According to recent reports, international investment bank Morgan Stanley has released a latest research report stating that FOSUN PHARMA (600196.SH, 02196) is demonstrating improving profitability trends, with its innovative drug pipeline value being underestimated by the market. Combined with financial optimization from non-core asset divestment expected in the first half of 2025, the firm has upgraded both A-share and H-share ratings to "Overweight" and raised the A-share target price to 42 RMB and H-share target price to 33 HKD, representing significant upside from current stock prices. This expectation highly aligns with FOSUN PHARMA's recently disclosed 2025 interim results, highlighting its dual breakthrough in innovative drug commercialization and financial resilience.
**Tremendous Growth Potential in Innovative Drug Business**
FOSUN PHARMA's strategic positioning in innovative drugs is gradually showing results. In the first half of 2025, innovative drug revenue reached 4.3 billion RMB, up 14% year-over-year, accounting for 32% of pharmaceutical business revenue. Morgan Stanley expects innovative drug revenue to represent 45% of the company's total pharmaceutical sales by 2030.
Currently, FOSUN PHARMA operates three mature R&D entities, including Shanghai Henlius, Global R&D Center, and Fosun Kite, focusing on four core technology platforms: antibodies, ADC, small molecules, and cell therapy. Centered around core therapeutic areas including solid tumors, hematologic malignancies, and immune inflammation, FOSUN PHARMA has gradually built a high-value pipeline portfolio while actively expanding into chronic diseases (cardiovascular, renal, and metabolic) and neurological fields.
Morgan Stanley noted that FOSUN PHARMA's combination of self-developed and licensed innovative pipeline, along with its subsidiary Shanghai Henlius's innovative drug portfolio, are core factors driving innovative drug revenue growth, including promising progress in DPP-1, MEK1/2, and AR1001 (PDE5). Shanghai Henlius's core pipeline assets HLX43 (PD-L1 ADC), HLX22 (HER2 monoclonal antibody), and serplulimab injection (anti-PD-1 monoclonal antibody) demonstrate tremendous potential in global markets.
**Clear Performance Growth Expectations**
Morgan Stanley highlighted that FOSUN PHARMA's previously announced equity incentive plan has instilled market confidence, with the plan clearly setting growth targets for 2025-2027 net profit attributable to shareholders and innovative drug revenue, both targeting approximately 20% compound annual growth rate.
Morgan Stanley believes FOSUN PHARMA's current trading multiples correspond to 2025E P/E ratios of 20.1x (A-share)/14.7x (H-share), representing discounts of 24%/29% compared to A-share and H-share peer average P/E ratios respectively, indicating room for valuation expansion. FOSUN PHARMA's AH premium has narrowed from 62% at the beginning of the year to 34%, with H-shares performing strongly, while both A-shares and H-shares still have significant upside potential.
Morgan Stanley's positive assessment of FOSUN PHARMA reflects market recognition of its innovative drug business development and financial improvement. As the company continues advancing new drug development and optimizing asset structure, FOSUN PHARMA is positioned to stand out in future market competition, achieving dual enhancement in both performance and valuation.