Since reaching a peak of HKD 19.90 on August 8 this year, BOAN BIOTECH (06955) has entered a new downtrend, eventually hitting a low of HKD 11.22 on October 14. It has shown signs of stabilizing over the past two trading days, with the stock price collectively dropping over 30%. According to data from Zhitong Finance APP, due to the ongoing decline in stock price, BOAN BIOTECH's average daily market value during the Stock Connect review period has fallen to HKD 6.651 billion, approaching the threshold for removal from the Stock Connect at HKD 5.745 billion, thus increasing pressure to maintain its status. The recent decline in BOAN BIOTECH's stock price is attributed to bulk procurement related to biosimilars. As a commercial pharmaceutical company that has recorded profit in three consecutive reporting periods, the ability of BOAN BIOTECH to sustain its valuation and status within the Stock Connect amidst the backdrop of bulk purchasing may directly influence the investment direction of secondary market investors.

Can it escape the downward channel? Despite the average daily market value of BOAN BIOTECH nearing the exit threshold, the company's actual market value remains above HKD 7 billion. Even at the exit threshold of HKD 5.745 billion, the corresponding stock price remains below HKD 10. Therefore, BOAN BIOTECH only needs to stabilize its stock price and exit the downward channel to achieve a "protection of connectivity." From a technical perspective, BOAN BIOTECH has been in a "falling price and shrinking volume" downward channel since August. After reaching a high on August 8, the stock price formed a "doji" candlestick pattern the following day and began a technical return towards the lower Bollinger Band (BOLL). The stock attempted to bounce back towards the middle Bollinger Band on August 20 but ultimately failed due to a lack of buying momentum. After failing to reach the middle BOLL on August 27, it led to selling actions among some investors the following day, though significant funds had not exited. Following a drop of 13.99% on August 28, daily trading volume gradually decreased, with several days in early September seeing volume drop below 10 million shares, and by September 10, volume fell to just 5.2172 million shares.

To further clean up excess shares, on September 16, BOAN BIOTECH executed a strategy that saw a strong rise, resulting in a more than 12% gain on a single day. This sudden surge again widened market divergences, with daily trading volume reaching over 81.3 million shares, leading to a tightening of shareholder structure. However, from September 17 onwards, daily trading volume further declined, dropping below 5 million shares to 4.7044 million shares on October 14. Nevertheless, on October 13 and 14, the stock price once again touched the lower Bollinger Band and returned technically towards the middle band in the following sessions, with price rising alongside increased volume. However, on October 16, the stock price did not reach the middle BOLL, making it difficult to ascertain whether this was merely a fund washout or a genuine rebound in the stock price.

Is bulk procurement a "blessing" or "curse"? BOAN BIOTECH’s success in the commercialization sector, particularly in developing biosimilars, is a crucial strategy compared to many unprofitable biotech companies in the Hong Kong stock market. This strategy is prudent, as biosimilars do not require original innovation, thus significantly reducing R&D risks and difficulties; meanwhile, with key monoclonal antibody patents expiring, there exists a vast market for domestic replacements. BOAN BIOTECH has achieved short-term commercial returns through the commercialization of its biosimilars, leading to strong performance.

However, the commercial logic of biosimilars must now contend with the challenges posed by bulk procurement. Zhitong Finance APP reports that on August 1, the Anhui Pharmaceutical Centralized Procurement Platform issued a notice formally initiating bulk procurement for certain monoclonal biological agents. This procurement includes eight products: adalimumab, bevacizumab, daratumumab, rituximab, trastuzumab, tocilizumab, infliximab, and pertuzumab. The sales performance of these drugs shows that in 2023, bevacizumab had sales nearing HKD 10 billion, followed by trastuzumab with HKD 7.89 billion, with rituximab and pertuzumab also surpassing HKD 3 billion in sales. This directly affects three of BOAN BIOTECH's current commercial products: Boyounuo® (bevacizumab), Boluoja® (darunavir 120mg), and Boyoubai® (darunavir 60mg). As its fourth product, Boyouping® (dulaglutide), was only approved for sale in August this year, the company achieved sales revenue of HKD 385 million during the first half of the year solely from these three products.

For example, prior to bulk procurement, the competitive environment for BOAN BIOTECH's core product, Boyounuo®, was quite challenging. There are currently 11 approved biosimilars of bevacizumab in China, and the explosion of the market has led to gradual reductions in the health insurance price of this product, capping Boyounuo®'s sales potential due to competition. In May 2021, BOAN BIOTECH granted exclusive promotion rights for Boyounuo® to AstraZeneca in 21 provinces, and with AstraZeneca's established sales channels, Boyounuo® achieved only HKD 159 million in sales during its listing year, capturing a market share of only 1.76%. In contrast, competitors Anwei and Anke each achieved sales of HKD 3.299 billion and HKD 3.5 billion that same year, with market shares of 36.66% and 38.89%, respectively. Now that bulk procurement has commenced, companies will inevitably engage in price wars to capture market share, which poses a challenge for leading companies like Qilu and Roche that have already secured market positions. According to the latest health insurance pricing, the highest priced products in 2025 for bevacizumab are Qilu’s Anke and Roche's original drug Anwei at HKD 1,126 and HKD 1,500 per dose, respectively. In contrast, BOAN BIOTECH's Boyounuo® is priced below HKD 1,100, establishing a relative price advantage.

Similarly, the market performance for BOAN BIOTECH's two daratumumab biosimilars mirrors that of Boyounuo®. The original drug manufacturer for daratumumab is Amgen, which has developed two brands, Prolia and Accruven, for metabolic and oncology indications. Boyoubai® is a Prolia biosimilar, while Boluoja® is an Accruven biosimilar. However, competitors like Maiwei Biotech’s Maiwei Jian and Qilu Pharmaceuticals’ Ludaxin have already received market approval, thus creating substantial competitive pressure prior to bulk procurement. According to the procurement rules, biosimilar companies must adhere to policy mandates to prevent "involution," requiring that companies disclose the rationality of their pricing costs while grouping by generic names plus corporate identity, thus steering clear of a "lowest price only" approach. This permits a significant likelihood of achieving moderate price reductions. Additionally, research by Huarong International suggests that, based on past experience with chemical generic drug procurement, it typically takes 1-2 months from information submission to formal bidding. Given that this is the first bulk procurement of biosimilars in mainland China, information organization and rule establishment will likely require more time. Therefore, it is advisable to monitor which products will be included and the established bidding rules, as the actual impact on relevant company performances and sales is expected to be reflected starting in 2026.