As a leading pharmaceutical company in China, Sino Biopharm has delivered significant results in its innovation-oriented transformation. By focusing on four core therapeutic areas: oncology, liver/ metabolism, respiratory, and surgery/ analgesia, the Company has built a robust innovative pipeline which includes multiple assets with substantial potential for global out-licensing. Additionally, the rapid sales ramp-up of its biosimilar products and the resilient growth in generics business will continue to provide strong financial support for its innovation. We initiate coverage of Sino Biopharm with a BUY rating and a TP of HK$9.40.
　　A full-speed transformation to innovation with global out-licensing
　　breakthroughs expected. Sino Biopharma has consistently increased R&D investment to 17.6% of total revenue in 2024, significantly up from 9.9% in 2019. By the end of 2024, 17 innovative drugs (including biosimilars) of the Company had been approved in China, contributing 42% of total revenue in 2024, compared to only 11% in 2015. In addition to in-house R&D, the Company has proactively expanded its collaborations with external partners to enrich its innovative pipeline. Based on our data, the Company completed more than 3 deals on average annually from 2019 to 2024. Moreover, its landmark acquisition of LaNova Medicines significantly enhances its early- stage R&D capabilities, laying a solid foundation for overseas out-licensing opportunities. Notably, multiple investigational products within Sino Biopharma’s pipeline possess promising potential for global out-licensing, including TQC3721 (PDE3/4), Rovadicitinib (JAK/ ROCK), TQB2102 (HER2 bispecific ADC), TQB3616 (CDK2/4/6), TQA2225 (FGF21), LM-108 (CCR8), LM-168 (CTLA-4TME), and LM-364 (Nectin-4TME ADC).
　　Investments in innovation reached a harvest phase. Sino Biopharm has
　　built a rich innovative pipeline centered around its four key therapeutic areas.
　　In oncology, Anlotinib has emerged as a cornerstone product, with 9 indications approved and another 4 indications under NMPA NDA review as of July 2025. Its combination with IO therapies is expanding its reach into first- line treatment for major indications, further unlocking sales potential. The Company’s oncology pipeline also contains other promising candidates, such as Culmerciclib, the fastest progressing CDK2/4/6 inhibitor globally, TQB2102, the No.2 ranking HER2 bispecific ADC worldwide, and TQB2868, the fastest progressing PD-1/TGF-β bifunctional fusion protein in the world.
　　Additionally, the PDE3/4 inhibitor TQC3721, with global best-in-class potential, may become a blockbuster treatment for COPD and is a prominent candidate for potential overseas licensing. In liver/metabolism area, the Company’s differentiated pipelines target major indications such as obesity, diabetes, and MASH.
　　Rapid sales ramp up of biosimilars coupled with resilient momentum
　　seen in generics business. According to PharmCube, the combined sample-hospital market size for the seven approved biosimilars of Sino Biopharm reached RMB24bn in 2024. Given the Company’s well-established commercialization network in China, the biosimilar sales are expected to ramp up rapidly, particularly for pertuzumab, where Sino Biopharm holds substantial first-to-market advantage. Moreover, the generics business of the Company has shown strong resilience amid policy shifts in China, with revenue returning to positive growth in 2024 (+3.1% YoY). Most importantly, the impact of volume-based procurement (VBP) in China has been largely eliminated for Sino Biopharma, with products selected by the 10th batch of VBP accounting for just 1% of the Company’s total revenue in 2024.
　　Initiate at BUY with a target price of HK$9.40. We forecast revenue growth
　　of 11.4%/ 10.5%/ 9.6% YoY for 2025E/ 2026E/ 2027E, with adjusted net profit　　growth of 12.2%/ 11.5%/ 10.5% YoY, respectively. Out of prudence, our current estimates do not yet factor in future earnings contributions from potential overseas out-licensing for multiple key assets. Based on a 10-year DCF model (WACC: 9.3%; terminal growth: 2.0%), we derive a TP of HK$9.40, implying 37x 2026E adjusted P/E.