The Hang Seng Healthcare Index rose 0.5% this week, underperforming the broader market. Biopharmaceuticals, prescription drugs, and medical equipment sectors outperformed others. Domestic investors adopted a defensive stance, favoring profit-taking while increasing positions in traditional and undervalued innovative drugmakers with stable organic growth. Foreign investors were more active, focusing on industry leaders and upstream supply chain players in innovation-driven segments, including innovative drugs and CXO companies.
The transition to a price inquiry model for the 1st-8th batch of national centralized drug procurement renewals may result in limited overall price reductions, with potential impact on Hong Kong-listed prescription drug manufacturers likely milder than expected. December presents ample industry catalysts, including academic conferences, healthcare negotiation results announcements, and potential Fed rate cuts, which could steadily improve sector sentiment.
Recommended investment themes: 1) Innovative drugs: 3SBIO (01530), ANTENGENE-B (06996), and BeiGene (06160) offer rich near-term catalysts with valuations yet to reflect core blockbuster potential; SIMCERE PHARMA (02096), HUTCHMED (00013), and Legend Biotech (LEGN.US) appear significantly undervalued with clear long-term growth logic. 2) CXO: Leaders like WUXI XDC (02268) benefiting from downstream vitality and marginal financing recovery. 3) Hospital, medical equipment and diagnostics subsectors with turnaround opportunities as regulatory uncertainties gradually ease.