Foreign giants are mining China's pharmaceutical stocks

Currently, foreign institutions are quietly increasing their allocation to Chinese pharmaceutical stocks. Recent annual reports from listed companies show that several foreign giants, including Goldman Sachs, UBS, and Barclays, entered the top ten circulating shareholders of multiple pharmaceutical stocks in the fourth quarter of last year, with investments spanning across several segments, including innovative drugs, traditional Chinese medicine, and medical devices. At the same time, many pharmaceutical listed companies, such as BeiGene and BGI Genomics, have also been visited by foreign institutions for research this year.

Data shows that UBS Group entered the top ten circulating shareholders of Sinovac Biotech in the fourth quarter of last year, holding 6.877 million shares. Research from Northeast Securities indicates that Sinovac’s main business covers innovative drugs, raw materials, and health food sectors. In the innovative drug sector, the company has comprehensively laid out ADC, monoclonal antibodies, and mRNA vaccine fields, with several products, including Enlansumab injection and Omadacycline injection, already approved for sale in China, covering core indications in oncology and autoimmune diseases.

Teva Pharmaceutical Industries has also received attention from both Goldman Sachs and UBS Group, as both became new top ten circulating shareholders of Teva in the fourth quarter of last year, holding 2.24 million shares and 1.71 million shares, respectively, by the end of the fourth quarter. Information shows that Teva is a pharmaceutical manufacturing company focused on the research, production, and sales of traditional Chinese medicine, chemical formulations, and raw materials.

In the fourth quarter of last year, Huangshan Capsule received collective buying interest from Barclays and Goldman Sachs, with both institutions entering the company’s top ten circulating shareholders list. By the end of the fourth quarter, Barclays and Goldman Sachs held 1.317 million shares and 1.135 million shares, respectively.

Goldman Sachs and UBS Group also entered the top ten circulating shareholders of HeFu China in the fourth quarter of last year, holding 507,000 shares and 376,000 shares, respectively, by the end of the fourth quarter.

This year, foreign institutions are still actively researching A-share pharmaceutical listed companies. According to WIND statistics, as of March 24, BeiGene has received research visits from 81 foreign institutions this year, ranking first among all A-share companies that have been visited by foreign institutions. In addition, BGI Genomics, Aibo Medical, Lanfan Medical, New Industry, CanSino, and ProLogis have also welcomed multiple foreign institution research visits in the pharmaceutical sector.

A third-party analyst in Shanghai told the Shanghai Securities Journal that from the allocation structure, foreign capital spans traditional Chinese medicine, pharmaceutical manufacturing, and some growth-oriented pharmaceutical targets in the pharmaceutical sector, showing a “defensive + growth” dual-line allocation characteristic. This allocation approach reflects foreign capital’s confidence in the long-term development of China’s pharmaceutical industry and also demonstrates a balance between “certainty” and “growth” in the current market environment.

“On one hand, leading companies in traditional Chinese medicine benefit from policy support and consumption upgrades, with stable performance growth and strong anti-cyclical capabilities; on the other hand, growth-oriented targets represented by innovative drugs carry long-term logic of industrial upgrading and self-control, with greater potential for growth,” the analyst added.

A foreign fund manager, in an interview with the Shanghai Securities Journal, stated that the current A-share pharmaceutical sector presents rich alpha opportunities. He noted that the order inflection point in the CXO sector has gradually been established, and the industry chain is expected to undergo a dual repair of performance and valuation; in segments such as medical devices and traditional Chinese medicine, some companies that possess technical barriers, operate steadily, and have stabilized after collective procurement also have good defensive value and valuation attractiveness.

“Overall, we maintain a positive view on the medium to long-term development of China’s pharmaceutical industry, and at this stage, we prefer to construct our portfolio by selectively choosing stocks and grasping the rhythm of performance realization,” the fund manager said.