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Deutsche Bank Markets Research

Asia

Hong Kong

Health Care

Health Care

Industry

China Healthcare

Date

14 September 2016

Industry Update

Monthly hospital Rx tracker, July 2016

Flat YoY growth in July

________________________________________________________________________________________________________________

Deutsche Bank AG/Hong Kong

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016.

Jack Hu, Ph.D

Research Analyst

(+852 ) 2203 6208

[email protected]

Linc Yiu

Research Associate

(+852 ) 2203 6248

[email protected]

Bo Yu

Research Associate

(+852 ) 2203 5928

[email protected]

Key Changes

Company Target Price Rating

1093.HK 8.00 to 8.50(HKD) -

600196.SS 19.50 to 21.10(CNY)

-

601607.SS 18.10 to 19.80(CNY)

-

600998.SS 24.50 to 26.10(CNY)

-

Source: Deutsche Bank

Companies Featured

CSPC Pharma (1093.HK),HKD7.53 Buy

Fosun Pharma (600196.SS),CNY23.19 Hold

Shanghai Pharmaceuticals (601607.SS),CNY19.94

Hold

Jointown Pharmaceuticals (600998.SS),CNY22.47

Buy

Source: Deutsche Bank

In July 2016, total hospital sales were flat YoY vs. 9%/6% growth in 1H16/2015. In June, the YoY growth was 4% vs. 14%/3% for May/April respectively. The growth of the majority of flagship drugs decelerated or even declined in July. Outperformers included Hengrui, Hualan and THDB, which grew 21%/17%/11% respectively, while FDZJ and Fosun underperformed with YoY growth of -8%/-4% during the same period. We remind investors to interpret hospital drug data cautiously, as it may deviate from reported sales data.

Hengrui: growth accelerated to 21% in July 2016 Hengrui grew 21% in July vs. 12%/10% in 1H16/2015 in eight key products. Ai Li, Ai Su, Ai Heng, Cis-atracurium and Kai Te Li grew 13%/54%/1%/1%/37% vs. 17%, 2%, 0%, 9% and 13% in 1H16 and 9%, 3%, 0%, 10% and 23% in 2015.

THDB: solid growth of 14% in July 2016 THDB recorded 14% growth in July vs. 16%/18% in 1H16/2015 for its insulin products. Among these, Gansulin 30R grew 4% this quarter vs. -1%/3% growth in 1H16/2015. The overall Gansulin series delivered sales growth of 11% in July 2016.

CSPC: growth moderated to 9% CSPC grew 9% YoY in July vs. 31%/26% in 1H16/2015. Flagship products continued to grow, including NBP/Xuanning/Oulaining at 20%/-3%/-10% vs. 40%/12%/11% in 1H16 and 26%/14%/21% in 2015. Duomeisu continued the strong growth trend, with a 66% rise in July vs. 185%/171% in 2Q16/2015.

3SBio: solid growth achieved at 8% In July 2016, EPIAO, TPIAO, SEPO and Etanercept registered a combined growth rate of 8% vs. 16%/15% in 1H16/2015. EPIAO/TPIAO/Etanercept grew 4%/27%/-10% in July vs. 4%/36%/3% in 1H16 and 4%/22%/6% in 2015.

SBP: growth decreased to 1% in July 2016 SBP grew 1% in July vs. 21%/15% in 1H16/2015 in seven key products. Growth in four major products – Runzhong, Ganmei, Kaishi and Kaifen – was 16%,-8%,-7% and 17%, vs. 40%, 7%, 3% and 37% in 1H16 and 46%, 15%, -2% and 19% in 2015. We remind investors that SBP’s overall growth might be lower than our reported number, as we have data for only seven key products.

CBPO: sales declined by 4% YoY Plasma products sales grew -4% YoY in July, vs. 9%/27% in 1H16/2015. Albumin/IVIG delivered growth of 7%/-11% vs. 13%/6% in 1H16 and 15%/38% in 2015.

Valuation and risks We caution investors that monthly drugs data are volatile and YTD data would be a more meaningful indicator. In this report, we have adjusted price targets for two companies due to the recent sector re-rating, as summarized on page 20. We use a multiples-based valuation approach in light of the sustainable growth we expect from the sector. Key risks include price erosion, government policy, capitated reimbursement control, and increasing competition.

Distributed on: 14/09/2016 15:36:33 GMT

14 September 2016

Health Care

China Healthcare


Hospital sales overview

Total hospital drug sales

We summarize the monthly and quarterly total drug sales in the exhibits

below. In July 2016, total hospital sales grew 0% YoY, vs. 9% and 6% in 1H16

and 2015. On a quarterly basis, total drug sales registered YoY growth of

11.5%/6.7%/5.4%/5.9% for 2Q16, 1Q16, 4Q15 and 3Q15 respectively.

Figure 1: Monthly hospital drug sales (Jan 14- Jul 16) Figure 2: Quarterly hospital drug sales (Jan 14- Jul 16)

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

0

5

10

15

20

25

30

Total hospital drug sales YoY growthRMB bn

0%

2%

4%

6%

8%

10%

12%

14%

0

10

20

30

40

50

60

70

80

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

Total hospital drug sales YoY growthRMB bn

Source: Deutsche Bank, Chinese Pharmaceutical Association


The July data are different from previous high frequency data as we have a

sample size of approximately 1,050 now vs. 850 before. We believe the new

version is likely to be a better indicator for hospital purchase; even the current

approach does not include an extrapolation process.

14 September 2016

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China Healthcare


13 selected drug manufacturers

We summarize the growth details of the flagship products of 13 drug

companies in the following tables. We caution investors that: 1) the combined

growth for each company is based on a number of specified products we

track, rather than on the entire product portfolio of the company; and 2)

monthly sales data are subject to seasonality; for example, the timing of the

Chinese New Year each year affects the data for January and February.

Figure 3: Sales performance overview of selected drug companies (Jan 2015 - Jul 2016)

CSPC Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

7% 100% 32% 42% 39% 51% 45% 43% 40% 27% 39% 42%

Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16

56% 18% 51% 21% 28% 18% 9%

Quarterly 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16

36% 44% 43% 36% 42% 22%

Yearly 2015 YTD16

26% 27%

Sino Biopharm Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-1% 67% 19% 35% 29% 44% 34% 42% 38% 26% 38% 36%


42% 6% 38% 5% 16% 10% 1%


21% 36% 38% 34% 30% 10%

Yearly 2015 YTD16

15% 16%

3SBio Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-6% 63% 1% 19% 3% 18% 14% 14% 7% 3% 25% 21%


20% -12% 49% 2% 26% 13% 8%


12% 13% 11% 16% 18% 13%

Yearly 2015 YTD16

15% 14%

Hengrui Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-5% 44% 5% 11% 4% 14% -1% 12% 7% 6% 15% 14%


17% -10% 32% 2% 22% 9% 21%


10% 10% 6% 12% 14% 10%

Yearly 2015 YTD16

10% 13%


14 September 2016

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Figure 4: Sales performance overview of selected drug companies (Jan 2015 - Jul 2016) - continued

CBPO Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

13% 58% 28% 8% 36% 27% 30% 28% 11% 23% 37% 20%


21% 3% -2% 23% -3% 11% -4%


29% 23% 22% 26% 8% 10%

Yearly 2015 YTD16

27% 7%

Hualan Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-25% 59% -26% 8% -18% 9% -19% 39% 13% -18% -10% -9%


-6% -5% 26% -10% 50% -13% 17%


-8% 0% 8% -12% 4% 5%

Yearly 2015 YTD16

-6% 6%

Tonghua Dongbao Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-1% 60% 10% 16% 9% 25% 12% 25% 17% 11% 20% 10%


32% -12% 31% 12% 23% 10% 11%


16% 16% 18% 13% 18% 15%

Yearly 2015 YTD16

18% 16%

Sihuan Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-4% 98% 31% 46% 43% 55% 49% 50% 43% 41% 44% 44%


56% -1% 41% 3% 9% 7% -2%


28% 48% 47% 43% 33% 6%

Yearly 2015 YTD16

16% 14%

Fosun Pharma Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-19% 57% 4% 14% 8% 21% 11% 18% 10% -1% 15% 13%


26% -23% 22% -5% 6% -5% -4%


5% 14% 13% 9% 9% -2%

Yearly 2015 YTD16

-3% 2% Source: Deutsche Bank, Chinese Pharmaceutical Association

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Figure 5: Sales performance overview of selected drug companies (Jan 2015 - Jul 2016) - continued

China Medical System Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-3% 66% 27% 34% 25% 25% 31% 32% 27% 23% 30% 22%


38% 1% 19% -5% 8% 2% -1%


23% 28% 30% 25% 20% 1%

Yearly 2015 YTD16

14% 8%

Luye Pharma Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-4% 52% 23% 25% 19% 35% -11% 30% 30% 13% 37% 30%


40% 15% 25% 1% 28% 13% 42%


18% 26% 17% 27% 27% 13%

Yearly 2015 YTD16

13% 22%

Fudan Zhangjiang Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

19% 63% 34% 21% 31% 62% 25% 27% 22% -6% 24% 32%


28% 25% 6% -1% 15% -4% -8%


35% 37% 25% 17% 19% 3%

Yearly 2015 YTD16

20% 7%

Dawnrays Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

45% 85% 35% 83% 72% 54% 50% 23% 17% 47% 28% 48%


34% -11% 60% -11% 23% 12% 30%


50% 69% 29% 41% 31% 7%

Yearly 2015 YTD16

34% 20%

Humanwell Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-8% 82% -2% 14% 6% 19% 14% 18% 12% -2% 11% 15%


27% -17% 49% 8% 9% 12% -1%


12% 13% 15% 9% 20% 10%

Yearly 2015 YTD16

13% 12% Source: Deutsche Bank, Chinese Pharmaceutical Association

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CSPC (1093.HK)

Figure 6: Growth summary for CSPC (Jan 2015 – Jul 2016)

Drug name Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

NBP 8% 85% 32% 46% 33% 48% 47% 43% 37% 30% 49% 45%


62% 27% 58% 27% 42% 31% 20%


Rx data 35% 43% 42% 41% 49% 33%

Reported sales 43% 35% 34% 31% 36% 43%

Biapenem Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-45% 34% 109% -34% -7% -66% -30% 119% 9% 28% 44% 78%


104% 44% 72% 47% -19% 284% 59%


-2% -37% 25% 50% 73% 60%

Duomeisu Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

89% 431% 88% 160% 102% 364% 133% 265% 180% 119% 362% 282%


241% 209% 288% 173% 234% 81% 66%


Rx data 141% 196% 183% 242% 247% 148%

Reported sales 72% 126% 109% 109% 27% 22%

Oulaining Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

7% 117% 31% 39% 45% 48% 40% 34% 36% 20% 21% 28%


42% -1% 30% 5% 2% -3% -10%


Rx data 38% 44% 36% 23% 24% 1%

Reported sales 22% 21% 24% 26% 16% 10%

Xuanning Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-10% 57% 14% 20% 15% 23% 29% 27% 32% 8% 29% 32%


28% -5% 34% -4% 11% 10% -3%


Rx data 14% 19% 29% 23% 19% 5%

Reported sales 31% 33% 16% 10% 16% 14%

Jinyouli Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

185% 247% 181% 114% 201% 217% 194% 233% 159% 109% 212% 203%


326% 214% 250% 290% 216% 163% 145%


Rx data 200% 180% 190% 175% 261% 211%

Reported sales 168% 75% 97% 180% 68% 78%


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Sino Biopharm (1177.HK)

Figure 7: Growth summary for Sino Biopharm (Jan 2015 – Jul 2016)


Runzhong 20% 112% 58% 85% 64% 80% 77% 82% 76% 54% 74% 68%


87% 26% 55% 18% 34% 25% 16%


Rx data 53% 77% 78% 66% 57% 25%

Reported sales 45% 39% 37% 13% 17% 7%

Tiance Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

24% 78% 40% 51% 71% 69% 71% 72% 66% 48% 56% 34%


48% 28% 41% 3% 5% -5% -20%


Rx data 42% 63% 69% 45% 40% 0%

Reported sales 35% 47% 52% 15% 10% -5%

Mingzheng Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-21% 48% -4% 15% -4% 15% -8% -8% -3% -13% -14% -9%


4% -41% -3% -35% -14% -28% -32%


Rx data -1% 8% -6% -12% -12% -27%

Reported sales 4% -14% -15% -29% -26% -24%

Kaishi Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-10% 53% -5% 11% 4% 13% 2% 12% 9% 2% 11% 9%


6% -15% 23% -7% 7% 5% -7%


Rx data 5% 10% 8% 8% 5% 1%

Reported sales -2% -4% -5% -7% -10% 1%

New Ossified Triol capsules Monthly

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-26% 21% -9% -3% -6% 16% 10% 17% 15% 10% 24% 38%


57% 17% 58% 22% 28% 14% 3%


Rx data -9% 2% 14% 24% 45% 21%

Reported sales 7% 4% 9% 9% 12% 16%

Kaifen Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

2% 77% 35% 49% 46% 72% 55% 69% 53% 46% 63% 58%


58% 18% 60% 26% 33% 32% 17%


Rx data 30% 55% 59% 56% 48% 30%

Reported sales 24% 24% 24% 23% 10% 15%


14 September 2016

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Figure 8: Growth summary for Sino Biopharm (Jan 2015 – Jul 2016) – continued

Drug name Monthly 15-Jan 15-Feb 15-Mar 15-Apr 15-May 15-Jun 15-Jul 15-Aug 15-Sep 15-Oct 15-Nov 15-Dec

Tianqingganmei 1% 65% 17% 36% 29% 42% 31% 35% 34% 25% 34% 33%

16-Jan 16-Feb 16-Mar 16-Apr 16-May 16-Jun 16-Jul

35% 2% 21% -8% 4% -6% -8%


Rx data 20% 36% 33% 31% 20% -4%

Reported sales

18% 23% 27% -1% 4% -10%


14 September 2016

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3SBio (1530.HK)

Figure 9: Growth summary for 3SBio (Jan 2015 – Jul 2016)


EPIAO -12% 57% -4% 21% -8% 9% 3% 5% 5% -7% 13% 5%


17% -19% 26% -13% 13% 7% 4%


7% 7% 4% 4% 7% 1%

Semi-annual 1H15 2H15 1H16

Rx data 7% 4% 4%

Reported sales 23% 7% -6%

TPIAO Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

0% 82% 9% 23% 14% 28% 18% 33% 13% 10% 36% 35%


37% -1% 92% 28% 45% 28% 27%


22% 22% 20% 27% 39% 33%


Rx data 22% 24% 36%

Reported sales 38% 35% 37%


14 September 2016

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Hengrui (600276.SS)

Figure 10: Growth summary for Hengrui (Jan 2015 – Jul 2016)


Kai Te Li 15% 65% 11% 17% 13% 28% 16% 20% 10% 7% 1% 29%


21% -21% 37% 2% 31% 3% 37%


24% 19% 15% 13% 15% 11%

Ai Li Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-14% 42% -1% 1% -5% 17% -5% 18% 7% 24% 21% 22%


18% -2% 31% 14% 32% 11% 13%


3% 4% 6% 22% 16% 18%

Ai Su Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-14% 28% 2% 6% -2% 3% -38% 2% -1% -6% 8% 6%


9% -11% 13% -13% 13% 5% 54%


2% 3% -12% 3% 4% 1%

Ai Heng Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-22% 26% -1% -4% -6% 3% 0% 0% -5% 0% 15% 5%


6% -14% 7% -9% 5% 1% 1%


-4% -2% -2% 7% 0% -1%

Loversol Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

11% 62% 22% 33% 15% 26% 21% 18% 21% 27% 18% 26%


22% -6% 36% 12% 24% 13% 13%


26% 25% 20% 24% 20% 16%

Le Jia Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

8% 53% 10% 15% 8% 14% 14% 15% 6% 3% 15% 5%


15% -6% 36% 7% 20% 9% -1%


19% 12% 11% 7% 16% 12%

Atracurium series Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-3% 56% -5% 12% 6% 14% 14% 18% 12% -1% 22% 2%


20% -15% 41% -7% 13% -1% 0%


10% 11% 14% 8% 16% 1% Source: Deutsche Bank, Chinese Pharmaceutical Association

14 September 2016

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China Biologic Products (CBPO.US)

Figure 11: Growth summary for CBPO (Jan 2015 – Jul 2016)


Albumin -12% 22% -1% 4% 23% 3% 30% 16% 20% 45% 32% -2%


39% -13% -4% 29% -6% 33% 7%


Rx data 0% 10% 21% 21% 9% 17%

Reported sales 62% 29% 16% 17% 10% -4%

IVIG Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

43% 101% 64% 11% 48% 47% 29% 40% 4% 10% 41% 39%


7% 15% 0% 19% -1% -2% -11%


Rx data 64% 35% 22% 30% 7% 5%

Reported sales 14% 37% 18% 8% 28% 43% Source: Deutsche Bank, Chinese Pharmaceutical Association

Hualan Biological (002007.SZ)

Figure 12: Growth summary for Hualan (Jan 2015 – Jul 2016)


Albumin 9% 173% 8% 144% 35% 133% 86% 193% 84% 17% 47% 119%


17% 52% 6% -10% 47% -26% -15%


34% 103% 123% 57% 24% -4%

IVIG Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-34% 35% -40% -24% -31% -21% -38% -18% -8% -35% -32% -44%


-16% -31% 42% -11% 51% -4% 34%


-21% -25% -23% -37% -7% 11% Source: Deutsche Bank, Chinese Pharmaceutical Association

14 September 2016

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Tonghua Dongbao (600867.SS)

Figure 13: Growth summary for Tonghua Dongbao (Jan 2015 – Jul 2016)


Gansulin 30R -1% 59% 8% 15% 0% 16% 0% 12% 3% -4% 11% -1%


14% -25% 12% -4% 12% -2% 4%


16% 10% 5% 1% 1% 2%

Gansulin series Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-1% 60% 10% 16% 9% 25% 12% 25% 17% 11% 20% 10%


32% -12% 31% 12% 23% 10% 11%


16% 16% 18% 13% 18% 15%


14 September 2016

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Sihuan (0460.HK)

Figure 14: Growth summary for Sihuan (Jan 2015 – Jul 2016)


GM 1 (Aogan + Xiangtong)

-52% 22% -27% 0% -8% -17% 22% 44% 70% 111% 45% 107%


70% -16% 63% 17% 22% 49% -4%


-31% -9% 43% 84% 40% 29%


Rx data -20% 62% 34%

Reported sales 15% 38% -22%

Kelinao Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-9% 61% 47% 63% 65% 93% 98% 66% 75% 67% 79% 67%


89% 29% 36% -4% 6% -6% -12%


25% 73% 79% 71% 51% -2%


Rx data 51% 75% 18%

Reported sales 27% -31% -41%

Yinbixin (Guhong)

Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

23% 146% 48% 61% 36% 58% 33% 54% 56% 56% 44% 35%


36% -13% 33% 3% 12% 11% 5%


55% 51% 47% 44% 20% 8%


Rx data 53% 46% 14%


Yuanzhijiu Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

27% 256% 92% 93% 127% 125% 102% 87% 74% 58% 75% 58%


92% 9% 45% 16% 13% 8% 10%


89% 114% 86% 64% 49% 12%


Rx data 103% 74% 27%


Oudimei Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-4% 86% 22% 29% 26% 33% 22% 32% 10% 11% 16% 22%


31% -11% 42% -1% 6% 8% -3%


23% 29% 20% 17% 22% 4%


Rx data 27% 19% 12%



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Figure 15: Growth summary for Sihuan (Jan 2015 – Jul 2016) – continued

Drug name Monthly 15-Jan 15-Feb 15-Mar 15-Apr 15-May 15-Jun 15-Jul 15-Aug 15-Sep 15-Oct 15-Nov 15-Dec

Yimaining -7% 61% 5% 23% 13% 42% 22% 24% 27% 15% 27% 23%

16-Jan 16-Feb 16-Mar 16-Apr 16-May 16-Jun 16-Jul

34% -10% 32% -5% 0% -6% -11%


12% 25% 24% 22% 20% -4%


Rx data 19% 23% 7%

Reported sales 19% -15% -6% Source: Deutsche Bank, Chinese Pharmaceutical Association

14 September 2016

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Fosun Pharma (2196.HK)

Figure 16: Growth summary for Fosun (Jan 2015 – Jul 2016)


Youdier 47% 104% 29% 68% 52% 92% 66% 94% 79% 31% 99% 59%


89% 25% 177% 83% 121% 79% 77%


52% 70% 79% 63% 101% 93%

Bangting Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-17% 65% 8% 23% 15% 36% 21% 25% 17% 14% 17% 19%


42% -22% 36% -3% 5% -8% -6%


8% 24% 21% 17% 20% -2%

Atomolan Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-11% 86% 10% 22% 15% 35% 26% 22% 26% 13% 22% 21%


31% -15% 37% -8% 14% 6% -4%


16% 24% 25% 19% 18% 4%

Qiwei Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-27% 81% 2% -6% 21% 37% 36% 24% 14% 16% 25% 18%


22% -29% 16% 6% -12% -8% -17%


4% 16% 24% 20% 2% -5%

Shaduolika Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-35% 31% 13% 4% -19% 18% 6% 20% 15% -19% 9% -1%


24% -6% 71% 0% -4% -38% -28%


-9% 1% 13% -3% 27% -16%

Aodejin Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-23% 46% -1% 7% 3% 7% 0% 8% -3% -10% 4% 5%


13% -32% -9% -18% -13% -18% -13%


-1% 6% 1% 0% -9% -17%


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China Medical System (0867.HK)

Figure 17: Growth summary for CMS (Jan 2015 – Jul 2016)


Xinhuosu -10% 44% 40% 60% 32% 29% 42% 56% 55% 43% 40% 32%


90% 37% 45% 3% 35% 23% 27%


19% 40% 52% 37% 57% 19%


Rx data 30% 44% 36%


Ursofalk Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

5% 81% 30% 25% 25% 22% 27% 24% 18% 15% 28% 21%


30% -6% 21% 2% 14% 6% 9%


31% 24% 23% 21% 16% 7%


Rx data 22% 22% 11%


Salofalk Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-6% 76% 29% 39% 24% 25% 24% 22% 15% 24% 20% 14%


33% 14% 22% 9% 20% 33% 15%


23% 29% 20% 19% 23% 21%


Rx data 26% 19% 22%


Deanxit Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-7% 73% 17% 26% 20% 29% 35% 32% 26% 19% 33% 20%


39% -4% 17% -11% -5% -13% -21%


18% 25% 31% 24% 18% -10%


Rx data 22% 27% 3%



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Humanwell (600079.SS)

Figure 18: Growth summary for Humanwell (Jan 2015 – Jul 2016)


Remifentanil -14% 79% 1% 15% 5% 17% 11% 20% 10% -1% 15% 14%


32% -11% 43% 7% 13% 11% 1%


9% 12% 14% 10% 22% 10%

Sufentanil Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

4% 95% -1% 16% 11% 26% 23% 18% 19% -1% 11% 18%


27% -21% 60% 14% 7% 15% -2%


21% 18% 20% 10% 22% 12%

Fentanyl Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-25% 36% -22% -7% -23% -6% -18% -6% -17% -17% -16% -9%


-11% -32% 17% -18% -6% -9% -18%


-11% -12% -14% -13% -9% -12% Source: Deutsche Bank, Chinese Pharmaceutical Association

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Luye Pharma (2186.HK)

Figure 19: Growth summary for Luye (Jan 2015 – Jul 2016)


Lipusu -3% 49% 24% 22% 15% 31% -23% 29% 27% 10% 36% 30%


36% 19% 23% 1% 35% 20% 67%


19% 23% 11% 26% 26% 18%

Lutingnuo Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-6% 43% 7% 47% 26% 43% 40% 31% 62% 29% 45% 35%


55% 8% 37% -12% 13% -13% -13%


10% 39% 45% 36% 35% -5%

Maitongna Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-8% 89% 19% 35% 41% 52% 27% 28% 35% 22% 36% 27%


59% -17% 35% 2% -2% -11% -7%


20% 43% 30% 28% 27% -4%

Xuezhikang Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

-9% 60% 27% 22% 35% 37% 22% 39% 26% 19% 44% 18%


47% 4% 19% 10% 10% 0% -3%


20% 32% 28% 25% 23% 6%


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Fudan Zhangjiang (1349.HK)

Figure 20: Growth summary for Fudan Zhangjiang (Jan 2015 – Jul 2016)


ALA 4% 106% 69% 41% 50% 99% 40% 64% 32% 15% 74% 89%


72% 47% 39% 15% 26% 4% 5%


47% 62% 45% 60% 52% 14%


Rx data 55% 52% 29%


Libod Monthly Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

29% 45% 15% 8% 18% 38% 15% 2% 15% -18% -2% -6%


4% 12% -20% -16% 5% -11% -18%


28% 20% 10% -9% -2% -8%


Rx data 24% 0% -5%



Dawnrays (2348.HK)

Figure 21: Growth summary for Dawnrays (Jan 2015 – Jul 2016)


Leiyide 45% 85% 35% 83% 72% 54% 50% 23% 17% 47% 28% 48%


34% -11% 60% -11% 23% 12% 30%


50% 69% 29% 41% 31% 7%


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Valuation and risks

Adjusting target prices for the following companies

Shanghai Pharma-A: increasing target price to RMB19.8 from RMB18.1; risks

We use the same valuation method as for Shanghai Pharma-H. We increase

our TP on the solid performance delivered in 1H16. Our TP is now based on

16.5x 2017E EPS of RMB1.20 (vs. 15x previously). We believe 16.5x is justified,

as its A-listed peers are trading at 31x with growth of 19% (vs. 15% for SPH).

Upside risks include continuous improvement in the product mix and less-

than-expected pricing pressure. Downside risks include a prolonged sales team

reorganization, larger-than-expected price cuts and slower-than-expected

M&A.

Fosun Pharma-A: increasing target price to RMB21.1 from RMB19.5; risks

We use the same valuation method as for Fosun Pharma-H. Our TP is now

based on 24x 2017E core EPS of RMB0.76 and 45x non-core EPS from the

hospital segment of RMB0.07. We believe 24x/45x is justified, as A-listed drug

peers are trading at 31x with 19% growth (vs. 13% for Fosun), and Asian-listed

hospital peers are trading at 35x with 17% growth (vs. 20% for Fosun). We

believe Fosun deserves a premium on its diversified revenue base and M&A

firepower. Key upside risks include more acquisitions, less pricing pressure

and a more rapid ramp-up of new products. Downside risks include less M&A,

more pricing pressure and more dilution.

CSPC: increasing target price to HKD8.5 from HKD8.0; risks

We increase our price target to HKD8.5, based on 20x 2017E EPS of HKD0.42,

due to the recent sector re-rating. The multiple is justified as HK-listed names

are trading at 16x 2017 EPS with 16% growth (vs. 20% we model for CSPC).

We believe CSPC deserves a premium due to its robust earnings growth profile

with margin expansion opportunities. Key risks include lack of blockbuster

compounds in the pipeline, slower-than-expected tender progress, as well as

regulatory delays in drug approvals.

Jointown: increasing target price to RMB26.1 from RMB24.5; risks

Our target price is based on 48x 2017E EPS of RMB0.54 vs. 45x we used

previously. We increase our target multiple due to the recent re-rating. This

represents a premium to its Chinese peers, which are trading at 31x 2017E EPS

with 19% growth in 2017 (vs. 24% for Jointown). We believe the premium is

justified by its outgrowth vs. competitors and improving product mix. Key risks

include unfavorable policies and slow ramp-up of new businesses.

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Appendix 1

Important Disclosures

Additional information available upon request

Disclosure checklist

Company Ticker Recent price* Disclosure

Fosun Pharma 600196.SS 23.19 (CNY) 14 Sep 16 14

Shanghai Pharmaceuticals 601607.SS 19.94 (CNY) 14 Sep 16 14

Jointown Pharmaceuticals 600998.SS 22.47 (CNY) 14 Sep 16 NA

CSPC Pharma 1093.HK 7.53 (HKD) 14 Sep 16 NA *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr.

Important Disclosures Required by U.S. Regulators

Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes.

14. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year.

For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr

Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst about the subject issuers and the securities of those issuers. In addition, the undersigned lead analyst has not and will not receive any compensation for providing a specific recommendation or view in this report. Jack Hu

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Historical recommendations and target price: Fosun Pharma (600196.SS) (as of 9/14/2016)

12

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16

Secu

rity

Pri

ce

Date

Previous Recommendations

Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating

Current Recommendations

Buy Hold Sell Not Rated Suspended Rating

*New Recommendation Structure as of September 9,2002

**Analyst is no longer at Deutsche Bank

1. 07/03/2016: Upgrade to Hold, Target Price Change CNY18.10 Jack Hu, Ph.D

2. 31/07/2016: Hold, Target Price Change CNY19.50 Jack Hu, Ph.D

Historical recommendations and target price: Shanghai Pharmaceuticals (601607.SS) (as of 9/14/2016)

1 2

34

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00


Secu

rity

Pri

ce

Date







1. 07/03/2016: Upgrade to Hold, Target Price Change CNY15.10 Jack Hu, Ph.D

3. 31/07/2016: Hold, Target Price Change CNY16.90 Jack Hu, Ph.D

2. 21/03/2016: Hold, Target Price Change CNY14.80 Linc Yiu 4. 15/08/2016: Hold, Target Price Change CNY18.10 Jack Hu, Ph.D

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Historical recommendations and target price: Jointown Pharmaceuticals (600998.SS) (as of 9/14/2016)

1 2

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00


Secu

rity

Pri

ce

Date







1. 24/07/2016: Upgrade to Buy, Target Price Change CNY24.40 Jack Hu, Ph.D

2. 24/08/2016: Buy, Target Price Change CNY24.50 Jack Hu, Ph.D

Historical recommendations and target price: CSPC Pharma (1093.HK) (as of 9/14/2016)

1 23 4

5

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00


Secu

rity

Pri

ce

Date







1. 26/11/2014: Buy, Target Price Change HKD9.00 Jack Hu, Ph.D 4. 30/11/2015: Buy, Target Price Change HKD8.30 Jack Hu, Ph.D

2. 18/01/2015: Buy, Target Price Change HKD8.50 Jack Hu, Ph.D 5. 21/03/2016: Buy, Target Price Change HKD8.00 Jack Hu, Ph.D

3. 01/11/2015: Buy, Target Price Change HKD8.40 Jack Hu, Ph.D

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Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock.

Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock

Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell.

Newly issued research recommendations and target prices supersede previously published research.

52 %

38 %

10 %15 % 14 % 19 %

050

100150200250300350400450500

Buy Hold Sell

Asia-Pacific Universe

Companies Covered Cos. w/ Banking Relationship

Regulatory Disclosures

1.Important Additional Conflict Disclosures

Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the

"Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing.

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Deutsche Bank equity research analysts sometimes have shorter-term trade ideas (known as SOLAR ideas) that are

consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the

SOLAR link at http://gm.db.com.

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14 September 2016

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