Morgan Stanley recently released a research report providing an in-depth evaluation of the innovative drug pipeline value of Fosun Pharma (02196) and its controlling subsidiary HENLIUS (02696). The report indicates that HENLIUS's core innovation pipeline continues to drive valuation growth, and combined with its biosimilar business, is expected to contribute approximately 72 billion yuan in total valuation for this innovative biopharmaceutical company. Based on the current valuation of over 40 billion yuan, this implies nearly 80% upside potential for the stock, translating to a target price of approximately 145 Hong Kong dollars. The institution's target price for HENLIUS continues to reach new highs, further highlighting confidence in the company's value.

Morgan Stanley states that HENLIUS has established a diversified product portfolio consisting of antibodies and antibody-drug conjugates (ADCs), while expanding into bispecific/trispecific antibody fields. Although the company's sales revenue was previously mainly contributed by biosimilars and PD-1, this year's stock price surge (over 200% year-to-date gain) has primarily benefited from the potential demonstrated by its innovation pipeline in clinical trials. Particularly HLX43 (PD-L1 ADC) and HLX22 (HER2 monoclonal antibody), these core innovative assets have driven prospects for out-licensing and increased diversity in product pipeline and international partnerships.

Specifically, HLX43 is well-positioned in second-line/third-line (2L/3L) treatment for EGFR wild-type non-small cell lung cancer (NSCLC). The firm estimates its probability of success (PoS)-adjusted peak sales in the US market alone could reach $3.9 billion (unadjusted $5.6 billion). The drug's differentiated advantage lies in encouraging objective response rates (ORR) of 46.7% and 30% respectively in advanced EGFR wild-type NSCLC patients and squamous non-small cell lung cancer (sqNSCLC) patients who failed docetaxel treatment (≥3rd line), with efficacy independent of PD-L1 expression levels, according to data released at the 2025 World Conference on Lung Cancer (WCLC).

Based on positive data, HENLIUS is seeking FDA approval for ≥3rd line treatment indication based on single-arm data, while currently evaluating second-line treatment (versus docetaxel) in a Phase II international multi-center clinical trial (MRCT), with plans to initiate Phase III clinical trials within one year. Additionally, HENLIUS is exploring its use in first-line NSCLC treatment and conducting multiple Phase II trials for various other cancer types to broaden its label indications.

HLX22 has shown early signs of significant progression-free survival (PFS) and overall survival (OS) benefits at 24 weeks in a Phase II trial for first-line (1L) HER2-positive gastric cancer (GC) in China, with hazard ratios (HR) of 0.2 and 0.5 respectively compared to current standard of care (SoC). However, considering the limited patient numbers, the firm conservatively estimates its adjusted peak sales for first-line HER2-positive gastric cancer in US, Japanese, and European markets at $2.7 billion (unadjusted $4.1 billion).

HENLIUS is exploring combination therapy of HLX22 with Enhertu for HR-positive/HER2-negative breast cancer (BC), with proof-of-concept (PoC) data expected to read out in the second half of 2026, which could further unlock upside potential if proven effective.

Furthermore, Serplulimab (PD-1) is expected to enter the Biologics License Application (BLA) stage in the US (first half of 2026), positioning it as the first PD-1 monoclonal antibody to demonstrate good efficacy in first-line extensive-stage small cell lung cancer (ES-SCLC). The drug is also in Phase III clinical trials for pMMR/MSS colorectal cancer (CRC, accounting for 95% of CRC cases) and neoadjuvant treatment for gastric cancer (GC).

Despite intense competition in the cancer market with multiple PD-1 products available, the firm believes Serplulimab's unique positioning in first-line ES-SCLC, gastric cancer neoadjuvant treatment (GCneo), and CRC (where it has shown treatment benefits compared to limited available treatment options) should help it capture considerable market share in target markets.

Overall, Morgan Stanley believes that HENLIUS's innovative product portfolio is an indispensable component of Fosun Pharma, with an estimated 73% of valuation growth expected to come from the global potential of core drug candidates—HLX43, HLX22, and Serplulimab. Additionally, its extensive global biosimilar layout (already approved in the US, Canada, ASEAN, Middle East, and other regions) will effectively offset negative impacts from China's volume-based procurement (VBP) and contribute profits through higher profit margins.