Halister News

(Bloomberg) -- Investors should buy big Chinese pharmaceutical cos. as the sector will consolidate in next five years and drug quality standards will improve, while the market should see double-digit growth in 2019-2021 as insurance coverage expands and new products are approved, Credit Suisse says.

• Sino Biopharmaceutical Ltd. is top pick, rating upgraded to outperform and PT raised 69% to HK$12 from HK$7.10, analysts led by Serena Shao write in Oct. 31 note
• Top 10 China pharma cos. should double market share by 2022, while more than 50% of local smaller cos. will be forced out of business due to quality concerns
• Credit Suisse also likes hospital sector due to rising demand for higher quality services and expansion opportunities from privatization of public hospitals
  • Initiates coverage on China Resources Phoenix Healthcare Holdings Co. with outperform rating and PT of HK$13, implying 26% upside from Monday’s close
• Other favored big Chinese pharma names include Jiangsu Hengrui Medicine Co., CSPC Pharmaceutical Group Ltd. and China Medical System Holdings Ltd.; Credit Suisse has outperform ratings on all three
• Also likes Shanghai Fosun Pharmaceutical Group Co.; has outperform rating on co.’s H shares, neutral on A shares
• Neutral on distributors
• NOTE: MSCI China Healthcare Index has risen 5.2% over past month, led by Shanghai Fosun Pharmaceutical with 18% gain; MSCI China Index +3.6% over same period
• ALSO: CSI 300 Healthcare Index +8.2% in past month vs +4.2% for CSI 300 Index
• Read More: China Consumer Stocks Soar as Defensive Ploys Pay Off

To contact the reporter on this story: Will Davies in Hong Kong at wdavies13@bloomberg.net To contact the editors responsible for this story: Robin Ganguly at rganguly1@bloomberg.net Ron Harui, Will Davies