Xiaomo: Mainland healthcare industry pullback provides market entry opportunities, favoring biotech and CXO

The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that although the mainland healthcare industry sector declined from a high level in September and October due to the results of the national medical insurance drug catalogue price negotiations and the subsequent return of profits, the bank believes that the fundamentals of the industry have not changed. The recent weakness has instead provided a good opportunity to enter the market in 2026.

Regarding the external licensing of innovative drugs, the bank believes the trend is sustainable. Currently, there are several potential targets and drug forms, which are expected to bring new licensing opportunities next year. And the key global Phase III clinical data reading of these authorized assets will be critical to market sentiment and deserve close attention. Furthermore, the bank also believes that geopolitical concerns about China's pharmaceutical R&D outsourcing industry (CXO) have reached their peak, and it is expected that China's medical policy environment will remain stable and will continue to support innovation, while more moderate drug volume procurement will drive the recovery of the medical device and diagnostic sector.

In terms of stock selection, the bank favors biotechnology and CXO. Among them, it favors Cinda Biotech (01801), Collumbotai Bio-B (06990), Pharmaceutical Kangde H shares (02359), Pharmaceutical Kangde A shares (603259.SH), and PharmacomingUnited (02268), and is optimistic about minimally invasive robot-B (02252) in the medical technology industry. Cinda Biotech's target price was slightly raised from HK$110 to HK$111, maintaining an “incremental” rating. The target price of Pharmaceuticals & Pharmaceuticals was raised from HK$74 to HK$82. The above shares all received an “incremental” rating.