SBP Combats Drug Price Cuts With a Strong Fast Follower Pipeline

Sino Biopharmaceutical, or SBP, is one of the top four drugmakers in China, and operates in a fast-growing and rapidly changing environment. Drug manufacturing is growing faster than GDP, and we project it to grow at high single digits over the next decade. Additionally, the industry is undergoing massive regulatory change. The most impactful policy is the Group Purchasing Organization, or GPO, which is expected to cut prices for several hundred commonly used chemical generics over the next few years. Although the near-term impact from regulatory reform will be negative for SBP, we believe in the long-term it will be supportive of SBP’s manufacturing capabilities and somewhat differentiated pipeline.