-12 between Jiangsu Hengrui Pharmaceuticals and BMS. The transaction involves 13 preclinical projects; Hengrui has obtained exclusive rights in Mainland China, Hong Kong, and Macau for BMS projects, while BMS has acquired global rights outside those regions. UBS views this as an important milestone in building Hengrui's global capability.

Core views

UBS's core view is: first, the size and number of projects in the transaction validate the value of Hengrui's innovative drug R&D platform; second, the Co-Co joint development and co-commercialization model helps Hengrui leverage multinational resources to improve global R&D and commercialization; third, Hengrui's strength in Chinese clinical operations and patient access can improve development efficiency for the covered projects and help ease market concerns that the U.S. may restrict use of Chinese clinical data for IND filings; and fourth, UBS maintains a Buy rating and a target price of HK$97.40.

Analysis framework

The report assesses Hengrui's H-share investment value by combining transaction terms, project composition, global rights structure, payment structure, and R&D/commercialization role allocation, together with DCF valuation and H/A premium assumptions.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  UBS applies DCF valuation to Hengrui A shares and derives H-share valuation on that basis.

• Valuation methodsH/A premium

  H-share premium over A-shares

  UBS applies a 15% H/A premium on top of the A-share valuation to arrive at an H-share target price of HK$97.40 for Hengrui.

• RatingForecast Stock Return

  Forecast stock return

  UBS defines forecast stock return as the sum of expected 12-month stock price appreciation and expected dividend yield and uses it to judge the rating.

Asset mapping & comparison

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

• Jiangsu Hengrui Pharmaceuticals H-share 1276.HK

  Primary coverage asset

  Strengths

  A broad innovative drug pipeline, with the R&D platform and China clinical operations resources receiving validation from BMS; large global collaboration scale.

  Weaknesses

  Valuation depends on R&D progress, clinical data delivery, and global commercialization capability buildout.

  Comparison

  Compared with A-share 600276.SS, UBS applies a 15% H/A premium assumption when valuing H-shares.

  Risks

  Drug price cuts, volume-based procurement or medical reimbursement pressure, intensified competition, tighter policy and regulatory oversight, and key innovative products falling short on clinical outcomes.

• Jiangsu Hengrui Pharmaceuticals A-share 600276.SS

  Valuation benchmark asset

  Strengths

  UBS uses A-share DCF valuation as the base for H-share valuation.

  Weaknesses

  A-share target price and rating history has had No Rating periods; valuation and rating may change with assumption updates.

  Comparison

  H-share target price is converted from A-share valuation and adjusted for H/A premium.

  Risks

  Faces similar risks from pricing, competition, regulation, and clinical development as in the wider pharmaceutical sector.

Key data

• Target priceHK$97.4012-month target price for 1276.HK from UBS.
• Current priceHK$66.05Local close on 2026-05-11.
• 12-month ratingBuyUBS reiterates Buy rating.
• Forecast price upside47.5%Calculated based on target price versus current price.
• Forecast total return47.9%Includes a forecast dividend yield of 0.4%.
• Max upfront and anniversary paymentsUS$950mIncludes US$600m upfront, US$175m initial anniversary payment, and a conditional second anniversary payment of US$175m in 2028.
• Potential total deal valueUS$15.2bnIncludes milestone payments, excluding tiered sales royalties.
• Expected transaction close3Q26Both parties expect the transaction to close in the third quarter of 2026.
• Potential catalysts2026-05-21Multiple ASCO abstracts and details expected.

Impact & implications

If successfully implemented, Hengrui could not only receive substantial upfront and potential milestone payments, but also strengthen global R&D and commercialization capabilities through joint development with BMS, including target selection, TPP definition, molecule design, and validation collaboration. This transaction may also boost market confidence in the global licensing capability of China's innovative drug platform.

Risks

• Pricing pressure from competition, volume-based procurement, or inclusion in the reimbursement formulary proving greater than expected.
• Competition from multinational pharma, established biopharma, specialty companies, and other R&D institutions intensifies.
• Policy environment with tighter rules, regulation, and inspections than expected.
• R&D readouts or clinical trial outcomes for key innovative products fall short, affecting approvals or market share.
• The pace of transaction completion, revenue recognition, and project advancement falls behind expectations.

What to watch

• Whether the collaboration with BMS closes on schedule in 3Q26.
• The payment timing of the US$950m related consideration and its alignment with development milestones.
• Target selection, TPP setup, and subsequent clinical progression for co-developed projects.
• Release of multiple ASCO abstract details on 2026-05-21.
• Policy changes in the United States regarding use of Chinese clinical data for IND submissions.
• Progress on Hengrui's implementation of global commercialization collaborations.