Zhongtai International released a research report stating that HANSOH PHARMA (03692) is expected to achieve smooth sales of its existing products in the second half of the year, with an $80 million upfront payment from Roche set to be recorded by the end of 2025. Roche’s support is anticipated to facilitate the smooth progress of HS-20110’s development. Meanwhile, INNOVENT BIO (01801) reported a year-on-year increase of over 40% in product sales revenue to more than RMB 3.3 billion in Q3, slightly exceeding expectations. Its collaboration with Takeda is expected to accelerate the development of next-generation immuno-oncology (IO) therapies and antibody-drug conjugates (ADCs). Zhongtai International’s key insights are as follows:

**Healthcare Index Underperforms Hang Seng Index in October** The Hang Seng Healthcare Index fell 11.1% in October, significantly underperforming the broader Hang Seng Index. The bank attributed this to several factors: 1) The healthcare index had seen consecutive gains since 2025, leading to recent market concerns that potential U.S. tariff hikes on drugs could impact the overseas expansion prospects of innovative drugs. 2) The Chinese patent protection for the well-known weight-loss drug semaglutide is set to expire in 2026, raising concerns about competition from generics. 3) The 2025 national drug price negotiations took place in late October, resulting in cautious market sentiment.

**Notable Progress in Overseas Expansion of Innovative Drugs** The pharmaceutical industry has recently witnessed multiple breakthroughs in the global expansion of innovative drugs. HANSOH PHARMA granted Roche’s subsidiary exclusive global rights (excluding Greater China) for its ADC candidate HS-20110. INNOVENT BIO partnered with Takeda to advance the development of next-generation IO therapies and ADCs. Additionally, LianBio (09887) licensed U.S. biotech firm Dianthus (DNTHUS) the rights to develop, manufacture, and commercialize its autoimmune drug LBL-047 outside Greater China.

Zhongtai International noted that Roche, HANSOH PHARMA’s partner, is a globally renowned industry leader with extensive ADC expertise, which bodes well for HS-20110’s development. INNOVENT BIO’s collaborator Takeda, a top-tier Japanese pharmaceutical company with consistent global revenue rankings and a strong sales network in Japan, Europe, and the U.S., is expected to bolster both R&D and commercialization efforts. While the timing of upfront payments remains undetermined, the partnership is viewed favorably. LianBio’s agreement with Dianthus, a specialist in autoimmune therapies, is also seen as beneficial for advancing pipeline development.

**Limited Impact of 11th Bulk Procurement on Key HK-Listed Firms** The 11th round of China’s national bulk drug procurement covered 55 medications across anti-infectives, antiallergics, oncology, diabetes, hypertension, lipid-lowering, and anti-inflammatory treatments. Leading Hong Kong-listed pharmaceutical firms—HANSOH PHARMA, CSPC Pharma (01093), and Sino Biopharm (01177)—had products selected, though none involved core offerings. The National Medical Products Administration emphasized rational pricing guidance, aligning with the State Council’s goal to curb excessive competition. Consequently, Zhongtai International expects minimal impact on major Hong Kong-listed companies.

**Risk Warnings** 1) Significant price cuts for drugs and medical devices may affect earnings. 2) Delays in new drug development could postpone pipeline realization. 3) Poor post-launch sales performance may hinder short-term profitability.