According to a research report released by CLSA, the recent pullback in China's healthcare sector has been primarily driven by macroeconomic concerns, and these factors have largely been reflected in share prices; with overseas progress and mainland operations continuing to improve, and the macroeconomic environment having stabilized, the firm views the recent pullback as a buying opportunity.
The firm noted that sample hospital data shows drug sales improved month by month from July to September, with stronger sequential momentum in September, which may reflect that companies and doctors are gradually adapting to new compliance requirements. Third-quarter earnings are expected to improve, and the upcoming results season could serve as a short-term catalyst. The importance of the out-of-hospital and self-pay markets is rising, and with more innovative drugs coming to market and demographic trends, the firm believes the mainland market will eventually become a growth engine again.
At ESMO 2026, Chinese assets accounted for 29 of 96 LBA presentations and 5 of 12 Presidential Symposium sessions. Key developments include positive Phase III results for SKB BIO (06990)'s TROP2 ADC sac-TMT in first-line non-squamous non-small cell lung cancer and endometrial cancer; successful Phase III trial of Akeso (09926)'s AK112 versus durvalumab in first-line biliary tract cancer; successful first Phase III readout of Innovent Bio (01801)'s CLDN18.2 ADC IBI343 in later-line gastric cancer; first Phase I data for GenFleet-B (02595)'s GFH276; and registrational clinical data for Leads Biolabs-B (09887)'s LBL-024, among others.
Further data readouts are expected at ESMO Asia from December 4 to 6, including CSPC Pharma (01093)'s SYS6010. Legislation related to China-U.S. innovative drug licensing has largely been settled, with limited impact on normal license-out transactions, removing a major uncertainty for overseas expansion. The firm maintained its China healthcare stock basket unchanged, noting that healthcare accounts for less than 2% of total fund holdings, and that the valuation discount offers a more attractive long-term buying opportunity; further overseas clinical progress and new Phase III asset BD deals should also provide support for the sector.
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