Healthcare 02 (May 15 - Dec 25)

[winston]

Biotech Analysts See Deals, Drug Data Carrying 2020 Performance

by Bailey Lipschultz

Biotechnology analysts expect another strong performance in 2020 after stocks rose almost 25% this year.

While some investors have been hesitant to dive into smaller drugmakers amid worries about legislation to drive down drug prices, analysts across Wall Street have advised investors to pile into companies with more innovative products.

Source: Bloomberg

https://finance.yahoo.com/news/biotech- ... 27729.html

[winston]

China expands drug-buying program

China is expanding its generic drug-procurement program to include an additional 33 drugs, pitting domestic and international drugmakers, in a price war that could see Chinese players dominate.

Less than three months after China went nationwide with a pilot bulk-buying program for 25 medicines, the government yesterday announced a second batch of 33 drugs treating everything from diabetes and infections to dementia.

Makers of generic and brand-name versions of the newly added drugs are required to submit bids by mid-January. The government has set a price ceiling and will allow more than four companies to supply as much as 80 percent of national demand, for a certain drug for a maximum period of three years.

China is changing the way it procures drugs in major cities as part of a grand overhaul to improve health care for the country's 1.4 billion people.

Driving down the price of generic, off-patent medication drugs is an important part of that plan.

The initiative has evolved to reward more companies. The pilot program, launched in December 2018, began with naming one company as the major supplier of a particular drug. When it was expanded nationwide in September, as many as three companies were allowed to supply as much as 70 percent of a particular drug to hospital.

The latest inclusion of more than four participating companies opens up greater opportunities to Chinese drugmakers that have passed the government's quality consistency tests, an official stamp that assures the generic version is just as good as the brand-name drug.

The first round of the drug bulk-purchasing program, which combined procurement of 25 drugs across 11 Chinese cities in late 2018, yielded savings of 5.8 billion yuan (HK$6.46 billion) in health-care spending, the government said earlier this year.

Source: Bloomberg

http://www.thestandard.com.hk/section-n ... 1230&sid=2

[winston]

Tech ETF Wealth Builder No. 3: IHI

Medical devices are on the front lines of healthcare innovation. And it’s a field that covers everything from in vitro diagnostics to remote heart monitoring to deep brain stimulation.

A lot of the innovation in this sector is taking place right here in the United States, which is projected to account for $208 billion of the global medical device market by 2023, according to Select USA.

That’s why I recommend the iShares U.S. Medical Devices ETF (NYSE: IHI) as a cost-effective way to play the whole field at once.

Over 70% of this portfolio is anchored by 10 of the world’s most innovative device makers, such as Medtronic Plc. (NYSE: MDT), Abbott Laboratories (NYSE: ABT), and Boston Scientific Corp. (NYSE: BSX).

Trading at $272.12, the fund charges a 0.43% expense ratio. Over the past five years, it has yielded 128% profits, beating the S&P 500 by 103%.

Source: Daily Trade Alert

[winston]

not vested

Health Care Select Sector SPDR (XLV)

Already one of the better-performing traditional sector funds this year due in large part to investors embracing companies racing to develop coronavirus vaccines, the Health Care Select Sector SPDR (NYSE: XLV) is the second-best SPDR in June, meaning its usual gains in the sixth month of the year are even more meager than those posted by the aforementioned XLU.

Interestingly, of the 25 best-performing S&P 500 members in June over the past decade, eight are XLV components, including Dow members UnitedHealth (NYSE: UNH) and Johnson & Johnson (NYSE: JNJ).

Source: Benzinga

[winston]

Antibiotics in the US

80% of the antibiotics we consume in the United States come from China.

Did you know that we can’t make penicillin anymore in the United States? Chinese producers sold it at such low prices that they drove out all the domestic producers.

Now, we’re hugely dependent on China for penicillin and other antibiotics including those for superbugs.

Many healthcare experts believe that about 80% of the basic components used in U.S. drugs come from China and India.

If China wanted to cut off the supply drugs and medicine it sends to America, we’d have a major health crisis here.

Source: Investor Place

[winston]

Healthcare stocks rallied more than 5% to a new all-time high, as it is clear that the Senate will remain in Republican control.

Even if Biden wins, a complete overhaul of the healthcare system will be difficult with the Republican senate majority.

That has led to a relief rally that is spread across the entire industry.

Source: Money Wire

[winston]

not vested

Invesco DWA Healthcare Momentum ETF (PTH)

Health care is huge right now, and not just because of the Covid-19 pandemic. Aging baby boomers and advances in medications and technology are pushing health care to the forefront of society and business.

One of the best ways for investors to gain broad-based exposure to health care is through the Invesco DWA Healthcare Momentum ETF, or PTH.

The ETF is comprised of U.S. health care stocks and it aims to meet a specific set of investment criteria, including fundamental growth, stock valuation and risk mitigation.

Currently, one quarter (25%) of PTH is allocated to the biotechnology sector, followed by a 23% weighting for the health care equipment and supplies sector.

Top holdings include UnitedHealth Group (NYSE:UNH), Humana (NYSE:HUM) and Thermo Fisher Scientific (NYSE:TMO).

The PTH ETF has $552.7 million assets under management and boasts an expense ratio of 0.60%, or $60 annually on a $10,000 investment. It doesn’t pay a dividend, but it has returned 43% to investors year-to-date and is up 20% over the past five years.

Source: Investor Place

[winston]

Drugmakers including Pfizer, Sanofi, and GlaxoSmithKline plan to raise US prices on more than 300 drugs in the United States on Jan 1, according to drugmakers and data analysed by healthcare research firm 3 Axis Advisors.

The hikes come as drugmakers are reeling from effects of the Covid-19 pandemic, which has reduced doctor visits and demand for some drugs.

Source: Phillips

[winston]

China Healthcare Sector – Key takeaways of the 2020 National Reimbursement Drug List

Effective 1 March 2021 to 31 December 2022, the new NRDL list covers ~2800 drugs (vs 2019’s 2713), as regulators continue to work on increasing coverage of key drugs.

For the latest round of drug price negotiation qualifying for medical insurance reimbursement, 119 drugs (from 162 candidates) were successfully added to the NRDL list with an average price cut of -50.6% for negotiated drugs.

14 proprietary drugs originally on the previous list (with more than CNY1bn of estimated annual sales) were retained (e.g. AstraZeneca (Buy)’s prostate cancer drug Zoladex/goserelin and CSPC (Buy)’s NBP (capsule and injection, for acute ischemic stroke), while 29 drugs were taken out of the list.

Covid-19 treatments recommended in the national treatment guidelines were added, while previously unlisted domestic PD-1 inhibitor drugs from Hengrui (unrated), Junshi (unrated) and Beigene (unrated) were added. Most of the agreed cuts in drug prices have not yet been disclosed as details of the new NRDL prices will be released by March 2021.

Pricing pressure will remain a continuous headwind for the pharma sector in China. In addition to regular NRDL negotiation exercises (mostly affects newer drugs), centralized group procurement exercises (mostly applied for common generics) are also annual recurring events and will exert ongoing pricing pressure on drug prices while pharmaceutical companies work on growing their pipeline of new innovative drugs.

In such an environment, leading pharmas with stronger drugs pipeline and commitment to research and development are better positioned and should fare better (e.g. Sino Biopharm 1177 HK).

We expect a more modest year ahead for CSPC (fair value HKD10.60) following the latest NRDL price cuts announced for its NBP drug (~51.3% and 55.6% price cut for NBP injectable and capsules respectively, effective 1st March 2021), which will require a period of transition for volume expansion to come through over the year as the new pricing takes effect while the company works on increasing its penetration in lower tier cities.

Elsewhere in the sector, while we see more growth opportunities and less policy headwinds in sub-segments such as contract research organisations (CRO), valuations are rich (e.g. Wuxi Biologics) at this point and we prefer to accumulate new positions on pullback.

Drug distributors offer long term value (buy-rated ideas in this segment are Sinopharm Group/1099 HK and Shanghai Pharmaceuticals/2607 HK) but are expected to see earnings volatility ahead driven by higher write-downs and/or rise in finance costs due to impact from the pandemic (higher accounts receivable balances expected to come through resulting from distributors’ credit extension to public hospitals).

Source: OCBC

[winston]

China Healthcare Sector – Key takeaways of the 2020 National Reimbursement Drug List

Effective 1 March 2021 to 31 December 2022, the new NRDL list covers ~2800 drugs (vs 2019’s 2713), as regulators continue to work on increasing coverage of key drugs.

For the latest round of drug price negotiation qualifying for medical insurance reimbursement, 119 drugs (from 162 candidates) were successfully added to the NRDL list with an average price cut of -50.6% for negotiated drugs.

14 proprietary drugs originally on the previous list (with more than CNY1bn of estimated annual sales) were retained (e.g. AstraZeneca (Buy)’s prostate cancer drug Zoladex/goserelin and CSPC (Buy)’s NBP (capsule and injection, for acute ischemic stroke), while 29 drugs were taken out of the list.

Covid-19 treatments recommended in the national treatment guidelines were added, while previously unlisted domestic PD-1 inhibitor drugs from Hengrui (unrated), Junshi (unrated) and Beigene (unrated) were added. Most of the agreed cuts in drug prices have not yet been disclosed as details of the new NRDL prices will be released by March 2021.

Pricing pressure will remain a continuous headwind for the pharma sector in China. In addition to regular NRDL negotiation exercises (mostly affects newer drugs), centralized group procurement exercises (mostly applied for common generics) are also annual recurring events and will exert ongoing pricing pressure on drug prices while pharmaceutical companies work on growing their pipeline of new innovative drugs.

In such an environment, leading pharmas with stronger drugs pipeline and commitment to research and development are better positioned and should fare better (e.g. Sino Biopharm 1177 HK).

We expect a more modest year ahead for CSPC (fair value HKD10.60) following the latest NRDL price cuts announced for its NBP drug (~51.3% and 55.6% price cut for NBP injectable and capsules respectively, effective 1st March 2021), which will require a period of transition for volume expansion to come through over the year as the new pricing takes effect while the company works on increasing its penetration in lower tier cities.

Elsewhere in the sector, while we see more growth opportunities and less policy headwinds in sub-segments such as contract research organisations (CRO), valuations are rich (e.g. Wuxi Biologics) at this point and we prefer to accumulate new positions on pullback.

Drug distributors offer long term value (buy-rated ideas in this segment are Sinopharm Group/1099 HK and Shanghai Pharmaceuticals/2607 HK) but are expected to see earnings volatility ahead driven by higher write-downs and/or rise in finance costs due to impact from the pandemic (higher accounts receivable balances expected to come through resulting from distributors’ credit extension to public hospitals).

Source: OCBC