Source: Broker China Author: Shi Qian
The path to the rise of innovative drugs doesn't seem easy!
A “Draft for Solicitation of Comments on the Implementation Plan to Support the Development of Innovative Drugs in the Whole Chain” that came out last night stimulated the nerves of the market. In early trading today, the Hong Kong Stock Innovative Drug ETF once soared by nearly 10%. Soon, however, the entire sector fell into a slump. The reason was Yao Ming Kang De. This stock also opened high and went low, plummeting nearly 5%.
What actually happened? On the evening of March 13, just as the country was cheering for the benefits of innovative drugs, it was announced on the official website of BIO (Biotechnology Innovation Organization), a well-known American biotechnology organization, that it would be excluded from membership in WuXi (Pharmaceutical Kangde) and that cooperation with it would be terminated.
So, how much impact will this matter actually have? Is there also an impact on the entire innovative medicine sector?
Yao Ming Kang De plummeted
On March 14, there was a sharp rise in the pharmaceutical market. The innovative drug ETF Phu Quoc (159748) opened surged, Hang Seng Healthcare ETF (159506) surged more than 6%, and the vaccine ETF Fu Guo and the leading pharmaceutical ETF rose simultaneously. Among them, the innovative drug ETF Fuguo component stock Zhaoyan Pharmaceutical rose or stopped, while Tiger Pharmaceuticals, Digger Pharmaceutical-U, and Rongchang Biotech collectively surged more than 10%. However, the market soon became fragmented, and many pharmaceutical stocks began to weaken frequently. Among them, the trend of Yao Ming Kang De is the most notable. Pharmaceutical Kang De H shares fell more than 9%, Pharmaceutical Biotech fell more than 8%, and its A shares also plummeted by nearly 5%.
The “Draft for Solicitation of Comments on the Implementation Plan to Support the Development of Innovative Drugs in the Whole Chain” document that came out last night is to comprehensively promote key aspects of R&D, approval, use, and payment of innovative drugs through policy guidance and support. It can be said that there are quite a few interesting articles in this document, and the market is also looking forward to it. However, the market does not seem to be able to withstand the impact of some peripheral events.
On the evening of March 13, the official website of BIO (Biotechnology Innovation Organization), a well-known American biotechnology organization, issued a press release announcing that it would cancel WuXi (Pharmaceutical Kangde) membership and end cooperation with it.
In a press release, BIO said it will take steps to “eliminate Medicinal Kangde membership” and fully support the US Biosafety Act. Also, the bill may prohibit Pharmacovac and several other Chinese healthcare companies from doing business in the US or cooperating with US companies. BIO also revealed that on the 13th, it sent a letter to Michael Gallagher (Michael Gallagher), a member of the House of Representatives and chairman of the US-China Strategic Competition Special Committee, stating its position and emphasizing the importance of the biotechnology industry to national security.
Earlier, Yao Ming Kang announced on the Hong Kong Stock Exchange that the US Senate Committee on Homeland Security and Government Affairs voted on March 6 to pass a revised draft bill S.3558 to report to the Senate. The amendments to the draft include, but are not limited to, a non-retroactive provision that exempts existing contracts signed prior to the entry into force of the proposed legislation; and procedures relating to the designation and review of “concerned companies” by US government agencies. Despite these revisions and the existing national security assessment procedures of US government agencies, the draft pre-defines Pharmacovigilant as one of the “biotechnology companies to pay attention.” The company strongly opposes this pre-emptive and unfair definition without due process, and we strongly believe that Pharmacovigilance did not, does not present, and will not pose a national security risk to the US or any other country. The company also once again reiterated that Yao Ming Kangde has no human genomics business, nor does the company collect human genomics data in any of its current businesses. Over the next few months, the above draft will continue to go through the Senate's legislative process. The company will cooperate with consultants to continue exchanges and dialogues with relevant parties involved in the draft and the ongoing legislative process for the corresponding bill in the US House of Representatives. The content of the draft is still subject to further review and may be changed.
Currently, Yao Ming Kangde is the only Chinese company blacklisted by the Biosafety Act, which is a bipartisan bill that has been proposed by both houses of the Senate and the House of Representatives. In early trading today, the performance of Hong Kong pharmaceutical stocks was divided. Tiger Pharmaceuticals once rose more than 21%, Pharmaceutical Kangde fell more than 8%, and Pharmaceutical Biotech fell more than 7%.
How big is the disturbance?
Over the past two days, disturbances from the periphery have gradually increased.
Haitong International said it is optimistic about the company's compliant operation and long-term development. According to the company announcement, Pharmaceutical Kangde's business development does not pose a risk to the safety of any country. Pharmaceutical Kangde has always complied with the laws and regulations of various countries where it operates, including China and the United States. Pharmaceutical Kangde has always been a trusted partner in the global medical industry, and continues to provide drug development and production services to thousands of US and global customers to help promote the early launch of innovative drugs to benefit patients around the world.
Judging from the flow of foreign capital, these disturbances do not seem to have caused much trouble for the Chinese stock market. Today's early trading saw a net inflow of foreign capital into the market, and it is the main buying power for the entire market. Furthermore, some grassroots research shows that the number of people entering Pudong Airport has increased markedly, and the airport has excluded entry.
According to Bloomberg, some investors have seen evidence that the recent rebound in the Chinese stock market may be different. Beijing's determination to end the sharp decline in the stock market, signs that the economy and profits are recovering, and the return of foreign capital inflows give investors reason to believe that the market is bottoming out and rebounding.
edit/lambor