[ET Net News Agency, 16 November 2018] HSBC Global Research lowered its target price
for CSPC Pharmaceutical Group (01093) to HK$20.2 from HK$28.6 and maintained its "buy"
rating.
The research house said the proportion of CSPC's generic business is relatively low
compared with other companies, accounting for only half of total revenue; as such, HSBC
expects the impact of the GPO (group purchasing organisation) scheme to be mild in the
short term.
HSBC's concern about CSPC is the lack of innovative drugs in the pipeline and slowing
growth of sales of NBP, an innovative drug used to treat stroke patients. In the medium
term to long-term, it expects CSPC to acquire more innovative products through M&A to
reduce GPO risks.
Several of CSPC's products are included in the list of 31 drugs for the first trial,
including Imatinib, Azithromycin, Amoxicillin, Cefuroxime, Enalapril, Captopril, Tramadol
and Paclitaxel (Albumin Bound). According to Pharmaceutical Data Base (PDB) data, these
products only constitute a small proportion of the company's revenue; HSBC doesn't expect
a significant impact in 2019. (KL)