China Pharma H126 preview: Innovative drug sales and license income remain the two dominant drivers

Research evidence excerpt

China Pharma H126 preview: Innovative drug sales and license income remain the two dominant drivers

China Pharma UBS Research

Sector overview for H126

We expect the Chinese pharma companies under our coverage to deliver median

revenue/earnings growth of 8%/1% in H126, respectively, and 12%/19% in 2026,

driven by continued innovative drug sales momentum and rising BD income. 1) We

expect all the companies except United Lab to deliver positive revenue growth in H126,

with Simcere posting the strongest growth (+30% YoY), and United Lab seeing a 33%

revenue decline due to the one-off upfront revenue in H125. 2) We forecast median

growth of 1% YoY in net profit for the companies under our coverage in H126, mainly

held back by a high base due to one-off gains at SBP and substantial upfront revenue at

United Lab in H125, and intensifying competition for 3SBio's core products in H126.

Compared with Visible Alpha consensus, our H126 revenue estimates are 5%/4%

higher for Hansoh/Kelun Pharma, driven by strong product sales and licensing income

at Hansoh and a stabilising legacy business at Kelun Pharma. We expect 3SBio and

United Lab to miss consensus revenue by 6% and 16% due to weaker core product

sales and softer 6-APA demand, respectively, while our forecasts for the remaining

names are broadly in line. Simcere remains our sector top pick, supported by strong

growth in the rapidly expanding ORA insomnia market and an attractive valuation.

According to IQVIA sales data, Hengrui maintained resilient innovative drug sales

growth of about 25% YoY in 5M26, although May 2026 was a lower 16% YoY

(generics: -7%/-8% YoY May/5M26 ). For novel drugs with Rmb50m+ in monthly sales,

rezvilutamide (AR, +71%) and henagliflozin (SGLT2, +90%) had the most momentum