Innovation has been recognized internationally, and the leading AH pharmaceutical company Fosun Pharmaceutical (02196) is about to release “double value”

When an innovative drug licensing deal of US$645 million hit the subsidiary Fuhong Hanlin's 235% increase during the year, the valuation logic of Fosun Pharmaceuticals (02196) is undergoing a silent restructuring.

On August 11, Fosun Pharmaceutical's announcement shocked the market: its self-developed small-molecule oral DPP-1 inhibitor XH-S004 and US biotech company Expedition Therapeutics reached a global rights license (excluding China, Hong Kong and Macau regions), and the total potential transaction amount reached US$645 million (approximately RMB 4.6 billion).

The next day, Fosun Pharmaceutical's H shares surged 9.4% in early trading, and A-shares rose 5.6% at the same time. The market acknowledged the deal with real money.

According to the Zhitong Finance App, XH-S004 is a small molecule oral DPP-1 inhibitor for which Fosun Pharmaceutical has independent intellectual property rights. It reduces inflammatory response by inhibiting DPP-1 and the neutrophil serine protease it activates, thereby blocking the vicious cycle of infection and airway structural damage caused by it. Currently, XH-S004 for the treatment of non-cystic fibrosis bronchiectasis is in phase II clinical trials in China, and phase Ib clinical trials for the treatment of chronic obstructive pulmonary disease (COPD) in China.

For XH-S004 research and development, Fosun Pharmaceutical's total R&D investment is only about 72 million yuan (unaudited). Compared with the current authorized amount of US$645 million, the input-output ratio is astonishing.

Expedition is a biotechnology company focusing on the development of innovative treatments in the field of autoimmune diseases. Its core management team consists of veterans in drug development and business development from multinational pharmaceutical companies and biotech companies. Expedition's current investors include several well-known US investment institutions with rich industry investment experience. Fosun Pharmaceuticals is collaborating with partners focusing on autoimmune diseases to promote XH-S004 to benefit patients with non-cystic fibrosis bronchiectasis and chronic obstructive pulmonary disease more widely around the world.

It is worth mentioning that just one day after the deal was announced, the American biotech company Insmed announced that Brensocatib, its dipeptidyl peptidase 1 (DPP-1) inhibitor, was officially approved for marketing in the US to treat non-cystic fibrosis bronchiectasis (NCFBE) patients in children aged 12 and above and adults. Currently, only Insmed's DPP-1 inhibitor has been approved for marketing worldwide. There are not many domestic companies with a layout on this racetrack, and Fosun Pharmaceutical is already leading the way. However, in recent years, the global population of patients with chronic lung disease has continued to expand, demand for medication has surged, and the value of DPP-1 inhibitors has also become more obvious. MNC giants such as MSD and GlaxoSmithKline (GSK) have stepped up their layout in this segment. This increasingly popular track is gradually splitting into a blue ocean where giants compete due to new mechanisms, small molecules, and breakthroughs in biotechnology.

The launch of Fosun Pharmaceutical's DPP-1 inhibitors not only proved that their pipeline value was recognized by the market, but also proved that the innovation and transformation achieved remarkable results during the period.

This strategic shift is also clearly visible in capital operations. Just three days before the licensing agreement was announced, Fosun Pharmaceutical announced that it had completed issuing the second installment of the 2025 Science and Technology Innovation Bond. The actual total issuance amount was 1 billion yuan. The period was 2 years, and the issuance interest rate was only 2.70%. This is the first medium- to long-term science and technology innovation bond in the domestic private pharmaceutical industry, reflecting the capital market's high recognition of Fosun Pharmaceutical's innovation, transformation and innovation capabilities.

The results of Fosun Pharmaceutical's innovation and transformation were even more remarkable in its subsidiary Fuhong Hanlin. As far as stock prices are concerned, as of August 14, Fuhong Hanlin's stock price increased by nearly 235% during the year, with a total market value of HK$43.1 billion.

The sharp rise in Fuhong Hanlin's stock price is closely related to its many innovative products. According to the Zhitong Finance App, at the 2025 WCLC conference, Fuhong Hanlin's three core innovative products in the field of lung cancer, PD-L1 ADC HLX43, anti-EGFR monoclonal antibody HLX07, and anti-PD-1 monoclonal antibody H drug, 10 lung cancer research studies were selected for the conference oral reports, wall guide, poster display, etc., including 4 oral reports and 2 wall reports.

According to information, HLX43 is the world's first PD-L1 broad-spectrum anti-tumor ADC to enter clinical phase II. It has both immune checkpoint blocking and payload cytotoxicity. In advanced solid tumors, especially in the vast majority of patients with backline drug-resistant NSCLC who received checkpoint inhibitors (CPI) and failed, HLX43 continued to show a high response rate, showing better efficacy in specific subgroups such as eGFR wild-type nsnsCLC, with an ORR of 47.4%.

In the new era of tumor treatment where IO and ADC go hand in hand, Fuhong Hanlin's PD-L1 targeted ADC HLX43 stands out with its breakthrough clinical data, not only verifying the synergy value of the dual mechanism of “immune activation+toxin killing”, but also directly tackling the current treatment difficulties of PD-1/L1 drug-resistant patients with its high efficiency and low toxicity characteristics, making it one of the most watched innovative treatments in the field of lung cancer in the world.

As various innovation pipelines such as HLX43 progress, its stock price is expected to continue to soar. Considering that Fuhong Hanlin has not yet been included in the Hong Kong Stock Exchange Standard, some domestic investors cannot directly enjoy the dividends brought by its growth. In this regard, one recommended strategy is for investors to indirectly benefit from Fuhong Hanlin's innovative value by holding Fosun Pharmaceuticals, while also enjoying the steady support and risk mitigation brought by the parent company's diverse business ecosystem.

Fosun Pharmaceutical itself has deep pharmaceutical R&D and commercialization capabilities. Its business ecosystem covers multiple platforms such as small molecule drugs, cell therapy, antibody/ADC, etc., and the overall performance is steady and has great potential for growth. Among them, Fuhong Hanlin, as a core innovation asset, has developed rapidly in recent years and has become an important value growth engine for Fosun Pharmaceutical Group.

However, such a critical “value entry” is grossly underestimated. As of the latest close (August 14), Fosun Pharmaceutical's H shares closed at HK$19.96 per share. Compared with its A share price of RMB 27.97 per share, H shares were discounted by 34% compared to A shares. This valuation gap contrasts strongly with the continued release of the company's overall innovation value.

As the wave of revaluation of innovative drugs swept through the capital market, Fosun Pharmaceutical developed innovative achievements through solid R&D pipelines, successful international cooperation, and subsidiary innovation. When XH-S004 advances clinical trials in overseas markets, and when HLX43 Phase II data is unveiled at the World Lung Cancer Conference, the market will eventually recognize that the era of globalization of innovative Chinese pharmaceutical companies has arrived, and the market value of Fosun Pharmaceutical is also expected to be fully re-evaluated.