Hong Kong stocks of innovative pharmaceuticals soared at the end of yesterday. Collumbotai Biotech rose 14.9%; Rongchang Biotech rose 14.8%; Conoa-B rose 12.8%; and Hewang Pharmaceuticals rose 11.6%. Furthermore, although the “Yao Mao” Yao Ming Kangde Hong Kong stock closed down 1.16%, it also experienced a sharp narrowing in the decline at the end of the session, and received a net purchase of 565,700 shares from the Shanghai-Hong Kong Stock Exchange and 299,600 shares from the Shenzhen-Hong Kong Stock Connect.

With the opening of trading on March 14, many stocks in the Hong Kong biotechnology sector surged once again. As of press release, Tiger Pharmaceuticals had surged by more than 22%, Zhaoyan New Pharmaceutical had risen by more than 13%, and Collumbotai Biotech had risen by more than 11%.

According to market sources, the sharp rise in Hong Kong pharmaceutical stocks at the end of the session was mainly stimulated by the circulation of a “Draft for Comments to Support the Innovative Drug Chain”. However, the CRO industry where Pharmacom Kangde is located is also highly related to innovative drugs. In the early stages, Pharmaceutical Ming dragged down the overall recovery of the pharmaceutical industry, and stock prices were still hovering at a low level.

Xiaomo increased its Hong Kong stock holdings of Pharmaceutical Ming Kangde, while Damo is bullish on A-shares of Pharmaceutical Kangde

It is worth noting that J.P. Morgan Chase has just increased its holdings in the Hong Kong stock Yao Ming Kangde. This is the first time that a well-known foreign-funded institution has “real money” to support the entry of “real money” after Morgan Stanley gave A-share Pharmaceutical Kangde an “increase” rating.

Regarding the increase in J.P. Morgan Chase's holdings on March 13, documents disclosed by the Hong Kong Stock Exchange showed that on March 7, J.P. Morgan Chase increased its holdings of Pharmaceutical Kangde H shares by a total of 1,654 million shares with an average price of HK$46.9642 per share on the market and an average price of HK$46.7617 per share outside the market, with a total value of about HK$776.794 million. After the increase in holdings, J.P. Morgan Chase's latest shareholding was 39.9,104 million shares, and the shareholding ratio increased from 9.88% to 10.31%.

Two days ago, on March 11, Yakming Kangde A shares were given an “increase in holdings” rating by Morgan Stanley, with a target price of RMB 151. Morgan Stanley said that the company's continuous share buybacks showed a firm will to protect shareholders' interests in a volatile market and reflected management's belief that the company's shares are undervalued.

There are traces of Morgan Stanley's actions. In February of this year, the Morgan Stanley Research Report pointed out that the market may be allergic to the introduction of a biotechnology restriction law by the United States, and believes that the stock price of Medicinal Kangde has overreacted to this, providing potential opportunities. Even if the bill became law, it would only restrict the outsourcing of projects receiving federal funding to overseas companies. They believe that as a cost-effective service provider, Kangde will benefit from the development of the biopharmaceutical industry.

The attitude of major international banks has changed one after another, and this is not unrelated to the repurchase plan announced by Pharmaceutical Kangde two days ago.

On March 8, Yao Ming Kangde issued an announcement on A-shares in the evening, stating that it plans to continue to repurchase A-shares through centralized bidding transactions to protect the company's value and shareholders' rights. After the repurchase is completed, all shares repurchased will be cancelled and the registered capital reduced. The total amount of capital to be repurchased is 1 billion yuan, and the share repurchase price does not exceed 83.33 yuan.

Since the announcement was issued, Yao Ming Kangde continued to carry out repurchases for many days. On March 13, 2024, Yao Ming Kangde spent RMB 2.097 million to buy back 355,500 A shares; on March 12, it spent nearly 20 million yuan to buy back 350,600 A shares; on March 11, Yao Ming Kangde repurchased the company's shares for the first time through centralized bidding transactions. The number of shares repurchased was 9371 million shares, using a total capital of 499.95 million yuan.

According to reports, Yao Ming Kangde's repurchase plan is to cope with the sharp decline after being stimulated by overseas information. On March 6, the US draft Biosafety Act was passed in a hearing held by the US Senate Committee on Homeland Security with an 11-1 vote. On March 7, Yao Ming Kangde's A shares fell to a halt, and Hong Kong stocks fell by more than 20%. Afterwards, Pharmaceutical Kangde issued an urgent clarification notice and issued a repurchase plan.

Can the Hong Kong stock pharmaceutical industry usher in a “crouching jump”?

The A-share E-Fangda Pharmaceutical ETF has rebounded nearly 20% from its low level in early February. Facing the A-share pharmaceutical industry, which has already seen quite a bit of increase, many investors have set their sights on Hong Kong pharmaceuticals next door, and the investment community has long been circulating a saying: “Consumption looks at A shares, technology looks at US stocks, and pharmaceuticals look at Hong Kong stocks.”

In fact, before the launch of the Science and Technology Innovation Board, only Hong Kong stocks allowed eligible biotech companies that were not yet profitable or unprofitable to go public, so many innovative pharmaceutical companies, new biopharmaceutical companies, and other biotech companies completed their listing on Hong Kong stocks. Industry insiders believe that at present, leaders in many segments, such as Pharmacomics, a leader in the biotechnology industry, Weigao Group, a leader in the healthcare equipment industry, and many Internet pharmaceutical companies with unique business models, such as JD Health, Ali Health, etc. are not listed on A-shares, so they are optimistic about the investment opportunities of innovative Chinese pharmaceutical companies. Hong Kong stock pharmaceuticals are an allocation target that cannot be circumvented.

In terms of the 2024 annual investment strategy, pharmaceuticals have also received the attention of institutions. According to the Everbright Securities Research Report, the 2024 annual investment strategy may reshape value orientation, and a new pharmaceutical cycle may begin. Innovation-driven, localized, and leading brands may be the main lines of future pharmaceutical investment.

Furthermore, it was recently reported in the media that the China Artificial Intelligence Industry Development Alliance plans to initiate the establishment of a “Biomedical Industry Working Group”. The working group aims to jointly carry out research on cutting-edge technologies and industry development of artificial intelligence+biomedicine, carry out research work on standard development and regulatory scientific research, give full play to the advantages of the alliance's resource integration, promote cross-border exchanges and cooperation, promote the digital transformation of the biomedical industry, and accelerate future technological innovation and future health industry development.

According to the news, in order to seize the integrated development opportunities of the biomedical industry and artificial intelligence technology, the working group will carry out the development, evaluation and verification of AI pharmaceuticals and biomedical large-scale model standards, build benchmark data sets, evaluation platforms, tools, etc., and accelerate the rapid and compliant application of large models and other AI technologies in key aspects such as biological research, pharmaceutical device development, clinical trials, registration review, manufacturing, supply circulation, digital marketing, user use and services.

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