Sino Biopharmaceutical, One of the Largest Chinese Drugmakers, Is in the Transformation Stage

Sino Biopharmaceutical was initially anchored in hepatitis medicines with its flagship drug Tianqing Ganmei, which was approved in 2005 in China. Since the introduction of China’s volume-based procurement policy in 2018, Sino Biopharm has increased its research and development spending for a more innovative pipeline. VBP purchases pharmaceutical products in bulk from drugmakers at a lower price for national public hospitals using national public healthcare funds. Generic or biosimilar drugs have the most severe price cuts in VBP. In 2023, generics and biosimilars contributed around 70% of Sino Biopharm’s total revenue. Hence, we believe the company’s transformation strategy makes sense, as it will increase Sino Biopharm’s competitive advantage while helping to mitigate the impact of VBP.