China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

November 27, 2015 MORGAN STANLEY ASIA LIMITED+ Sean Wu China Healthcare [email protected] +852 3963-0755 Yolanda Hu 2016 Outlook: Prefer Service Providers to [email protected] +852 2848-5649 Isabella Zhao Manufacturers on Policy Uncertainties [email protected] +852 2848-5887 Laurence Tam We expect healthcare names to hold up well in 2016 with substantial [email protected] +852 2239-1753 chance of outperformance, after a relatively weak year. We prefer services names to manufacturers which are facing more policy China Healthcare headwinds. Sinopharm, Fosun and CTCM are our top picks for 2016. Asia Pacific IndustryView Attractive Tenders and reimbursement control to rein in drug sales growth: Tenders have been slow in 2015 but we do expect most provinces to finally complete them by mid-2016. Price cuts will continue to be the major tender Exhibit 1: What's Changed themes and companies are running increasing risk of losing out in certain markets for demanding high prices. Due to local government budget constraints, reimbursement control will only get tighter, which may lead to less prescription of accessory drugs. Hence, we think the weak drug sales growth will likely continue in 2016. Medical consumables to be subject to increasing levels of price control: Many provinces are conducting centralized procurement of high-end medical consumable products with the much talked about Ningbo model raising the Source: Morgan Stanley Research existential fears of some industry insiders. Hospitals will likely become more cost conscious if not allowed to make as much money from drug sales, which Exhibit 2: Our top picks would negatively affect sales of high-priced consumables. While the government is supportive of the development of the domestic medtech industry, its near-term impact is limited. Hence, we have also become more cautious on the medical equipment/devices sector. Services likely a bright spot: The Chinese government will continue to support the development of the private hospital sector and is more willing to allow hospitals to raise service charges if hospitals implement no markup Source: Morgan Stanley Research policies for drug sales, which should make high fees charged by private hospitals more acceptable to the general population. With more listed hospital Sean Wu takes over coverage of Shanghai Pharm A/H, Fosun names, the subsector has become quite investible. We have Fosun Pharma and Pharm A/H, Guangzhou Pharm A/H, Tasly and Hengrui with Harmonicare as top picks for the private hospitals play. We expect distributors this report. to further benefit from continued credit easing and potential upside from O2O drug sales. Sinopharm is our top pick due to its unrivaled industry leadership and potential of expansions into more value-added services. Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, Key policies to watch in 2016: 1) Continued support for R&D innovation investors should be aware that the firm may have a conflict with CFDA drug approval reform; 2) quality equivalence studies; 3) insurance of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan budget control and reimbursement price reforms; 4) mobile health; 5) release Stanley Research as only a single factor in making their of new NRDL; and 6) 13th five-year plan regarding the healthcare industry. investment decision. For analyst certification and other important disclosures, Top picks: 1) Sinopharm for credit easing and M&A; 2) Fosun for private refer to the Disclosure Section, located at the end of this hospital expansion; 3) CSPC for strong growth post tenders; . For small cap report. += Analysts employed by non-U.S. affiliates are not registered w ith FINRA, may names, we prefer CBPO, CTCM and Harmonicare. not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications w ith a subject company, public appearances and trading securities held by a research analyst account.

54 1 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Performance of Healthcare

Exhibit 3: Industry sales growth is slowing down quite a bit

Source: National Bureau of Statistics; Morgan Stanley Research Exhibit 4: China's A share healthcare is up 35% vs. SHSZ300 up 5% 2015 YTD

Source: Thomson Reuters; Morgan Stanley Research

55 2 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 5: MSCI China healthcare underperformed the market slightly 2015 YTD

Source: Bloomberg; Morgan Stanley Research

56 3 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Investment Summary

2 016 Outlook

We expect healthcare names to hold up well in 2016 with substantial chance of outperformance, after a relatively weak performance so far this year for overseas listed healthcare companies. While China's A-share healthcare index is up by 35% vs. 5% for SHSZ300 year to date, the MSCI Healthcare Index has so far underperformed MSCI China Index and H-share index. We prefer services names to manufacturers which are facing more policy headwinds. Tender price cuts, reimbursement controls, post-tender price renegotiations, and other policies may further temper industry growth for the drug industry so we believe investors must be selective on picking stocks within drug manufacturers. We used to think medical consumables/equipment sector is less prone to price cuts as drugs are where most expenditures go. Recent trends suggest local governments have started quite aggressively on tenders and price cuts for high-end medical consumables as well while tight hospital budgets may mean deferred purchase of medical equipment. Hence, we have also become more cautious on the medical device sector. On the other hand, we think distributors are facing less pressure from drug price cuts as they may make partial offsets by handling more volume of drug sales and choose different mix for delivery. Meanwhile, they are expected to enjoy a continued easy credit environment, making working capital much less costly than before. Hospital services should continue to enjoy government support and we expect more local government outsourced management of budget-constrained, underperforming hospitals through PPP relationships. We expect hospital services will become increasingly to investors in the next couple of years. Sinopharm, Fosun and CTCM are our top picks for 2016.

Tenders and tenders, price cuts and more price cuts – drug sales growth will be slow in 2016

While 2015 was billed to be a year of tenders, and provinces were asked to complete tenders by mid-year, no major provinces have announced tender results for key products after the tenders in Guangdong, Zhejiang and Hunan.

The overall progress is summarized below: 1. Official tender guidelines released (five provinces): Fujian, Hainan, Guangxi, Jiangsu, SichuanDraft 2. Tender guidelines soliciting public opinion (13 provinces): Jilin, Jiangxi, Liaoning, Inner Mongolia, Ningxia, Shaanxi, Tianjin, Xinjiang, Yunnan, Hubei, Guizhou, Heilongjiang, Shanxi 3. Draft tender guidelines for internal review (one province): Hebei

The next important tender would be the Beijing tender, the results for which are expected to be announced by the end of November. Jiangsu is a very important province for drug sales, but the tender has not started yet. As of this writing, Sichuan has just announced preliminary results for 22 oncology drugs, the average price drop of which was 38.3% versus their listed price ceiling.

57 4 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 6: Summary of Recent Provincial Drug Tender Policies

Source: MENET, Morgan Stanley Research Since most provinces have already initiated the tender process, we believe 2016 will indeed become a year that will see many provinces releasing tender results and the picture will not be pretty. As with the policy guidelines listed above, price cuts and dynamic reference of national low prices are major themes of the tenders.

The central government started to build a centralized information system on drug prices and other data in late 2014, and currently it is connected with 17 provincial tendering platforms. Over the long run, we think the information system may lead to open sharing of information, leading to more or less uniform prices and rules for drug tenders, which would work in conjunction with the public insurance reimbursement reforms.

Tight reimbursement budget to impair industry growth

As the economy slows down, local governments are facing budget constraints and are less generous with subsidizing either hospitals or patients to buy insurance. Many local governments have undertaken measures to reform hospital reimbursement mechanisms to ensure that optimal medical services can be delivered within the reimbursement budget.

Different reimbursement mechanisms are being proposed, including: 1. Per-head payment – total control of reimbursement for outpatient services within a set geographic region 2. Diagnosis-related group (DRG) reimbursement 3. Per-bed/day inpatient reimbursement 4. Total prepayment control

The purposes are to control the growth of patient reimbursement funds and to allow medical services to be delivered within reimbursement fund budgets. In essence, insurance bureaus purchasing services from hospitals want to ensure that the services delivered by hospitals, including drug prescriptions, are in line with patients’ treatment outcomes. Hence, insurance bureaus may negotiate with medical institutions to determine reimbursements and quality of service.

Baseline reimbursement of drugs is also a part of the regimen change for insurance reimbursement. In November 2012, the Ministry of Human Resources and Social Securities (MOHRSS) promulgated “the Opinion for total amount control of insurance payment for basic medical insurance.” It asked for the implementation of total amount control in all comprehensively arranged areas within two years. For drug reimbursement price reform, there are Sanming Model and Chonqing Model. The government is essentially moving away from proportional reimbursement of drugs to a fixed amount of reimbursement, which should benefit high-quality manufacturers.

Under total payment control, hospitals are provided budgets for reimbursement for the upcoming year. Surpluses may be kept, while shortages may be shared between hospitals and governments, conditioned on the 58 5 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH delivery of quality services. Shanghai started total prepayment control in 2009. Shanghai’s total prepaid amount controls have resulted in a dramatic slowdown of drug sales compared to the national average. We expect total prepayment scheme to propagate given the tight reimbursement budget all over China. Exhibit 7: Total Prepaid Amount Control Resulted Medical consumables to be subject to increasing levels in a Dramatic Slowdown of Sales Growth in of price control Shanghai

Many provinces are conducting centralized procurements of high-end medical consumable products. Jiangsu Province had conducted two rounds of centralized procurement of high-end medical consumables, the first one for stents, electrophysiology stuffs and the second one for orthopedic implants, surgical consumables and others. The average price cut for the first batch was 16.57% and the latter one 23.41%. Zhejiang conducted a tender that resulted in Source: IMS China average price cut of 25.7% for some of seven categories of medical consumable, with price cut as high as 77.2% for certain products and one product seeing price cut of 99k. The minimal price cut is 10%. Sichuan asked manufacturers to bid for sales in Sichuan with the lowest price anywhere. Anhui has cut orthopedic implants by an average of 13%.

Hospitals will likely become more cost conscious if not allowed to make as much money from drug sales, which would negatively affect sales of high-priced consumables. While the government is supportive of the development of the domestic medtech industry, its near-term impact is limited. Hence, we have also become more cautious on the medical equipment/devices sector. Previously, we have thought the price cutting pressure on medical consumables would not have materialized so quickly.

Services to be a bright spot

The Chinese government will continue to support the development of the private hospital sector and is more willing to allow hospitals to raise service charges after hospitals implemented no markup policies for drug sales, which should make high fees charged by private hospitals more acceptable to the general population. County- level hospital reform measures have focused mostly on removing drug sales as a source of income for public hospitals. Given the tight budget of many local governments, many do not have the resources to subsidize hospitals on revenue lost. Hence, many governments are willing to enter into public private partnerships for the management of public hospitals. Through last year, we saw Fosun Pharma, Pheonix Healthcare and Huahan enter into agreements with Yulin county, Baoding City, and Liu Peng Shui City for the management of public hospitals. We expect more and more hospitals will get partially privatized this way. In 2015, we saw the public listing of Harmonica and the pending listing of Kangning. More hospital chains may go public. With more listed hospital names, the sector has become quite investible. Unlike the manufacturing subsectors, we see policy tailwinds for the hospital services subsector.

Key policies to watch in 2016

1) Continued support for R&D innovation with CFDA drug approval reform; 2) quality equivalence studies; 3) insurance budget control and reimbursement price reforms; 4) mobile health; 5) release of new NRDL; and 6) 13th five-year plan regarding healthcare industry. S tay positive on strong long-term investment case for the Healthcare Industry

Fundamentals of the healthcare industry stay strong

We believe the healthcare industry will continue to grow at a robust pace for the next 5-10 years because of favorable demographics and government support for expanding insurance coverage. With expanding insurance coverage and rising disposable income, an aging population is bound to demand more quality medical services. We expect healthcare spending in China to grow by at least the low teens each year over the next 10 years, and 59 6 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH healthcare expenditure as a portion of GDP should approximate 6.5-7.0% by 2020, a government stated goal, from the current level of ~5%. We think the government will continue to encourage consolidation within each healthcare subsector, meaning that the leading players should be able to achieve top line growth of substantially higher than industry average.

60 7 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Stay resolutely positive longer-term

We firmly believe the Chinese government will need a Exhibit 8: Rising disposable income propelling healthy healthcare industry with players generating out of pocket spend on healthcare decent profits in order to meet its goals of providing quality medical services to the population at affordable prices. Otherwise, if companies continue to make losses from selling drugs after drastic price cuts, they will either stop selling drugs or exit businesses altogether, making some drugs unavailable to patients.

In order to make the essential drugs available to the Chinese people, the government might be forced to raise prices in order to attract domestic manufacturers or import drugs at even higher prices. There is a balance between price cuts and drug supply. In fact, the government has allowed price increases for certain Source: National Bureau of Statistics; Morgan Stanley Research cheap drugs. In addition, if the government wants to achieve its goal of upgrading the healthcare industry to be more competitive globally, it needs the leading companies to generate profits to fund R&D for innovative product development. We think the current unfavorable operating environment could force out weak players so that strong players with consolidated market positions might eventually emerge stronger.

Exhibit 9: Life expectancy at birth in China Exhibit 10: China's aging population puts extra almost doubled from 1960s level demand on healthcare (population % >65)

Source: W orld Bank; Morgan Stanley Research Source: National Bureau of Statistics; Morgan Stanley Research

New CFDA measure to support long-term growth of the pharmaceutical industry

Expect clinical data to be more vigorous. In July 2015, the CFDA demanded manufacturers asking for approvals of 1,622 manufacturing certificates to conduct self inspections of their clinical data. The companies are allowed to withdraw applications if they think their clinical data are not reliable and accurate to support approvals. However, if the manufacturers do not withdraw but the CFDA finds their clinical data unreliable or inaccurate, the manufacturers may not see another drug approved in three years with the CFDA retaining rights to inspect clinical data previously submitted for already approved drugs. The self-inspections of clinical data by manufacturers ended in August: 67% submitted the data, 20% withdrew from the application, and 12% asked to waive trials. This could shorten the waiting time for companies that follow rules and have generated reliable clinical data.

Quality-equivalence of generic: CFDA targets to complete evaluations of oral pills on EDL by 2018, and others in 10-15 years. The CFDA indicates that after the first manufacturer achieves quality equivalence study, all other manufacturers of the same generic must complete quality equivalence studies within a three year period. Otherwise, the manufacture licenses will be revoked. We believe this policy will be very beneficial for domestic manufacturers that produce quality generics who may eventually be positioned to take market shares away from the originators who have been assumed by now to have better quality drugs. We fully expect some 61 8 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH manufacturers to fail those quality equivalence tests and be forced to withdraw from the market, which should allow the ones that successfully complete the tests to gain uncontested market shares.

A revamped drug approval regime: The CFDA has indicated that it will streamline approval processes and its intention to bring the approval processes closer to the developed markets. The Class 3.1 or Class 6.1 drugs will no longer be called new drugs but only generics. The new drugs will be only those that have not been approved anywhere else in the world or ever before in China. We think the new approval regime, upon achieving legal status upon approval by the People's Congress in next March may facilitate the upgrading of China's drug industry, make it more competitive against global peers, and make drug exports more likely in the future. We notice there are more and more returnees from large overseas pharma companies that have been financed by PE funds to conduct truly innovative R&D. These innovative R&D companies may eventually get listed or attract corporate interest from established drug companies to enrich their pipeline. We believe R&D is the future of the drug industry.

Ministries promoting domestic medical equipment, substitution of imports to accelerate

President Xi Jinping visited Shanghai United Imaging Medical Technologies in May 2014 and pointed out the need to speed up the domestic production of high-end medical equipment that will reduce costs and promote the continuous development of national brands. A week later, the National Commission of Health and Family Planning (NCHFP) started screening outstanding domestically produced medical equipment. The NCHFP issued guidelines in June 2014 to ask local governments to control the rapid expansion of public hospitals. The document clearly states that "medical institutions need to keep rational allocation of suitable equipment and gradually increase the level of domestic medical equipment use”. NCHFP and MIIT jointly held a conference on the development and application of medical equipment and devices in August that strongly advocated that medical institutions trial domestic medical equipment. It focused on Class 3 top-tier hospitals to adopt domestic medical equipment. Further measures are expected in 2015, with local governments laying out concrete requirements. While high-end hospitals are still pushing back against purchasing domestic high-end medical equipment, we expect the government support should allow domestic manufacturers to emerge and eventually we'll see lower market shares by GPS for high-end medical imaging products.

Industry consolidation and domestic substitution of foreign products to be key themes in the mid to long term

We believe foreign originators, which have so far enjoyed so-called supernational treatment will eventually lose a big chunk of market share to domestic companies who have shown product qualities by passing the quality equivalence tests. Local equipment and medical device manufacturers should become more competitive after government support with R&D innovation, which should allow domestic equipment/device markers to grab a higher market share for high-end products. Meanwhile, we also expect quality standards to improve and many drug manufacturers may be forced to exit the market or sell drug manufacturing certificates to stronger players, which will allow the surviving companies to thrive with larger market share. We have seen M&A pick up in last couple of years, including the acquisition of Tianjiang Yifang by China TCM, CR Wandong by Jiangsu Yuyue. Industry consolidation should enable companies with economies of scale to merge. Therefore, industry growth for both drug and medical device manufacturing may come down. We think domestic substitution and M&A will ensure some companies will outgrow the markets by a substantial margin and those should be pillars for healthcare investing.

Improving health insurance to be the ultimate driver for the growth of healthcare service industry

While China has achieved virtual universal health insurance coverage for her 1.4 billion people, the coverage for a majority of people, through New Rural Co-op Program or Urban Resident Scheme, is still quite minimal. While urban workers contribute an equivalence of about 6% of wages into the insurance scheme, other people pay in close to only Rmb500 per annum into the insurance pool. We expect the coverage gap to eventually shrink and see much better insurance coverage for rural residents and urban non-workers who may seek medical services that were previously unaffordable. We expect the hospital services sector to outgrow the drug and medical device sectors in the next few years with privatization as an ongoing theme.

62 9 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Industry Updates

P harmaceuticals

2016 policy uncertainties could trigger more pressure on the industry: 1) Public insurance reimbursement controls – In 2009-14, outflow recorded a 20.6% CAGR, but inflow was only 15.8%. If the trend continues, UEBMI (urban employee basic medical insurance) may record a deficit by 2017, while NRCMS (New Rural Cooperative Medical Scheme) may turn from surplus to deficit by 2017; 2) tax inspection may affect small third-party distributors and change doctors' prescription behaviour; 3) pilot program of tiered care system; 4) implementation of new tender results; and 5) anti-corruption campaign.

Expecting much slower industry growth in 2015-20: In 8M15, industry sales grew 9.2%, lower than the 13.1% in 2014 and 17.9% in 2013, attributable mainly to: 1) slower GDP and imports growth, and 2) insurance budget controls, restriction on antibiotics, price cuts, etc. However, profit growth reached 12.7%, vs. 12.3% in 2014 and 17.6% in 2013, driven by price rises of TCM and low-priced drugs. We think the growth slowdown will continue. CFDA Southern Medicine Economic Research Institute (MENET) is forecasting industry sales of Rmb4.4tn in 2020, up from Rmb2.7tn in 2015 at a CAGR of only 10.4% YoY). For drug specifically, it expects growth in the low teens in the next five years to reach Rmb2.34tn in 2020, vs. Rmb1.40tn in 2015. Our tracking of hospital drug sales also suggested a similar trend, with Jan-Aug registering 6% YoY growth only.

Exhibit 11: China Healthcare Industry Exhibit 12: Hospital drug sales growth slowed Forecasts to single digits this year

Source: PharmaTrust; Morgan Stanley Research Source: MENET, Morgan Stanley Research E = MENET estimates

Encouraging policies for new drugs applications: CDE targets to complete the review of 21,000 drug applications by 2016 and strictly follow the timeline by 2018. As of August, there were 21,668 new applications – 90% are generics; there are 8,000 new applications annually, and only 5,000 may be approved. 1) Draft guideline of drug registration – The self-inspections of clinical data by manufacturers ended in August: 67% submitted the data, 20% withdrew from the application, and 12% asked to waive trials. This could shorten the waiting time for companies that follow rules and have generated reliable clinical data. 2) Quality-equivalence of generics: CFDA targets to complete evaluations of oral pills on EDL by 2018, and others in 10-15 years. The CFDA indicates that after the first manufacturer achieves quality equivalence study, all other manufacturers of the same generic must complete quality equivalence studies within a three year period. Otherwise, the manufacture licenses will be revoked.

It should spur innovation and consolidation, leading to withdrawals of low-quality drugs and reduce oversupply. It is positive for companies like Hengrui, Sinobiopharm and CSPC, which are known for quality and innovation.

Focuses of reform: 1) coverage expansion for serious illness insurance; 2) insurance reimbursement – reimbursement price reform; 3) drug sales as a percentage of total hospital revenue; 4) tiered medical care systems - local primary care vs. tertiary hospitals at high end; 5) tenders; 6) post-tender negotiations; 7) drug 6310 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH pricing. Others include drug applications and internet plus.

Key drivers: 1) anti-poverty, and 2) aging population and birth policy changes, which could drive the growth of drugs for chronic diseases; 3) consolidation and upgrade; 4) rectified and reduced approval processes; and 5) better insurance coverage for serious illness.

Key concerns: 1) slower GDP growth and tighter government budgets; 2) insufficient public insurance funding; and 3) stricter tax policies.

Industry Sales to Grow in High Single Digits in 2015-17

Although we still believe the healthcare industry has high potential over the long run, the high growth recorded in the past few years may not be sustainable.

MENET projects that healthcare industry output value (including API, devices, etc.) will grow in low teens in the next two years, and reach Rmb4.8tn in 2017, and that industry sales growth could be slower, in the high single digits.

In addition, MENET expects the drug market in China to grow in the low teens in the next five years to reach Rmb2.34tn in 2020, vs. Rmb1.40tn in 2015. Encouragingly, it believes sales at grass root healthcare institutions could outgrow the overall industry at ~20%.

Exhibit 13: China Drug Market Size Forecasts (based on retail price)

Source: MENET, Morgan Stanley Research

More Centralized Tendering System

Drug pricing reform: We believe the abolition of retail ceiling prices previously set by the NDRC will drive the prices of TCM, low-priced drugs and drugs for gynecology and pediatrics in the future, and that prices of plasma products and some first-to-market (FTM) generics may also increase. Imported drugs are unlikely to enjoy unreasonable price premiums any more, while FTM generics produced by local manufacturers may gain more market share from those of MNCs. However, post-tender price negotiations could add more pressures on drug manufacturers.

6411 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 14: Summary of Recent Provincial Drug Tender Policies

Note: The double envelop system separates the technical envelop from the cost envelop w hich ensures the technical aspects to be review ed on their ow n merits, prior to review of the cost aspects. Fujian implements a reverse double envelop, meaning cost is review ed first. Source: MENET, Morgan Stanley Research

Public Insurance Reimbursement Reform for Drugs

The new reimbursement cap is currently under discussion, which will be based on brand name at an early stage.

Exhibit 15: Potential Impact from New Policy of Potential impacts include: 1) more incentives for Reimbursement Cap hospitals to lower purchase price with post-tender price negotiations less likely to be prohibited; 2) further pricing pressures for drug manufacturers; 3) more burden on patients; 4) tender prices will be important reference to set up reimburse cap prices; 5) to potentially benefit developers of innovative drugs, as it will be much easier for them to enter the hospital market and be qualified for public insurance reimbursement; 6) benefiting first-to-market generics; Source: MENET, Morgan Stanley Research and 7) more transparent drug prices.

Exhibit 16: Details of Pilot Programs for New Policy of Reimbursement Cap for Drugs

Source: MENET, Morgan Stanley Research

According to past experience in other countries, total drug reimbursement spending growth could still accelerate after the reimbursement policy is implemented.

6512 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 17: Reimbursement Cap Policy in Other Countries

Source: MENET, Morgan Stanley Research

Rising Aging Population to Increase the Burden from Chronic Diseases

In 2014, the over-65-year-old population in China accounted for 10.1% of total. By 2050, over 35% of the population will exceed 60 years old. Thus, over the next five years, we expect sales growth rates for drugs that combat obesity, cancer, hyperglycemia (high blood sugar), hypertension (high blood pressure), and hyperlipoproteinemia (high blood cholesterol) to grow faster than the industry average.

Serious illness insurance: Public insurance for serious diseases could significantly benefit related drugs (e.g., dialysis, oncology drugs, cardiovascular drugs, hepatitis and diabetes drugs). We believe the government will favor high-quality local products over high-priced imported products, and meanwhile leverage commercial insurance to improve overall coverage.

T raditional Chinese Medicine (TCM)

In China, TCMs are prescribed alongside chemical and biological drugs and are also a very important part of treatment protocol. Doctors actually combine TCMs with chemical drugs for the treatment of many diseases. TCM drugs are regarded as especially effective for the control of viral infections, cardiovascular diseases, and cancer for which chemical drugs have not achieved satisfactory outcomes. Chinese government has enacted many policies in support of the TCM industry, both for national pride and controlling medical costs. The modernization of TCM and development of TCM injections have fostered the emergence of some strong TCM companies, such as Tasly Pharma and Shijiazhuang Yiling. Major TCM brands, such as Tongrentang and Yunnan Baiyao, have sustainable brand recognition unrivaled by any chemical drug makers in China.

Favorably perceived by the Chinese government and people – wide usage attained in China

TCM has a long history and deep roots in China. Unlike the Western-educated population, Chinese people do not question the effectiveness of TCMs and have developed strong belief that TCMs are safer than Western medicines. Hence, given a choice between TCMs and chemical drugs, many people would choose TCMs. Our AlphaWise survey of 350 physicians in 2012 (report link) revealed that: 1) TCM is widely adopted, as nearly 50% of the doctors in China trained in western medicine use TCM to treat patients on a regular basis and 30% use TCM as their first-line therapy. 2) TCM prices have increased in the past two years; volume growth should remain stable.

Favorable Government Policies Offer Further Upside

In May 2015, the state of council released the "Plan for TCM development in 2015-2020" to promote and develop the TCM industry. We believe the government’s favorable policies will continue to support vigorous TCM industry growth.

1) Encourage the use of TCM in the basic medical insurance program: The government has increased the number of TCMs on the national EDL. The revised 2012 version of EDL (published by the MOH on March, 2013) included 502 drugs, of which 203 are TCMs (up from 102 from 2009 EDL). In the 2009 EDL, TCM to chemical 6613 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH drug ratio was 1:2. After adding a roughly equal amount of drugs into the list in 2013, the ratio changed to 2:3, highlighting the commitment of Chinese government to support the use of TCMs for basic medical needs.

2) Promote TCM services, especially at rural grassroots medical centers. The aim is to offer TCM services at 95% of community health centers and 90% of village or town level health centers by 2020, up from 76% currently. By 2020, the aim is to offer 4.78 TCM beds per 10,000 people.

3) While the government aims to gradually decrease hospital income from drug sales to about 30% in the future, certain TCM preparations, including herbal pieces, will be excluded from such calculation. In addition, sales of certain TCM drugs are allowed a 15% mark up while all other drugs will be eventually stripped of mark up. Both measures are specially carved out to support the TCM industry, in our view.

Largest & Fast Growing Industry with Secular Growth Potential

The TCM industry has grown rapidly in recent years, benefiting from favorable government policies, rising consumption levels, and increasing health insurance coverage. According to CEIC, TCM (including Chinese patent medicines and TCM decoction components) output topped Rmb581bn in 2014, a nearly six-fold increase over sales of Rmb95bn in 2005 – representing a nine-year CAGR of 24%. This outpaced the 21.5% growth rate of the overall healthcare sector output during the same period. Further, total TCM industry output as a percentage of the total healthcare sector gradually rose to 27% in 2014 from 24% in 2005.

Exhibit 18: TCM Industry Sales - CAGR of 24% in Exhibit 19: TCM- Second Largest Subsector -27% 2005-2014 of total sales

Source: CEIC, Morgan Stanley Research Source: CEIC, Morgan Stanley Research

Soft Sales Growth with Declining Gross Margin May Continue in 2015/2016

However, we have noticed the slowdown of TCM industry sales growth since early 2015. For example, the total sales growth for TCM industry slowed down to 7% in the first 9 months of 2015, down from 15% YoY in 2014, largely due to the tightening insurance reimbursement, lower price from tendering process. Furthermore, we observed the narrowed gross margin by 9% to 32.2% in 2015, down from 40.7% in 2007 due to the increasing TCM raw material price, labor cost. Both we believe will continue.

6714 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 20: Slower TCM Industry Sales Growth in Exhibit 21: Declining Margins, 2007-2015 2015/2016

Source: CEIC, Morgan Stanley Research Source: CEIC, E=Morgan Stanley Research estimates

M edical Devices

Medical equipment is what doctors employ to facilitate diagnostics and treatment. Medical devices, on the other hand, are implanted inside the human body to treat illness, in lieu of medicines. In China, as both involve technology and hardware, they are routinely treated as a single subsector of the healthcare industry.

Low Penetration Rate Suggests Plenty of Room for Growth Ahead

The penetration rate of common medical equipment in Chinese hospitals and the implantation rate of medical devices remains relatively low compared with that in the developed markets. Although the hospital beds per 1,000 people have increased steadily in China and surpassed that in the US (4.2 per 1,000 people in China and 3.0 per 1,000 people in the US as of 2009), many low-tier hospitals are severely under equipped. The penetration rate of even the basic patient monitor (monitor holdings/number of beds in medical institutions) remains low. Medical devices represent a very much under-penetrated market: device sales/drug sales: 0.2/1 in China vs 1.02/1 in the developed countries and 0.7/1 globally. The local companies have about 30% market share compared to 70% for MNC for some high-end medical devices, meaning lots of upside for local companies if domestic companies can upgrade technologies and displace MNCs for market share.

The use of implantable medical devices remains very low as well. For orthopedic implants, the implantation rates for trauma, joints, and spine were 2.7%, 0.4%, and 1.0% in China vs. 21.9%, 43.0%, and 3.8% in the US, respectively, according to estimates from Frost & Sullivan. Overall, the sales of medical devices/consumables are about 30% of the drug sales in China, compared with 40-50% in the US. Local companies have only about 30% market share in China. Hence, this subsector has considerably more room to grow compared with the drug sector.

Ministries promoting domestic medical equipment, substitution of imports to accelerate

President Xi Jinping visited Shanghai United Imaging Medical Technologies in May 2014 and pointed out the need to speed up the domestic production of high-end medical equipment that will reduce costs and promote the continuous development of national brands. A week later, the National Commission of Health and Family Planning (NCHFP) started screening outstanding domestically produced medical equipment. The NCHFP issued guidelines in June 2014 to ask local governments to control the rapid expansion of public hospitals. The document clearly states that "medical institutions need to keep rational allocation of suitable equipment and gradually increase the level of domestic medical equipment use”. NCHFP and MIIT jointly held a conference on the development and application of medical equipment and devices in August that strongly advocated that medical institutions trial domestic medical equipment. It focused on Class 3 top-tier hospitals to adopt domestic medical equipment. Further measures are expected in 2015, with local governments laying out concrete requirement. While high-end hospitals are still pushing back against purchasing domestic high-end medical equipment, we expect the government support should allow domestic manufacturers to emerge and eventually we'll see lower market shares by GPS for high-end medical imaging products.

6815 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH In-vitro Diagnostic Product Market – A Developing Dynamic Market in China

As a part of the new Healthcare Reform, the government is putting special focus on disease prevention. Hence, diagnostic services for disease prevention could be fully subsidized by the government. Medical device companies that make low-end diagnostic equipment for early disease detection are likely to be the first to benefit from the reform. In addition, hospitals are inclined to prescribe lots of diagnostic testing in order to reduce the chance of wrong diagnosis and avoid the resulting compensation cost to patients. Hospitals may also find diagnostic testing as another source of funding as it is becoming increasingly controversial to make money from markup on sales of prescription drugs.

Currently, the IVD products market is dominated by four major segments, clinical chemistry, immunoassay, diabetes testing, and blood testing. We see the molecular diagnostic product segment as the most dynamic area, which should grow at the fastest pace in China for years to come because of the low base and high growth of available testing targets, such as HPV testing, genotyping tumor cells, and genetic testing. According to BCG estimates, the total market size for in vitro diagnostic products market in China for 2013 was estimated to be about US$3.4bn. Between 2013 and 2018, the market is expected to grow at CAGR of 16%.

Local Government Tendering Looming for High-end Medical Products

MOH conducted a centralized procurement of high-end medical devices in 2008, which resulted in about a 15% average price cut for the products, with both domestic companies and MNCs winning solid shares. The draft of Measures for Standardized Centralized Tender of high-value medical consumables, which provide clear definitions for what counts as high-value medical consumables, should help narrow the differences in tenders among different provinces and make the practice more uniform across the country. In the short term, the measures appear to be very beneficial for domestic consumable makers. The imported products are required to quote import prices and the measures weaken the differential between domestic and imported products. Although centralized tenders tend to drive down prices, they also help large companies to gain market share.

Notably, the city-level tender for high-value Exhibit 22: Price Cuts for Ningbo Tender consumables turned out to be negative in 2015. The price cuts magnitude was 15-73% on average. In Zhejiang, the four categories of consumables (cardiovascular/endovascular implants, pacemakers, electronic physiological products) recorded an average price cut of 25.7%. Source: Government Data, Morgan Stanley Research If this trend spreads across the country in 2016, we think it could lead to margin erosions for manufacturers of medical consumables. In addition, distributors will be asked for their share as there is normally a substantial markup between ex-factory prices and retail prices.

D istribution / Retail Drugstores

Market Growth Driven by Low Base in Healthcare Spending

We expect the pharmaceutical distribution industry to achieve annual sales growth of 10-15% until 2020, fuelled by China’s current low spending per-capita on pharmaceutical products and the government’s push to foster greater access to healthcare by the population through the construction of more modern hospitals, expanding of medical insurance coverage and privatization of healthcare enterprises. As a percentage of per-capita GDP, the total healthcare spending in China is about 5%, not even one-third of the ~16% in the US, which has less than a quarter of China’s population.

Pharmaceutical Sales up by 9.2% in 2015 YTD

6916 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH According to data from the Ministry of Commerce (MOC), sales in China’s pharmaceutical distribution industry Exhibit 23: Distribution Sales & Growth totaled Rmb1,502.1bn in 2014, representing growth of 15.2%, continuing the growth decline for a fourth year in a row. Of the total, drug sales on the retail market reached Rmb300.4bn in 2014, representing growth of 9.1%. Among the total sales, direct sales to hospitals and drugstores were Rmb859.6bn, accounting for 57.2% of total sales. The remaining sales of Rmb642.6bn were sales between distributors, which accounted from 42.8%, down from previous year.

Exhibit 24: Distribution Gross Margin & Net Source: MO C, Morgan Stanley Research Margin The top 10 distribution markets were sequentially from large to small Beijing, Shanghai, Guangdong, Zhejiang, Jiangsu, Anhui, Shandong, Chongqing,Henan and Yunnan, which combined to account for 64.3% of total sales in China, down vs. last year.

The MOC estimated that the main business revenues of major pharmaceutical distributors grew 15.4% to Rmb1132.1bn, while their profits totaled Rmb24.7bn, up 14.8%. Overall, the average gross margin was 6.8%, Source: MO C, Morgan Stanley Research up by 100b.p. from previous year. The operating expenses ratio was 5.3%, up by 20b.p. The net profit margin was 1.7%, flat vs. the previous year.

Industry Consolidation to Continue

The drug distribution industry in China is currently highly fragmented with approximately 14,900 pharmaceutical distributors holding GSP certificates, and 432,600 drugstores, according to the MOC. The three largest distributors accounted for about ~30% of the total industry revenue in 2014, compared with the three largest US players holding 90% market share. Putting this in a historical perspective, the top 3 players held only 20% of the total market share in China before 2010. Hence, the market has clearly been consolidating.

We believe the implementation of the Essential Drug List and the likely adoption of a two-invoice distribution rule (one by the manufacturer and one by a distributor) will drive further consolidation in the industry. The government is also favoring continued industry consolidation. It is the government's stated goal to support the emergence of 1-3 distributors each with sales of above Rmb100bn and 20-plus local distributors with sales of above Rmb10bn by 2015 as a part of the 12th Five-Year Plan. However, we think the industry consolidation may not come easy. First, the low-hanging fruit is mostly gone – the parent company of Sinopharm has largely completed asset injections and large local distributors that are willing to sell are largely picked up. Second, valuations may rise because of fierce competition among the top-three players. And finally, it may not be easy to integrate the assets.

7017 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 25: Distribution Market Share: Rising Exhibit 26: Top 10 Distributors in China, 2014 Consolidation

Source: MOC, Morgan Stanley Research Source: MOC, Morgan Stanley Research

Low Interest Environment Greatly Benefiting the Distributors

Per Chinese government regulations, drug manufacturers are not allowed to sell drugs directly to hospitals. Instead, distributors are enlisted as middlemen to facilitate the sales. Instead of serving as delivery companies such as UPS or Fedex which charge a fee for services rendered without taking inventory of products to be moved, distributors in China must buy from manufacturers, keep drugs in stock, and then make the delivery upon requests from hospitals. Since manufacturers normally extend 1-2 months of credit while hospitals may not pay distributors in half a year, there is a clear mismatch between account receivable days and account payable days for distributors, which means distributors must deploy a large amount of working capital to support a low margin business. Distributors normally use bank loans to finance working capital.

In essence, while the healthcare industry is a secular Exhibit 27: Sinopharm Finance Cost % of Sales growth industry, distribution business is interest-rate sensitive subsector of healthcare industry. When interest rates were high in years past, many distributors saw operating profit growth greatly undercut by spiralling high finance costs. Since the government started interest rate and RRR cuts, distributors have seen greatly easing the finance cost burden. Sinopharm has experienced this benefit much more so than others. As the easy money environment is expected to continue for the next couple of years, we expect the financial burden to continue lessening to some extent, Source: Company Data, Morgan Stanley Research brightening the profit outlook for distribution industry.

Drug Retailers – the Clear Losers of Healthcare Reform

Unlike in the US and many other developed countries, where patients typically fill in their prescriptions at pharmacies unaffiliated with hospitals after receiving outpatient services from primary care or secondary care doctors, patients in China typically fill their prescriptions at hospital pharmacies and they routinely come back to hospitals to receive outpatient services again before they can fill old prescriptions again. People mostly purchase over-the-counter medicines in retail channels. A small proportion of the retail pharmacies in China is authorized under the National Medical Insurance Program, from which a program participant may purchase prescriptions included in the Provincial Medical Insurance Drugs Catalog and get reimbursed for the cost. Sales of prescription medicines are the principal component of drug expenditures in China, most of which go through hospitals with retail drugstores accounting for a minimal amount.

Previously, due to generally high prices of prescription medicines, many Chinese chose to purchase OTC medicines from retail drugstores instead of seeing doctors for prescription medicines if they did not have good insurance coverage. As part of the new Healthcare Reform, local communities have been building up healthcare centers that offer EDL drugs with no markup and most, if not all, are reimbursed by the government insurance 7118 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH programs. More patients, who were used to going to drugstores for self treating, are being diverted to hospitals, where they receive accurate diagnosis and obtain cheaper drugs from hospital pharmacies that may be reimbursable. On the other hand, patients largely pay for the OTC drugs on their own. We view that the mom- and-pop drugstores and drugstore chains are clearly indentified losers of this round of Healthcare Reform. Furthermore, the recent rounds of price cuts have severely depressed the gross margins of retailers, as the retail ceiling price cuts have limited the prices they can charge. In some instances, drug retail reference prices have been cut by the NDRC to be lower than prevailing prices at drugstores, making it highly unlikely for the drugstores to make any money out of them. Finally, the restriction on the use of antibiotics and the strict enforcement against selling antibiotics without prescriptions should hit drugstores hard, as antibiotics abuse has been quite common until recently. Many drugstore chains have attempted to change their business models by carrying more consumer products. However, with so many street-corner stores open 24 hours a day, there are little incentives for customers to visit drugstores to pick up personal care items. Moreover, the rising rental cost and strict zoning rules are running against the drugstores with regards to business expansion and cost control.

There may be light at the end of the tunnel. The government is determined to lower the proportion of drug sales in hospitals and in many cases, has disallowed mark up on drug sales to patients. If the hospitals are no longer allowed to make money of dispensing drugs, many may prefer patients to fulfill prescriptions outside of hospitals and some may close outpatient pharmacies as they now become cost centers for hospitals. Retail pharmacies are expected to become increasingly important sources of prescription drugs and they are expected to make money with stockpiling drugs from manufacturers. The Chinese government has recently announced that it will no longer issue certificates to drug stores with regard to dispensing of prescription drugs, which should allow most if not all drug stores eligible for selling prescriptions drugs.

The retail pharmacy sector in China is highly fragmented. Retail channels in China include pharmacy chain stores, individual pharmacies, and OTC medicine counters in supermarkets. Sinopharm is by far the largest drugstore chain in terms of total sales (Rmb7.352bn in 2014). eCommerce – Potential Policy Change for the Online Sales of Prescription Drugs

We think the expected release of the guidelines for online Rx sales could provide a boost for online pharmacies in 2016. However, whether doctors will write prescriptions remains the major hurdle for the industry to grow rapidly. Without further policy support, most hospitals are unwilling to share Rx with online platforms, as it might hurt the drug sales from their in-house pharmacies and it is difficult for doctors and hospitals to collect a proportion of sales revenue. e-Prescription still the key obstacle: e-Prescription is a major hurdle for eCommerce, in our view. Most big hospitals route their prescriptions electronically to in-house pharmacies automatically without patients seeing a physical copy. Thus, it is difficult for patients to get prescriptions from doctors for online purchases. Without hospitals’ collaboration, obtaining prescriptions is a challenge for most online platforms. We think this issue may persist in the near term.

Separation of prescribing from dispensing is the future, but progress is slow: In order to reduce the burden on public insurance plans, we think the government may encourage drugs to be sold via cheaper channels like online platforms or drugstores in the future. However, the progress could be slow due to the issues on e-prescription and the complicated insurance reimbursement system.

Nevertheless, healthcare related eCommerce is growing very fast. The number of Internet Drug Trade Certificates reached 460, vs. 357 in 2014. The healthcare B2C market size reached Rmb7.63bn in 2014, and is expected to exceed Rmb15bn in 2015, according to MENET.

7219 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 28: China Healthcare B2C Market Size Exhibit 29: No. of Internet Drug Trade Certificates

Source: MENET, Morgan Stanley Research E = MENET estimates Source: MENET, Morgan Stanley Research

H ealthcare Services

The China healthcare services market has grown rapidly in recent years; it recorded revenues of about Rmb2,000bn in 2012, from Rmb960bn in 2008, representing a CAGR of 19.6%, and Frost & Sullivan (a healthcare market research/consulting firm) expects it to grow at 16.1% annually to reach Rmb4,154bn in 2017. The fast developing healthcare service market largely benefits from the rising aging population, acceleration of chronic disease prevalence, increasing government spending, and expanding coverage of the three public medical insurance schemes.

Exhibit 30: Private hospitals: Revenue to grow at 20% CAGR

Source: CEIC, Morgan Stanley Research E = Frost&Sullivan However, public hospitals still dominate the healthcare service industry in China in terms of total number of beds and patient visits. About 73% of public hospitals are owned by the central and local governments, 25% are owned by SOEs and 2% are owned by the military. According to the NHFPC (National Health and Family Planning Commission), the central government aims to boost the number of beds at private hospitals to 20% of the total by 2015, indicating further upside for the industry.

7320 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 31: Public Hospitals Still Dominate the Exhibit 32: Private Hospitals Market

Source: CEIC, Morgan Stanley Research

Source: CEIC, Morgan Stanley Research E = Frost&Sullivan Emerging Specialties Private Hospital Chain

As private hospitals featuring low technical demand, lower clinic risk, faster return on investment and tendering medical services that are less available in the public hospitals, the number of specialty private hospitals has increased rapidly during the past few years. According to the Health Statistics Yearbook in 2012, there were 1,760 private hospital in China, which indicates a compound annual growth rate of 19% over the past decade. Compared to general hospitals, specialized hospitals in minor departments such as OB/GYN, Eyes, cosmetic, dental, have lower barrier to entry, thanks to smaller investment costs and a smaller range of required technical capabilities for operation. Specialized hospitals largely avoid direct competition with public hospitals with their differentiated services offerings.

We think the specialized private hospitals chain has proved to be the viable business model which delivers highly replicable standardized services, competing against public hospitals with distinctive advantages in service and price: Positive perception & popularity compared to public hospital: Private hospitals usually have a comfortable environment and offer decent service for its clients other than the crowded, long queues, and unattended services typical in public hospitals. Premium pricing with fewer government controls: Unlike public hospitals, private hospitals do not face stringent government price controls on their services and products. A for-profit medical institution is entitled to set up medical service fees at its own discretion. Discretionary spending/less price sensitivity: Other than general hospital services, some private hospitals services are not compulsory but for discretionary consumption, especially for the cosmetic surgery and vision correction surgery. The customers who decided to undergo the procedures are not patients that need immediate medical attention. They are willing to pay more to improve their appearance, hence are less price sensitive.

7421 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Key Company Highlights

T op Picks for 2016

Sinopharm (1099.HK) – OW , consolidating market leadership under a favorable financing environment

The largest pharmaceutical distributor in China, with organic pharmaceutical sales growing at 2-3 ppt above industry growth. A strong track record of executing major M&A transactions. In the near term, we see potential for economies of scale and leveraging; in the long run, we believe it may become a logistics company, providing solutions to hospitals and other distributors. Diversification into drug sales and marketing, hospital services and e-commerce should improve profitability and reduce working capital burden. Finance ratio has potential to trend further down because of expected further monetary easing. Key downside risks include: 1) continued long AR days and heavy finance cost; 2) much slower-than-expected drug sales growth in China; and 3) unsuccessful diversification.

Fosun Pharma (2196.HK, OW; 600196.SS, OW) – Fully diversified portfolio featuring less government policy risk with PPP driving hospital expansion

Strength of Fosun Pharma’s manufacturing assets is underappreciated, in our view. Fosun has four drugs with potentially annual combined sales of Rmb1bn waiting for tender to gain market access – sales to ramp up in 2016. Substantial value addition to its acquired companies distinguishes Fosun Pharma from competitors. Early-mover advantage in hospital services, a potentially lucrative space with the company already having signed multiple PPP deals with local governments. Overseas M&A for product acquisitions and domestic M&A to enhance solid market position in drug manufacturing and strengthen its IVD and medical device businesses. Fosun to benefit from continued strength of Sinopharm as a 27% shareholder.

CTCM (0570.HK) – OW

Excluding the contribution of Tianjiang, we estimate +16% YoY top line growth to Rmb3,721mn and +19% YoY bottom line growth. Together with the consolidation of Tianjiang with at least 30% bottom line accretion in 2016, the stock is attractively valued at 16x our 2016E P/E, versus its TCM peers at 20x. Reiterate OW.

Solid core business sales: Despite the price pressure from tendering process, we expect the sales growth for its core business remains solid in 2016, driven by 1) midteens sales growth for its top seven EDL drugs such as Xianling Gubao capsule, Yu Ping Feng capsule and Sheng Tong Ping capsule etc. 2) accelerating growth of above 30% YoY for its three new exclusive products: Zaoren Anshen capsule, Fengshi Gutong capsule and moisturizing and anti-itching capsules.

7522 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Consolidation of Tianjiang from November, 2015: CTCM has closed the acquisition of Tianjiang in October, 2015. The consolidation of Tianjiang began in November 2015. Notably, Tianjiang recorded strong sales/net profit growth in 2014. Total sales reached Rmb3,128mn, up 25% YoY from Rmb2,496mn in 2013. Total profit below tax was Rmb762mn, up 19% YoY from Rmb639mn in 2014. Management remains confident on +20% YoY top line growth with further margin upside from consolidation of raw material procurement and increasing operating efficiencies, thus implying at least 30% YoY EPS accretion in 2016 onwards, based on our pro-forma analysis.

Future M&A to drive upside: Furthermore, CTCM is actively seeking external growth with additional M&A targets. The parent company – Sinopharm Group – will consider injecting more assets with ~Rmb1bn in size: 1) more exclusive TCM products into the listco in 2015; and 2) TCM decoction business into the listco in 2016.

CSPC (1093.HK) – OW, solid portfolio despite pricing pressures

Looking ahead into 2016, we believe CSPC could post +8%YoY growth for total sales, helped by the healthy growth of finished drugs (+13%), although antibiotics, Vitamin C and caffeine growth may stay at low levels. We expect net profit to grow +24%YoY to HK$2.07bn in 2016.

The stock is trading at approximately 20x our 2016 EPS estimate, which we think attractive, given its strong earnings outlook.

Stable growth driven by differentiated product portfolio despite price cuts: Finished drugs should continue the healthy momentum in 2016 and grow +13% with potential upside, despite the pricing pressures of drug tenders. We project +24%YoY growth for NBP in 2016, 25% for Xuanning and 20% for Oulaining. The oncology franchise, however, could deliver +30% growth, in our view, driven by four major drugs.

Mixed impact from provincial drug tenders: We think CSPC is facing less pricing pressure than its peers. The prices of its low-priced drugs are unlikely to be cut severely given the recent policy. NBP may see incremental volume growth if some of its competitors are included in the adjuvant drug lists. NBP injectable is likely to benefit from the tenders, as it is currently not sold in most provinces. O ther Key Companies – Outlook

China Biologic Products (CBPO.O) – OW, potential beneficiary from price rises

With potential upside from the price increase of its key products and contributions from plasma by Xinjiang Deyuan, there is a chance that the company may beat our estimates of +21% growth for sales and +24% growth for non-GAAP net profit in 2016. We raise our 12-month price target to US$130 from US$125 to include the contribution from third-party plasma purchase. Trading at 26x 2016e P/E, the stock looks undervalued to us.

Bright outlook for 2016, driven by new collection centers and third-party purchase: We expect the sales volume of human albumin and IVIG to grow +16% and 22% YoY, respectively, in 2016, thanks to the contribution of the purchase of 143 tons of plasma from Deyuan. In addition, the new plant in Hebei will start operation in early 2016, which could also help lift the volume growth going forward. Our assumptions for ASP remain unchanged at 2% for albumin and 3% for IVIG in 2016.

More upside in 2017 and beyond: The majority of the purchase of 500 tons of plasma will unlikely make positive contribution to earnings until late 2016, given the collection timeline, and the fact that plasma products require a long time for quarantine and government batch approval before they can be sold on the market. Thus, we only fine-tune our non-GAAP net profit estimates for 2016 and 2017, but raise estimates more by 4-7% for 2018-20.

Harmonicare (1509.HK) – OW

7623 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH We project an accelerating top line growth of +18% YoY to Rmb1,153mn, much better than 4% YoY sales growth in 2015, driven by strong volume growth for obstetric services & increasing ASP; we expect 29% YoY bottom line growth to Rmb177mn in 2016, benefiting from continuous margin expansion on higher bed utilization rates & operating leverage. The stock is trading at an attractive 13x 2016E EV/EBITDA, a 40% discount to its emerging market hospital peers at 22x.

Strong demand for the obstetric services/babies delivery in 2016: The prepayment for obstetric services has been doubled in Beijing & Shenzhen hospitals since July 2015, which implies higher outpatient volume/sales for obstetric services in 2H2015 and increasing inpatients/babies delivery in 2016, the year of the Monkey. Notably, in order to meet the demand, Beijing Harmonicare Hospital has been expanding its bed capacity in 2H2015 with an additional 20 beds on 2 floors. We estimate double digits growth for both inpatient/outpatient visits for obstetric services in 2016.

Upgrading of existing facilities with potential ASP upside: In addition, Harmonicare is renovating existing older hospitals for high-end obstetric services, including Wuhan Modern Woman Hospital Chongqing Modern Woman Hospital, Guangzhou Modern Woman Hospital, and Guiyang Modern Woman Hospital. Management expects the renovation to be completed by 1H16 and increase ASP by at least by 8-10% YoY.

New hospitals expansion plan on track: Harmonicare is preparing the opening of new hospitals: 1) it is now in the final selection of the location of Beijing New Hospital with less rental cost as the downturn of real estate industry in Beijing offered more choices; 2) it is searching for the proper locations for the new hospitals in East China, such as Shanghai, Nanjing and Shouzhou. In addition, Harmonicare also is actively seeking suitable private specialized OB/GYN hospitals.

Bloomage (0963.HK) – OW

We expect a healthy 22% top line growth and 24% bottom line growth in 2016, supported by its new products launch, sales channel expansion & margin expansion. The stock is attractively valued at 18x 2016e P/E, a 30% discount to its peers.

Robust organic sales growth to continue: We expect total sales to grow 22% YoY to Rmb733mn in 2016, driven by 1) 14% YoY sales growth for HA raw material products on enlarged international market sales; and 2) strong 36% YoY sales growth for HA end products.

New products & services launch to support further upside: Management expects to launch its second generation of HA dermal filler in 1H2016, with higher ASP targeting middle end customers. More importantly, Bloomage continues to expand along the aesthetic ecosystem value chain by offering more products for Mesotherapy, which are non-surgical cosmetic treatments/injections for superficial layers of the skin, such as Aqua shining injections, Ultherapy lifting, etc. In addition to supply HA injectables, Bloomage provides the medical devices (micro-needles, rollers and radio frequency devices) & services as the full solution provider to the doctors/clinics. We expect the skin care products, medical devices to contribute to the top line in 2016.

Sinobiopharm (1177.HK) – OW, growth may slow down in 2016 but long-term prospects intact

We are raising our 12-month price target for Sinobiopharm from HK$7.0 to HK$8.0, which implies ~11% upside at current level. Our higher PT is mainly driven by better sales growth for key drugs due to tender delays, and a lower operating cost ratio, which led to higher estimates for operating income (2-8% in 2015-20e). Our net income estimates for 2015-17e are 4-5% lower due to higher tax rate and minority interest.

We project +19% YoY top line growth and +16% YoY bottom line growth (or +17% if excluding investment income from stocks) for 2016. Although we think the growth in 4Q15 should remain relatively stable, Sinobiopharm’s key growth drivers – Ganmei and Runzhong – may slow down in 2016 given a high sales base and price cuts from drug tenders. We continue to believe relatively new products, such as recently launched oncology drugs will become key growth drivers for SBP in the next year.

7724 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 33: Runzhong sales growth YoY - hospital prescription database vs. company reported

Source: PharmaTrust; Company Data; Morgan Stanley Research More pricing pressures if Zhejiang price spreads across the nation... According to the recently announced drug tender guidelines, some provinces intended to adopt the lowest tender price nationwide. If this policy is implemented, it may cause more pressure on Sinobiopharm. Recall that the tender price of its best-selling drug Runzhong was cut by 40% in Zhejiang.

... yet blockbuster to be launched after 2017: Despite the potential pressures from drug tenders, we still believe SBP is one of the most defensive names amid policy uncertainties, thanks to its diversified product portfolio and strong pipeline, as well as its strong sales and marketing capabilities. The company will launch blockbuster drugs after 2017, which could significantly boost growth. If the tender process continues to be delayed, SBP may see earnings upside.

3SBio (1530.HK) – OW, stable growth, expecting more catalysts to drive outperformance

We estimate +36% sales growth (or Rmb2.32bn) in 2016, and +33% net profit growth (or Rmb772mn). The robust growth is driven by the continued strong momentum of key products TPIAO and healthy growth of EPIAO despite potential price cuts. The stock is currently trading at 23.5x 2016e P/E. We think further price upside would come from: 1) positive earnings surprise, and 2) contribution from M&As.

Healthy growth from two key products: In 2016, we expect EPIAO to maintain ~20% growth, although there might be more price cuts due to provincial drug tenders. We think 10,000 dosage is facing less pressures, which could partially offset the price cuts for 3,000 dosage. SEPO from Scriprogen may growth faster than EPIAO, due to low base and network expansion in lower tier cities. TPIAO, on the other hand, should grow over 30%, thanks to stable price and volume growth.

Contributions from M&A to be one of the key growth drivers: We expect Scriprogen to grow at 40% in 2016, due to the low base in 2015 when the company is in the transition of its distribution and marketing network post acquisition. Sirton should grow at about 15%, while Wansheng, the newly acquired chemical drug manufacturer, should be able to post double-digit growth in 2016. Although the impact on net profit from Wansheng would be limited due to amortization expenses, it should be able to make positive contributions since 2016.

China Medical System (0867.HK) – OW, growth to re-accelerate in 2016

We project +23% YoY top line growth (or Rmb4.7bn) but +24% YoY bottom line growth (or Rmb1.2bn) for CMS in 2016, better than the +20% growth for recurring net profit in 2015. This is because we expect the acquisitions the company made in late 2014 and early 2015 to make positive contributions starting from next year.

New drugs start to make positive contributions: The growth of key products like Deanxit and Ursofalk may slow down to below +20% growth in 2016 due to competition, drug tenders and insurance reimbursement control. But newly licensed and acquired drugs such as Nuodikang, Danshentong sales should exceed Rmb100mn and Rmb200mn, respectively. Other acquired products like Lamisil and Parlodel tablets, and MOVICOL should also grow rapidly and start to make positive contributions after the transition period in 2015.

Limited risks from drug tenders: In 2016, some of CMS’ products may face potential price cuts during tenders, but we do not view this as a major concern, as in Zhejiang and Hunan the key products have maintained relatively stable prices. We think the company should be able to achieve a relatively stable tender price, thanks to product quality and better exclusivity than manufacturers of common generics.

7825 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Coverage Transfers

We transfer coverage of the following stocks to Sean Wu.

Fosun Pharma (2196.HK; 600196.SS) – Assuming coverage with OW on both A and H shares, Fully Diversified Portfolio Featuring Less Government Policy Risk with PPP Driving Hospital Expansion

Hospital services segment remains the focus: Fosun adopts a cluster strategy in its hospital development, and it has an acquisition manager locally dedicated to that cluster. The number of beds is now 2,770. New projects will be launched in the near term, although the project in Zhejiang will take longer, according to management. Fosun is acquiring beds via three channels: from existing oncology hospitals (Foshan Chancheng Hospital), building new hospitals (Taizhou, Zhejiang), and acquiring hospitals. As an early mover in the private hospital space, Fosun has a well established reputation as a hospital operator, making it a preferred partner for local governments which are interested into PPP deals to the management of underperforming local hospitals.

A solid drug manufacturing franchise. Fosun's portfolio features Aodejin, one of the top-selling drugs in China with annual sales close to Rmb1.5bn. The company's key products such as Atomolan, EPO, Xichang, Shaduolika, and others, have enjoyed sales growths much higher than industry average in recent years. Fosun's existing product portfolio features animal-based insulin product called Wan Su Lin, which occupies the largest market share for animal based insulin >90%) with a sales channel easily re-deployed to higher value-added human recombinant insulin, insulin lyspro (awaiting CFDA approval) and third generation insulin, insulin glargine (entering clinical trials). The anti-diabetes market should represent a huge market opportunity for Fosun. Fosun has four drugs, including Eudier and Febuxostat tablets, with potential of annual combined sales reaching Rmb1bn in next couple of years, awaiting for tenders to gain market access – sales to ramp up in 2016.

Underappreciated R&D pipeline: Fosun has developed quite a strong pipeline of biological products, including monoclonal antibodies against CD20, Her-2, VEGF, and EGFR for various cancer indications. The company's innovative drug R&D subsidiary, Fuchang, has five innovative small molecule drugs under various pre- and clinical development stages. Fuchang filled IND for two innovative drugs for the treatment of cancer. The company's human insulin, Lyspro, is waiting for approval. With CFDA requesting applicants to conduct self- inspection of clinical data supporting application of 1,620 drugs and others, we believe CFDA is poised to speed up approval processes, which may lead to human insulin approval in the next couple of years for Fosun. Of particular interest to us is the company's biosimilar rituximab, which has been under development for eight plus years by Fosun's Hanlin subsidiary. While there are numerous companies rushing to develop biosimiliars to rituximab, including Shanghai Pharma, only Hanlin and one other company's rituximab are classified as biosimiliars to Roche's Mabthera, pointing to pathway for accelerated approval while others are treated as novel drugs and must go through vigorous three phases of studies. Fosun is aiming to have the product approval and launched around the end of 2017. While the timeline may lapse, we do see great potential for this product.

M&A to complement organic growth: At the end of 2014, Fosun announced acquisition of 65% stake in Erye Pharma, a manufacturer of antibiotics. While some may not like the nature of business they acquired, the acquisition turns out to be quite prescient given the recent headline on the restriction of use of accessory drugs. Fosun intends to acquire more companies that produce genuinely effective drugs to bolster sales growth. Fosun has been shopping in overseas markets for technologies that can be transferred to the China market. Through overseas stake acquisitions in various companies, Fosun has gained access to advanced R&D technologies, personalized diagnosis, and novel medical devices. Fosun has proven a very astute investor and it has generally provided substantial value addition to its acquired companies, which distinguishes Fosun Pharma from most financial competitors. Fosun expects to benefit from continued strength of Sinopharm for years to come which the company established with CNPG as a 49-51 JV in 2003, in which Fosun still owns a 27% stake.

Valuation, price target, and risk analysis: Our 12-month price target of HK$34 for Fosun-H is based on our DCF analysis with cost of equity established from Hong Kong market. The A-share 12-month target was previously directly converted from our H-share price target by simply applying the current exchange rate. However, given the persistent A/H premiums for dual-listed companies and high PE multiple afforded to A share healthcare companies versus H-share healthcare companies due to different risk perceptions by two pools of 7926 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH quite distinct investors, we think it may be reasonable to afford a higher PT for the A-share. The average A-H premium is around 40%, which we do expect to narrow somewhat over the next 12 months. Hence, we have derived our A-share 12-month PT of Rmb34 based on a premium of 20%, half of that gap and HKD:Rmb exchange rate of 1.2. Key risks to our rating and PT are: 1) unfavorable government policies on prices of healthcare products and services, 2) failure to gain from any future M&A transactions in terms of yield synergies and growth, 3) difficultly in exiting minority investments due to unfavorable market conditions, 4) unexpected further delays in the launch of human insulin, and 5) penetrating private healthcare services and realizing target returns proving exceedingly difficult.

Shanghai Pharma (601607.SS, 2607.HK) – Assuming Coverage at EW on both A/H shares due to lack of near-term growth catalysts

SPH shares have experienced a roller coaster ride over the past 12 months. We believe much of the volatility is attributable to the euphoria associated with O2O drug sales and the letdown after realizing benefits may not come for quite sometime due to the limited availability of prescriptions. The volatility of SPH's stock has paralleled that of Ali Health (0241.HK, Not Covered). We see potential from the deal SPH signed with Ding Xian Yuan and JD.com but expect little earnings contribution in the next couple of years. Meanwhile, we expect the manufacturing assets of SPH, which feature relatively low GM compared to listed peers, to face further price cutting pressure and see diminished growth potential, as much of SPH's distribution business is spreading around coastal areas and Northern China which is maturing. Hence, without significant M&A contribution, we believe SPH's distribution business will also face challenges next year. That said, we realize SPH has reported solid double digit earnings growth for the last couple of quarters and think at current levels, both A and H shares are not expensive. Hence, we are EW on both A and H shares.

Easing financing policies to drive finance cost upside but tender price cuts to drive overall revenue growth: Top-line grew 14% YoY and EPS grew slower at 10% in 3Q15. The finance cost ratio was 0.55% in 3Q, vs. 0.74% in 2Q and 0.61% in 1Q. Like Sinopharm, SPH's distribution business also benefits PBOC monetary easing. This has helped working capital cost. On the other hand, the tender price cuts have tempered growth of Shanghai Pharma's manufacturing business, especially in Fujian and Hainan. We see the overall price cuts, reimbursement control, and restriction on prescription of accessory drugs to impair SPH's manufacturing growth and affect overall gross margin of the company.

Collaboration with Dinxiangyuan to add on JD.com O2O JV: Shanghai Pharma is the exclusive drug supplier for Dinxiangyuan (DXY), pursuant to a collaboration agreement with DXY. It will be providing logistics services to DXY's clinics. In future, different forms of fulfilling prescriptions will emerge, and any entity with prescription power will be a potential partner for the company. We are greatly impressed by SPH management's proactive pursuit of the O2O business. This DXY deal builds on the company's previous deal with JD.com for providing offline infrastructure with drugs sold through JD.com's online infrastructure. The company's leading DTP business should see substantial growth in next few years with traffic directed from DXY and JD.com.

2016 Catalysts: Major M&A in the magnitude of the Tianjiang Yifang acquisition by CTCM, which SPH lost out on. Further roll out of online drug sales initiative by the government and the company; Pipeline progress from the company's own internal R&D and from Fudan Zhangjiang; and tender results that may reinforce or significantly weaken market positions of SPH's key products.

Guangzhou Pharma (600332.SS, 0874.HK) – Assuming Coverage at UW on A shares and EW on H Shares on Continued Lackluster Sales Performance

We are UW on the A-shares. We expect slower sales growth to continue and see dilution from its new issuance as a near-term overhang. Relatively undemanding valuation makes us EW on the H-shares.

Remain cautious on the sales outlook for 2016, especially the drug manufacturing segment, which may be below the industry average, constrained by: 1) soft industry growth, 2) ongoing internal adjustment for some subsidiaries.

8027 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Wang Lao Ji sales poised to continue underperforming: Our WLJ Red Can sales forecasts are Rmb8.4bn (+10% YoY) for 2016 on soft demand in the herbal tea market, which we believe will continue in 2016. In addition, we expect further pricing pressure – competitors are ramping up marketing efforts. It is disappointing that GZP managed to win all legal lawsuits against Jiaduobao (China), including the copyrights on red-can packaging, only to see Jia Duo Bao sales continue to perform extremely well. Although there have been previous anecdotes that JDB distributors have finally started to crack and begin defecting to the WLJ camp, the impact on the sales performance of WLJ has yet to show any evidence of such an impact.

Weak sales of 'Jinge' in 3Q15 concerning: Total sales in the first nine months of 2015 were Rmb180mn. Yet, the sales of 'Jinge' increased only Rmb50mn in 3Q15, slower than the average quarterly sales in the first half of 2016. Alongside weak reported Jinge sales in 3Q, GZP reported sales decline of Rmb120mn for its core manufacturing business, clearly underperforming the overall market even with overall drug sales growth slowing down to high single-digits. We are concerned with the continued underperformance of GZP's manufacturing business which features some enviable TCM brands such as Xia Ke Wan, Huatuo Zaizao Wan, and Chen Li Ji. The ongoing consolidation of its manufacturing facilities from old sites to a single site in the outskirts of Guangzhou may eventually generate solid efficiency savings but in the near term may mean much higher depreciation expenses.

Valuation and risks: The 2016e P/E for BYS A-shares is 22.1x vs. the 22.5x average for A-share peers. The H- shares are at 13.6x vs. the 15.1x average for H-share peers. Both look reasonably valued on this basis. However, the A-shares carry a premium of about 60% over the H-shares – a notable disconnect given the Hong Kong Shanghai Stock Connect. In light of the earnings shortfall in the last few quarters and likely ongoing soft performance, we believe it is justifiable to rate the A-shares UW relative to the H-shares and our coverage. The risks to our ratings and PTs include much better/worse sales of WLJ franchise and overall sales performance of pharmaceutical products.

Jiangsu Hengrui (600276.SS) – Assuming Coverage at OW on further upside from R&D Innovation and Global Expansion

Hengrui is a leading China drug manufacturer best regarded for strong sales force, first-in-class oncology franchise, and top-notch R&D capabilities. Through years of painstaking investment in innovative R&D, Hengrui has finally reached an important inflexion point. Cyclophosphamide is leading the charge in the US market while apatinib is heralding a new phase of oncology expansion in China. We believe Hengrui deserves a healthy premium versus its peers and rate Hengrui at OW, despite a significant share price run-up in the past year.

Strong existing product portfolio and sales force. Hengrui has been the top player in China's oncology market for the last ten years. The recent approval of apatinib for stomach cancer, which has transformed it into one with its own proprietary targeted cancer therapies, moving away from relying on sales of generic chemotherapies. Hengrui appears poised for a new phase of sharp growth in its oncology franchise. Henguri has also strengthened its franchises for anesthesia medicines and contrasting agents. Hengrui files three strong teams of direct sales force, which will underpin the continued commercial success of its products.

Globalization efforts paying off. Hengrui has obtained approvals of several ANDAs, culminating recently with Sandoz distributing its cyclophosphamide in the US, with total sales expected to reach US$200mn there. Hengrui should book Rmb3-400mn of revenue against little SG&A. Hengrui expects US approval of sevoflurane in 2015, allowing it to tap into a US$400mn market now with three players. Increasing overseas profit contribution should lessen Hengrui's exposure to domestic policy risks compared to most of its peers.

R&D pipeline to sustain a bright future. Hengrui has built a strong R&D pipeline featuring promising candidates for cancer and diabetes, including Phase III products such as famitinib and retagliptin. SHR-1210 has the potential to become the first approved PD-1 inhibitor in China. In September, Hengrui outlicensed its rights to SHR-1210 outside Greater China area to Incyte for an upfront payment of US$25mn, potential milestone payments of up to US$770, and future tiered royalties on net sales of SHR-1210 in Incyte territories. This serves as one of the strongest validations of Hengrui's R&D capabilities.

Model revised, leading to 12-month PT of Rmb56. Hengrui's net income jumped 43% YoY in 3Q15, beating 8128 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH our estimate by a wide margin. The better net income growth was driven by margin improvement across the board. We have revised our model with a new price target of Rmb56 based on DCF analysis of our new financial forecasts. Risks to our PT and OW rating include, but are not limited to: 1) larger than expected overall tender price cuts for major oncology products; 2) unexpected clinical trial setbacks; and 3) unexpected safety issues seen with some newer products.

Tasly (600535.SS) – Assuming Coverage at EW on Slowing Sales Growth, Awaiting Additional Catalysts

Tasly engages in the manufacture and distribution of pharmaceutical products worldwide. It provides compound Danshen dripping pills, which prevent and treat coronary heart disease and angina pectoris; nourishing blood and cleaning brain granules, which help to relieve headache, as well as bupleurum pills, huoxiangzhengqi pills, pills for stomach diseases and andrographolide pills, among others. In addition, the company is involved in a pharmaceuticals trading business. Tasly has enjoyed tremendous growth in sales of its key product, Compound dripping pills, since the inclusion in the 2009 version of EDL. It has a Phase 3 program ongoing in the US to evaluate Dantonic® (T89) for the treatment of stable angina. If successfully developed, Dantonic could become the first TCM approved in the US that addresses a very large indication with substantial unmet medical need.

Rare R&D-driven TCM name benefiting form continued strong growth of CCV industry: Tasly is the CCV TCM market leader, one of the most lucrative market segments in China. Its modernized TCM products, full industry value chain coverage, extensive sales network, management strength, and especially strong R&D capability (with R&D ratio of ~7% of manufacturing rev vs. peers’ 2-3%) distinguish it in a segment some perceive as lacking innovation. Supported by an R&D-driven model, Tasly has built a comprehensive product portfolio and pipeline that we believe is well positioned to benefit from secular growth opportunities in the TCM industry.

Slower sales growth continued in 3Q15: 3Q15 total sales were Rmb3,148mn (+2% YoY), missing MS estimate of Rmb3,331mn (+8% YoY). In the first nine months of 2015, total sales grew just 1% YoY, to Rmb9,310mn. Manufacturing sales grew 4% YoY, to Rmb4,596mn, hampered by: 1) a soft overall retail market; 2) slow tendering process; and 3) tightened insurance reimbursement. Meanwhile, the distribution business declined 1% YoY, to Rmb4,714mn as Tasly strengthened channel controls at hospitals and reduced pharmaceutical sales to other distributors/drug stores. We expect these factors to continue to pressure sales growth in 2015/2016. Recent sales growth has slowed down on soft demand & insurance reimbursement budget controls. We expect 13%/25% top line/bottom line growth in 2016.

What could make us more positive: 1) unexpected early results from Phase 3 trials of Compound Danshen in the US; 2) better sales growth for either manufacturing or business growth; 3) improving gross margin; 4) M&A.

What would concern us: 1) Unabated slowdown in sales of key products; 2) more price cut pressure from tenders; and 3) declining margins.

8229 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

China Biologic Products

Risk-Reward View: Clear Edge in a Market with Very High Entry Barriers

FALSE 11/10/2015 Investment Thesis $ 180 2015-FY $165.00 (+43%) 160 Top plasma maker in China, with R&D strength given six pipeline products 140 $130.00 (+13%) $115.04 High entry barriers given strict government 120 controls 100 Limited competition given the lack of imported 80 $80.00 (-30%) BullCase products and limited no. of domestic players 60 Sound upside potential if the technology advances 40 and production efficiency improve 20 Healthy sales and earnings growth in the next two 0 years Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16

Price Target (N ov-16) Historical Stock P erform ance Current Stock P rice WARNINGDONOTEDIT_RRS4RL~CBPO.O~ Stock looks attractive at 26x 2016e P/E compared Source: Thomas Reuters, Morgan Stanley Research with its plasma peers Derived from DCF model of the base-case scenario. Price Target US$130.0 Key Value Drivers Bull US$165.0 Advances in tech and R&D lead to outperformance: 1) Robust Steady growth from end-user demand 33.6x Bull Case 2016E EPS growth above our base case expectations thanks to better Contribution from pipeline products to drive future utilization rate; 2) product prices rise and raw materials costs growth stabilise; and 3) pipeline products start the growth engine. Price increases for key products Deeper regional penetration Steady growth in-line with our expectation: 1) Steady volume Base US$130.0 Utilization rate of plasma collected 29.1x Base Case 2016E EPS growth thanks to rising end-user demand; 2) product prices remain stable, with modest raw materials cost inflation; and 3) Improvement of fractionation and purification pipeline products perform in line with our expectation. technology

Bear US$80.0 Policy uncertainties and industry headwinds cause more Potential Catalysts 21.3x Bear Case 2016E EPS pressure: 1) Volume growth below base case expectation with Clinical trial approvals and new product launches more imports and production constraints; 2) harsh price cuts and significant raw materials cost inflation; and 3) pipeline products Approval of clinical trials or production permits for underperform. plasma products Opening of new plasma collection stations Exhibit 34: Bear to Bull: Volume Growth, Price and Pipeline Products Are Key Announcement of M&A or collaboration Better than expected quarterly results

Risks to Achieving Price Target Government decides to shut down plasma collection stations Raw materials costs inflation Slower pipeline progress NDRC price cuts Unfavorable government policies

Source: Thomson Reuters, Morgan Stanley Research

8330 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financial Summary for China Biologic Products

Exhibit 35: China Biologic Products Income Statement

Source: Company Data; Morgan Stanley Research

8431 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation

D CF is Our Primary Methodology

We continue to use a cost of equity (COE) of 8.8%. We derive this COE from a capital asset pricing model (CAPM) calculation of the required return on equity, based on a market risk premium of 7.0% and a risk-free rate of 1.80% on an adjusted beta of 1.0 (all remained unchanged). We still assume a perpetual growth rate of 4%. Other key assumptions (both unchanged) include an optimal capital structure with 25% long-term debt and a long-term corporate tax rate of 15%. Our DCF model is detailed in Exhibit 34.

Our new base case value, which we adopt as our 12-month price target, is US$130.0 per share. This is up 4%, greater than the increase in our EPS estimates in 2016, because we raise our estimates for non-GAAP net profit in the outer years more for 2018-20.

A DCF valuation is quite sensitive to the COE, for which the calculation is based on the beta assumption. The valuation is also quite sensitive to the assumed DCF terminal growth rate. We therefore perform a sensitivity analysis based on different assumptions for COE and perpetual growth rates (Exhibit 35).

Exhibit 36: CBPO: Discounted Cash Flow

Source: Company data , Morgan Stanley Research e = Morgan Stanley Research estimates

8532 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 37: CBPO: DCF Sensitivity

Source: Morgan Stanley Research estimates Risks to Our Price Target

We see the following downside risks to achieving our 12-month price target:

1) Government delays in the granting of clinical trials and production approvals for new plasma products;

2) Unexpected shutdown or suspension of plasma collection stations;

3) NDRC price cuts, undermining CBPO’s key products;

4) Raw material cost inflation; and

5) Government policy on the plasma market turning unfavorable.

8633 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Shanghai Pharma Risk Reward

Risk-Reward View: Market Expansion and Synergies to Drive Upside (2607.HK, EW, HK$17.7, PT HK$25.0) Investment Thesis As a leading drug distribution company with an extensive network, SPH stands to benefit significantly from healthcare reform in China. Its business presence spanning the full healthcare value chain should help SPH increase efficiencies and extract synergies via its integrated platform. SPH is likely to see stable growth, thanks to favorable macro tailwinds and M&A opportunities that management is actively looking for. Shanghai government support for its only healthcare SOE should help secure SPH’s leading position in key markets. Stock incentives should spur management to improve results.

Source: Thomson Reuters, Morgan Stanley Research At 17.9x our 2016 EPS estimate, the shares look fairly valued. Price Target HK$25.0 Derived from DCF (sum-of-the-parts) analysis. Key Value Drivers Bull HK$34.0 Expanding into non-key regions as industry leader: 1) Higher- Market share gains, through expansion of 22.4x Bull Case 16e EPS than-expected govt. healthcare spending CAGR of 20%. 2) SPH distribution network and geographic coverage, or steps up expansion to reach a market share of 10%. 3) Better- M&A in distribution or manufacturing segments. than-expected synergies and accelerated integration contribute to cost savings and sales expansion. Government healthcare spending. Synergies derived from asset restructuring and Base HK$25.0 Solid network expansion in key markets: 1) Healthcare M&A. 17.9x Base Case 16e EPS of spending increases at a CAGR of 15%. 2) In-line expansion in key Rmb1.17 regions with focus on higher-tier hospitals. 3) Synergies improve Potential Catalysts the efficiencies of operations. Announcement of new M&A activity. Bear HK$17.0 G overnment spending tapers off; competition intensifies: 1) Change of policies for drug tenders and procurement. 13.4x Bear Case 16e EPS Government expenditure lower than expected at a 10% CAGR. 2) Network expansion encounters fierce competition, and SPH’s Favorable government policies on separation of penetration in low-tier hospitals and rural areas remains limited. 3) hospital pharmacies. Synergies not effectively realized. Better-than-expected tender results for non-EDL and EDL drugs. Government policies favoring large distribution players.

Risks to Achieving Price Target Pricing pressure on NDRL and EDL drugs. Unfavorable government policies. Difficulty in expanding distribution network to national scale. Dilutive M&A. Pipeline failure.

8734 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 38: Bear to Bull: Healthcare Spending Should Also Propel Shares Higher

Source: Thomson Reuters, Morgan Stanley Research

8835 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Risk-Reward: Shanghai Pharma (601607.SS, EW, Rmb20.17, PT Rmb20.00) Investment Thesis As a leading drug distribution company with an extensive network, SPH stands to benefit significantly from healthcare reform in China. Its business presence spanning the full healthcare value chain should help SPH increase efficiencies and extract synergies via its integrated platform. SPH is likely to see stable growth, thanks to favorable macro tailwinds and M&A opportunities that management is actively looking for. Shanghai government support for its only healthcare SOE should help secure SPH’s leading position in key markets. Stock incentives should spur management to improve results.

Source: Thomson Reuters, Morgan Stanley Research At 17.1x our 2016 EPS estimate, the shares look fairly valued. Price Target Rmb20.0 Derived from DCF (sum-of-the-parts) analysis.

Bull Rmb29.0 Expanding into non-key regions as industry leader: 1) Higher- Key Value Drivers than-expected govt. healthcare spending CAGR of 20%. 2) SPH 22.7x Bull Case 16e EPS Market share gains, through expansion of steps up expansion to reach a market share of 10%. 3) Better- distribution network and geographic coverage, or than-expected synergies and accelerated integration contribute to M&A in distribution or manufacturing segments. cost savings and sales expansion. Government healthcare spending. Base Rmb20.0 Solid network expansion in key markets: 1) Healthcare Synergies derived from asset restructuring and 17.1x Base Case 16e EPS spending increases at a CAGR of 15%. 2) In-line expansion in key M&A. Rmb1.17 regions with focus on higher-tier hospitals. 3) Synergies improve the efficiencies of operations. Potential Catalysts Bear Rmb12.5 G overnment spending tapers off; competition intensifies: 1) Announcement of new M&A activity. 11.5x Bear Case 16e EPS Government expenditure lower than expected at a 10% CAGR. 2) Network expansion encounters fierce competition, and SPH’s Change of policies for drug tenders and penetration in low-tier hospitals and rural areas remains limited. 3) procurement. Synergies not effectively realized Favorable government policies on separation of hospital pharmacies. Exhibit 39: Bear to Bull: Healthcare Spending Should Propel Shares Higher Better-than-expected tender results for non-EDL and EDL drugs. Government policies favoring large distribution players.

Source: Thomson Reuters; Morgan Stanley Research

8936 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financial Summary of Shanghai Pharm

Exhibit 40: Shanghai Pharm Income Statement

Source: Company Data; Morgan Stanley Research

9037 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation

V aluation for 2607.HK

Our Base Case: Sum-of-the-Parts Value at HK$25.0

Our primary valuation method is discounted cash flow. SPH’s distribution business is very different from the manufacturing business. Therefore, we perform DCF analysis on the three different business lines separately and use a sum-of-the-parts method to calculate the equity value of the company. We calculate a cost of equity of 8.1% based on the Capital Asset Pricing Model (CAPM), using a beta of 0.9, our Morgan Stanley country strategist’s risk premium of 7.0%, and a risk-free rate of 1.8%. We believe SPH will reach a steady state of perpetual growth of 4% in 15 years with a borrowing cost of 5% and long-term leverage of 50%. All of these assumptions remain unchanged. We allocate operating expenses according to the historical split among the three divisions.

Our sum-of-the-parts analysis suggests net present values of approximately HK$4.53 for the manufacturing business, HK$16.99 for the distribution business, HK$2.61 for the pharmaceutical retail business, and HK$0.87 for the other businesses.

We note that the fair values derived from the DCF models are sensitive to our perpetual growth rate and COE assumptions. Therefore, we include a sensitivity analysis in Exhibit 39.

Price Target Implies 41% Upside

Our SOTP-implied value for SPH is HK$25.01, which we round down to HK$25.0 and adopt as our 12-month price target, implying about 41% upside from the current stock price.

9138 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 41: 2607.HK: Discounted Cash Flow Analysis

Source: Morgan Stanley Research (e) estimates Exhibit 42: 2607.HK: DCF Sensitivity Analysis

Source: Morgan Stanley Research

Potential Catalysts/Upside Risks

Announcement of new M&A activity on accretive terms Change of policies for drug tenders and procurement Favorable government policies on separation of hospital pharmacies. Better-than-expected tender results for non-EDL and EDL drugs. Better-than-expected management transition. Government policies favoring large distribution players.

Key Downside Risks

Pricing pressure on drugs. Unfavorable government policies. Difficulty in expanding distribution network to national scale. Dilutive M&A.

9239 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Pipeline failure.

V aluation for 601607.SS

Our H-share price target of HK$25.0 implies Rmb20.0 (25 divided by a 1.25 conversion ratio, the prevailing exchange rate in April 2015 when we set our price target), which we use as our A-share price target. This implies a 2016e P/E of 17.1x.

Potential Catalysts/Upside Risks

Announcement of new M&A activity on accretive terms. Change of policies for drug tenders and procurement. Favorable government policies on separation of hospital pharmacies. Better-than-expected tender results for non-EDL and EDL drugs. Better-than-expected management transition. Government policies favoring large distribution players.

Key Downside Risks

Pricing pressure on drugs. Unfavorable government policies. Difficulty in expanding distribution network to national scale. Dilutive M&A. Pipeline failure.

9340 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Fosun Pharma Risk Reward

Risk-Reward View: Integrated Platform Offers Upside Potential (2196.HK, OW, HK$25.40, PT HK$34.0) Investment Thesis: Why OW As an integrated healthcare company, Fosun Pharma offers exposure to almost all subsegments along the China healthcare value chain. Potential benefits from rising demand for private healthcare services. Improving manufacturing pipeline with rising investments in R&D projects. Potential synergies with sister companies under the parent group. Strong brand name and M&A record with high- quality management and experience in China and overseas.

Key Value Drivers Source: Thomson Reuters, Morgan Stanley Research Manufacturing business. Price Target HK$34.0 Derived from our DCF analysis. Healthcare services. M&A pace. Bull HK$44.0 Manufacturing and service strategy very successful; strong 30.2x Bull Case 16E EPS M&A: 1) pharmaceutical and medical device sales grow at 25% Potential Catalysts and 35% CAGRs in 2014-16; 2) healthcare services account for Rmb1.46 CFDA approval of new products. 35% in 5 years; 3) M&A contributions higher than expected. Clinical progress of pipeline drugs. Base HK$34.0 Manufacturing and service strategy pans out in line with Government policies that favor private healthcare 25.6x Base Case 16E EPS expectations: 1) pharmaceutical and medical device sales grow at service providers. Rmb1.33 15% and 25% CAGRs in 2014-16; 2) healthcare services account Completion of new hospital construction or for 25% in 5 years; and 3) M&A contributions on track. expansion and openings. Announcement of M&A or collaborative projects Bear HK$18.0 Manufacturing and service strategy does not work; M&As US FDA approval of ANDA applications. 15.4x Bear Case 16E EPS underperform: 1) pharmaceutical and medical device sales grow Encouraging earnings results. Rmb1.17 at 10% and 15% CAGRs in 2014-16; 2) healthcare services account for 15% in 5 years; and 3) M&A below expectations. Launches of new manufacturing products.

Exhibit 43: Bear to Bull: Manufacturing, Service, and M&A Are Key Value Drivers Risks to Achieving Price Target Government price controls on drugs. 50 3.0 3.0 4.0 Significant pipeline setbacks. 40 6.0 44.0 4.0 Highly regulated industry. 30 34.0 6.0 Rising valuations for hospital M&A. 20 Relatively low earnings visibility. 18.0 10

0 Bear Manufacturing Healthcare Slow M&A Base Faster M&A Healthcare Manufacturing Bull Case business service below pace Case progress service business Case deteriorates expectation above outgrows expectation

Source: Morgan Stanley Research, Thomson Reuters

9441 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Risk-Reward View: Integrated Platform Offers Upside Potential (600196.SS, OW, Rmb26.6, PT Rmb34.0) Investment Thesis: Why OW As an integrated healthcare company, Fosun Pharma offers exposure to almost all subsegments along the China healthcare value chain. Potential benefits from rising demand for private healthcare services. Improving manufacturing pipeline with rising investments in R&D projects. Potential synergies with sister companies under the parent group. Strong brand name and M&A record with high- quality management and experience in China and overseas. Source: Thomson Reuters, Morgan Stanley Research Stock looks attractive, trading at 28.6x 2016E P/E vs. 37.4x for peers. Price Target Rmb34.0 Derived from A-H share steady state premium of 20% and HKD:Rmb exchange rate of 1.2. Key Value Drivers Bull Rmb44.2 Manufacturing and service strategy very successful; strong Manufacturing business. 30.1x Bull Case 16E EPS M&A: 1) pharmaceutical and medical device sales grow at 25% Healthcare services. and 35% CAGRs in 2014-16; 2) healthcare services account for Rmb1.47 M&A pace. 35% in 5 years; 3) M&A contributions higher than expected.

Base Rmb34.0 Manufacturing and service strategy pans out in line with Potential Catalysts 25.6x Base Case 16E EPS expectations: 1) pharmaceutical and medical device sales grow at CFDA approval of new products. Rmb1.33 15% and 25% CAGRs in 2014-16; 2) healthcare services account Clinical progress of pipeline drugs. for 25% in 5 years; and 3) M&A contributions on track. Government policies that favor private healthcare service providers. Bear Rmb17.0 Manufacturing and service strategy does not work; M&As Completion of new hospital construction or 15.5x Bear Case 16E EPS underperform: 1) pharmaceutical and medical device sales grow expansion and openings. Rmb1.10 at 10% and 15% CAGRs in 2014-16; 2) healthcare services account for 15% in 5 years; and 3) M&A below expectations. Announcement of M&A or collaborative projects. US FDA approval of ANDA applications. Exhibit 44: Bear to Bull: Manufacturing, Service, and M&A Are Key Value Drivers Encouraging earnings results. Launches of new manufacturing products.

Risks to Achieving Price Target Government price controls on drugs. Significant pipeline setbacks. Highly regulated industry. Rising valuations for hospital M&A. Relatively low earnings visibility.

Source: Morgan Stanley Research, Thomson Reuters

9542 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financial Summary of Fosun Pharma

Exhibit 45: Fosun Pharma Income Statement

Source: Company Data; Morgan Stanley

9643 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation

H -share Price Target of HK$34.0 Implies 31% Upside

Valuation Methodology: DCF

Our primary valuation method is discounted cash flow. In this analysis, we use a cost of equity of 8.9%, derived from a CAPM calculation of the required return on equity with a market risk premium of 4.5% and a risk-free rate of 3.3% as provided by Morgan Stanley’s China country strategist. The assumed perpetual growth rate is 4%. This works out to a fair value of HK$34.0 per share, which we use for our 12-month price target. Other key assumptions include an optimal capital structure with 50% long-term debt and a long-term corporate tax rate of 20%. These assumptions are unchanged.

We note that the fair value derived from the DCF model is very sensitive to our perpetual growth rate and COE. We also show a sensitivity analysis in our detailed DCF valuation.

P/E Valuation Also Suggests Significant Upside

Based on our 2016 EPS estimate of Rmb1.33, our H-share price target implies a forward P/E multiple of 25.6x, a premium over the H-share average of 17.4x. A -share Price Target of Rmb34.0 Implies 33% Upside

Valuation Methodology: DCF

The A has been trading at around a 40% premium in recent months, but we use a 20% premium for our price target on the assumption that this will narrow as Shanghai-Hong Kong connect becomes more active. Given how long the premium has persisted, however, we assume it will only narrow by half in the next 12 months. We apply the steady state A-H share premium of 20% to our H-share price target of HK$34.0, together with the HK$ to Rmb exchange ratio of 1.2, to obtain an A-share price target of Rmb34.0. See the H-share valuation for details of the DCF valuation methodology and below for the A-H historical premium.

Exhibit 46: Hang Seng China A-H premium index

Source: Thomson Datastream; Morgan Stanley Research

9744 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH P/E Valuation Underscores Significant Potential Upside

Based on our 2016 EPS estimate of Rmb1.33, our A-share price target implies a forward P/E multiple of 25.6x. A group of comparable A-share listed Chinese pharmaceutical companies trades at an average forward P/E of 37.4x, and Fosun A-shares appear undervalued by comparison, in our view. K ey Risks to Our Price Target

Downside risks to the realization of our one-year price target include: 1. Unexpectedly strong government price controls on key products. 2. Significant pipeline setbacks. 3. Healthcare service industry highly regulated by the government. 4. Rising valuations for hospital M&A. 5. Relatively low earnings visibility. 6. Broad market risk, with continued de-rating of China stocks.

Exhibit 47: 2196.HK Fosun Pharm: Discounted Cash Flow

Source: Morgan Stanley Research. e = Morgan Stanley Research estimates. Exhibit 48: DCF sensitivity analysis

Perpetual Growth COE 3% 4% 5% 7.9% 39.32 41.16 44.10 8.9% 33.05 34.00 35.34 9.9% 28.36 28.87 29.52

Source: Morgan Stanley Research estimates.

9845 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Guangzhou Baiyunshan Pharma Risk Reward

A-shares carry a large premium to the H-shares – a notable disconnect Investment Thesis The consolidation of GPC and Baiyunshan offers cost synergies, representing further margin upside. Earnings fundamentals for the A-shares are the same as those for the H-shares – we see decelerating growth in the Wang Lao Ji Red Can business. However, the A-shares carry a premium of about 60% over the H-shares – a notable disconnect given the Hong Kong Shanghai Stock Connect. In light of the earnings shortfall in the last few quarters and likely ongoing soft performance, we believe it is justifiable to rate the A-shares UW relative to the H-shares and our coverage.

Key Value Drivers Source: Thomson Reuters, Morgan Stanley Research estimates WLJ Red Can herbal tea business. Price Target Rmb23.0 Base case, P/E valuation Expanded market reach of TCM products after inclusion on EDL. WLJ brand fully leveraged: WLJ sales outperform and gain Bull Rmb33.0 New products, including generic Viagra. 31x bull case 2016E EPS market share; strong sales of TCM products; robust sales of generic Viagra. Improvement of internal control systems and operational efficiency. Base Rmb23.0 Some diversification, but reliance on WLJ remains: Sales grow Refocusing of sales to hospitals from channel 22x base case 2016E EPS modestly. WLJ sales growth remains at industry average and distribution. market share maintained. Potential Catalysts WLJ under threat, and other business fails to take off: TCM Bear Rmb13.0 Slower-than-expected sales growth recovery. 12x bear case 2016E EPS business declines. WLJ faces stiff competition. Government price controls cut further into margins. Further decline of WLJ sales. Larger-than-expected price cut from tending Exhibit 49: WLJ’s Strength, Channel Reform and Consolidation Are Key process.

Risks to Achieving Price Target Upside Risks Sales for new products take off faster than expected (e.g., faster ramp-up of generic Viagra). WLJ-related asset injection from parent company. Significant outperformance from Wang Lao Ji Red Can JV; Alliance/Boots Distribution JV and rabies vaccine JV.

Source: Morgan Stanley Research estimates

9946 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Guangzhou Baiyunshan Pharma Risk Reward

Relatively undemanding valuation keeps us EW on the H-shares Investment Thesis WLJ Red Can sales and distribution channel expansion; market share gains, and faster-than- expected sales growth (above midteens). The consolidation of GPC and Baiyunshan offers cost synergies, representing further margin upside. 2016e P/E for the H-shares is 17x vs. the 17x average for H-share peers – fairly valued, in our view.

Key Value Drivers WLJ Red Can herbal tea business. Expanded market reach of TCM products after inclusion on EDL. New products, including generic Viagra. Source: Thomson Reuters, Morgan Stanley Research estimates Improvement of internal control systems and Price Target HK$23.0 Base case, DCF valuation operational efficiency. Refocusing of sales to hospitals from channel Bull HK$35.0 WLJ brand fully leveraged, fast ramp-up of generic Viagra: distribution. 25x bull case 2016E EPS WLJ sales outperform; strong sales of generic Viagra; faster than expected TCM business recovery. Potential Upside Risks Significant outperformance from Wang Lao Ji Red Base HK$23.0 Some diversification, but reliance on WLJ remains: Sales grow Can JV. Alliance/Boots Distribution JV and rabies 17x base case 2016E EPS of modestly. WLJ Red Can maintains current market share and sales vaccine JV. growth. Rmb1.07 Accelerated WLJ Red Can sales growth. New products take off faster than expected (e.g., WLJ under threat, and other business fails to take off: TCM Bear HK$11.0 faster ramp-up of generic Viagra). 8x bear case 2016E EPS business declines. WLJ faces stiff competition. Government price controls increase. Risks to Achieving Price Target Exhibit 50: Bull-Bear Case: WLJ’s Strength, Channel Reforms and Consolidation Downside risks Are Key Marketing stays weak; herbal tea goes out of fashion and loses out to soft drinks. Spiking TCM raw material prices. Inability to ramp up production and marketing efforts weakens WLJ Red Can sales. Drastic government price cuts drive margins down severely. WLJ arbitration ruling reversal. The group company (GPHL) may extract more licensing fees from GPC, thereby reducing GPC's profitability.

Source: Morgan Stanley Research estimates TCM drug business deteriorates should more people opt for Western medicines.

10047 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financial Summary of Guangzhou Pharma

Exhibit 51: Guangzhou Pharm Income Statement

Source: Company Data; Morgan Stanley Research

10148 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation Methodology: Guangzhou Baiyunshan Pharma

H -shares: DCF

Our DCF analysis generates a value of HK$23 per share in the base case: This reflects our base-case financial projections on the pro forma results of the combination of GPC+WLJ+BYS.

Our bull case DCF valuation is HK$35, assuming the core business recovers and WLJ Red Can sales ramp up faster than expected. Our bear case DCF valuation is HK$11.

We continue to assume the following for the H-shares: A cost of equity of 8.5% A steady-state revenue growth rate of 3% 15 years needed to reach steady-state growth A steady-state debt/capital ratio of 20% A net-of-tax interest rate of 5%

A -shares: P/E

Our price target is Rmb23: This is our base case value, derived from comparative P/E multiple analysis. GPC’s A-shares have historically traded at a significant premium to the H-shares, and so we do not think a DCF valuation is justified.

Our base case value of Rmb23 is based on our 2016 EPS estimate of Rmb1.07x and a P/E multiple of 22x, in line with its A-share TCM peers. The stock is trading at 28x 2016e P/E, slightly above its A-share TCM peer average of 27x, which we believe is expensive given slower earnings growth seen for 2015-2017E.

Under our bull case, we assume GPC will increase its market share and improve operating efficiency rapidly. Our valuation for the combined business GPC+WLJ+BYS is Rmb33. Our bear case valuation is Rmb13.

10249 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 52: GPC BYS-DCF

Source: Company Data, e = Morgan Stanley Research estimates

10350 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 53: TCM Comp Sheet

Source: Share prices as of November 24, 2015; Thomas Reuters, Morgan Stanley Research E=Thomas Reuters Consensus estimates for non-covered stocks, Morgan Stanley Research estimates for covered stocks (in bold).

10451 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Tasly Risk Reward

R&D-driven TCM Player Fairly Valued Investment Thesis Dominates CCV TCM market with multiple product offering. Flagship product (Danshen Dripping pill) has gained market share in domestic and international markets. R&D focus with large product pipeline. Recent sales growth has slowed on soft demand and insurance reimbursement budget control. Our DCF-based PT of Rmb42.00 implies 23x our 2016E EPS, in line with its A share peers' average.

Key Value Drivers Market share expansion. Expanding distribution network, especially in Source:Thomson Reuters, Morgan Stanley Research estimates grassroots healthcare centers. Price Target Rmb42.0 Base case, DCF: 10.6% COE, 11.0% long-term ROE, 5% terminal More new product launches. growth rate Upside Risks to Price Target Bull Rmb57.0 Market share gains: Danshen Dripping pill passes FDA Phase III Success in FDA Phase III clinical trials in US for 32x bull case 2016E EPS trial and enters US market; faster-than-expected sales growth (>20% YoY) in 2015-2017; faster ramp up of new products; limited Danshen Dripping pill. ASP erosion from competition/government price cut. Earlier-than-expected launch and ramp-up of new products. Base Rmb42.0 Market share steady: Stable sales growth at mid-teens in 2015- Value-accretive M&A. 23x base case 2016e EPS 2017; successful pipeline launches; ASP erosion of about 5-10% Faster-than-expected sales growth (>20% YoY) in per year from competition and/or EDL/NRDL. 2015-2017. Bear Rmb22.0 Market share declines: Danshen Dripping pill fails to pass FDA 12x bear case 2016e EPS Phase III clinical trial; sales growth continues to slow down to Risks to Achieving Price Target single digits in 2015-2017; delay/failure in new product launches; larger-than-expected ASP erosion. Downside Reliance on Danshen Dripping pill. Exhibit 54: Bear to Bull Case Danshen Dripping pill fails to pass FDA Phase III trials in US. Delay in the launch of new products. ASP/margin erosion from price cuts on EDL/NDRL. Potential policy/regulatory changes. Competitors start to roll out new/better products.

Source: Morgan Stanley Research estimates

10552 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financial Summary of Tasly

Exhibit 55: Tasly Income Statement

Source: Company Data; Morgan Stanley

10653 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation Methodology: DCF

Our base case value/price target is Rmb42 . Our key assumptions remain unchanged: 1. A 10.6% cost of equity (COE). 2. A perpetual growth rate of 5%. 3. 15 years to reach steady state growth. 4. An optimal capital structure with 20% long-term debt. 5. A long-term corporate tax rate of 20%.

Our base-case DCF value suggests a FY2016E P/E of 23x, which is in line with A shares TCM peers.

Exhibit 56: Tasly Pharma – DCF (Rmb)

Source: e = Morgan Stanley Research estimates

10754 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Hengrui Risk Reward

Risk-Reward View: Scarcity Value Driven by R&D Focus, Strength of Oncology Franchise Investment Thesis The oncology market in China is experiencing unprecedented growth. Hengrui is the leading manufacturer of generic chemotherapies. Surgery products show strong growth to complement oncology products. Robust pipeline allows Hengrui to launch innovative drugs for domestic and international markets. We think an improving earnings outlook, better investor sentiment toward A-share healthcare stocks, and top-notch R&D capability in China warrant a premium to peers. Source: Thomson Reuters, Morgan Stanley Research Key Value Drivers Price Target Rmb56.0 Base case, DCF analysis. Surgical drug sales Bull Rmb72.0 Innovative drug strategy works; surgical drug sales exceed Sales of innovative products 46.0x bull case 2016E EPS expectations: 1) Innovative drug sales 50% above our base-case Continued expansion of its oncology franchise estimate; 2) surgical drug sales above expectations. Potential Catalysts Base Rmb56.0 I nnovative drug strategy pans out in line with expectations: CFDA approval of new products 40.0x base case 2016E EPS 1) Innovative drug sales in line with expectations; 2) steady growth Rmb1.40 of surgical drug sales. Earnings upside from recently launched products Price cut of existing drugs during provincial Bear Rmb34.0 Innovative drug strategy does not work; generic drug sales tenders 26.8x bear case 2016E EPS underperform: 1) Immaterial contribution from proprietary drug Enactment of healthcare reform benefiting sales; 2) disappointing surgical drug sales ramp-up. companies with proprietary drugs US FDA approval of the ANDA for generic drugs Exhibit 57: Bear to Bull: Driven by Sales of Proprietary and Surgical Drugs, Tax Rate

Risks to Achieving Price Target Price war among leading players in the oncology market Significant setbacks in the product pipeline Loss of patent litigation, resulting in significant punitive damages Unexpected institution of strong price controls for high-value oncology products Government policies allowing for fewer approvals of generic chemotherapies

Source: Morgan Stanley Research Significant delay of product approval for apatinib and PEG-G-CSF Broad market risk with continued de-rating of Chinese stocks

10855 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financial Summary of Hengrui

Exhibit 58: Hengrui Income Statement

Source: Company Data; Morgan Stanley

10956 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation

V aluation Methodology: DCF

Our primary valuation method is discounted cash flow. We use a WACC of 7.8%. This includes a cost of equity of 8.1%, based on a risk free rate of 1.8%, a risk premium of 7% and beta of 0.9%. The assumed perpetual growth rate is 5%. Our other key assumptions include an optimal capital structure with 25% long-term debt and a long- term corporate tax rate of 20%. This works out to a base case value of Rmb56.07 in 12 months, which we use as our new 12-month price target.

Based on our 2016 EPS estimate, Hengrui's P/E is currently 40.0x, vs. 35.14x in 2006-12 before the earnings slowed down in 2013 due to product cycle and price cuts. We believe Hengrui is one of the best pharmaceutical companies in China thanks to its outstanding R&D capability among local peers, a strong direct sales team of over 5,000 people, a rich product pipeline that includes both innovative drugs and first-to-market generics, and an experienced management team. Now that its earnings have recovered from the trough, we think it deserves a premium to the average of 32.7x for A-share listed pharmaceutical companies, and believe our implied valuation of 40.0x 2016e EPS is justified.

11057 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 59: Hengrui: Discounted Cash Flow

Cost of Equity 8.1% Price 37.60 Long-Term ROE on New Investments 15.0% IV Per Share (12 Month), Ex. Div Nov-16 56.07 Years to Reach Steady-State Growth 10 Expected Share Price Return 49.12% Steady-State Revenue Growth Rate (%) 5% Expected Dividend Yield 0.08 0.23% Shares Outstanding 1,956 Expected Total Return 49.35% Steady-state borrowing cost (net of tax) 5.0% Steady-State Leverage (Net Debt/Equity) 25% WACC 7.8% Price target horizon (months) 12 Long-Term RNOA on New Investments 13.0% Conv. Factor - Model to Traded Ccy 1.00 Explicit Forecast Period (Years) 6 Decimals 2 Fiscal Year Ending 0

Value Breakdown Residual Income (operating): Beginning NOA 4,846 DCF (operating): Sum of PVRI 87,044 Sum of PVFCFO 91,890 Beginning NNOAL 3,089 Beginning NNOAL 3,089 ROI Equity Value 94,979 DCF Equity Value 94,979 Residual Income (equity): DDM (Equity): Beginning Equity 7,937 Sum of Div & Net Rep 95,829 Sum of PVRI 87,892 DDM Equity Value 95,829 RI Equity Value 95,829

Option: Sum-Of-The-parts (SOTP) Valuation F2015e F2016e F2017e F2018e F2019e F2020e F2021e OPERATING LEVEL Operating Revenue 9,383 11,550 14,181 17,280 21,051 25,688 30,253 Operating revenue growth 23.1% 22.8% 21.9% 21.8% 22.0% 17.8% Operating Asset Turnover 1.94 1.99 2.06 2.15 2.23 2.32 2.32 NOPAT 1,815 2,352 2,964 3,664 4,527 5,641 6,279 NOPAT Margin 19.3% 20.4% 20.9% 21.2% 21.5% 22.0% 20.8% Net Operating Assets 5,817 6,875 8,027 9,423 11,063 13,055 15,673 RNOA 37.5% 40.4% 43.1% 45.6% 48.0% 51.0% 48.1% FCFO 844 1,295 1,811 2,268 2,887 3,649 3,661 PVFCFO 783 1,115 1,448 1,683 1,988 2,331 2,171 Residual Income (Operating) 1,439.49 1,901.44 2,430.66 3,041.62 3,797.05 4,783.62 5,266.63 PVRI (Operating) 1,336 1,638 1,943 2,256 2,614 3,056 3,123 FINANCING AND OTHER Net financial expense (income) (75) (67) (71) (75) (75) (75) (916) Other nonoperating expense (income) (238) (314) (394) (485) (597) (741) (741) Net Debt (Cash) (4,505) (6,060) (8,183) (10,823) (14,150) (18,327) (9,370) Other Nonoperating Liabilities (Assets) (ONOAL) 433 532 656 809 998 1,232 1,232 Leverage EOP (Net Debt/Equity) -46% -49% -53% -56% -58% -61% -39% EQUITY LEVEL Net Income 2,127 2,734 3,428 4,223 5,199 6,457 7,936 Equity 9,892 12,405 15,556 19,438 24,217 30,152 23,810 ROE 26.8% 27.6% 27.6% 27.1% 26.7% 26.7% 26.3% Dividends and Net Rep 172 221 277 341 420 522 14,278 PV Div and Net Rep 159 189 220 250 285 328 8,304 Residual Income 1,488.51 1,937.25 2,429.52 2,971.08 3,634.00 4,507.04 5,508.50 PVRI 1,378 1,659 1,926 2,180 2,467 2,832 3,204

Source: Company data, Morgan Stanley Research (e) estimates.

11158 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 60: A-share Pharmaceutical Comparisons

Source: Share prices as of November 24, 2015; Thomas Reuters, Morgan Stanley Research E=Thomas Reuters Consensus estimates for N/C stocks, Morgan Stanley Research estimates for covered stocks

11259 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Sino Biopharma Risk Reward

Risk-Reward View: Value Created via Leadership in Markets for Hepatitis and Cardio-cerebral Medicines Investment Thesis HK$ 12 A leader in both hepatitis and cardio-cerebral 10 HK$10.00 (+39%) markets. Largely first-to-market generics facing relatively 8 HK$7.20 HK$8.00 (+11%) low pricing pressure. Strong pipeline and M&A capability position SBP 6 for future growth. HK$5.00 (-31%) 4 Key Value Drivers

2 Performance of current products Performance of orthopedic and eye hospitals 0 Product pipeline Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16

Price Target (Nov-16) Historical Stock Performance Current Stock Price WARNINGDONOTEDIT_RRS4RL~1177.HK~ Source: Thomson Reuters,Morgan Stanley Research Potential Catalysts Price Target HK$8.00 Derived through DCF using our base-case financial projections Launch of key pipeline drugs Release of tender results for key products Bull HK$10.00 Pipeline outperformance supports robust growth:New Inclusion of drugs into provincial drug 31.0x bull case 2016e EPS oncology drugs and some pipeline products become blockbusters; reimbursement list 30%+ growth for current blockbuster drugs for a few more years. Announcement of M&A, as management is M&A makes more contributions. actively looking for opportunities Quarterly results Base HK$8.00 Steady business growth:Oncology drugs become solid 31.0x base case 2016e EPS contributors; 20%+ growth for current blockbuster drugs for a few How We Differ from Consensus more years. No major M&A. Despite its complicated corporate structure, SBP’s Bear HK$5.00 Competition undercuts business:Pipeline products perform business is relatively simple, in our view, with 31.0x bear case 2016e EPS poorly; competitors take market share, resulting in declining sales revenue and profit contributions concentrated in a of blockbusters and other products. M&A is not successful and few subsidiaries. becomes a drag. We see considerable room to further expand sales of its blockbuster drugs. Exhibit 61: Bear to Bull: Existing Products, New Launches, M&As are Key Drivers Given the magnitude and visibility of SBP’s growth, we believe that the current valuation is still 12 appealing, and we see further share price upside. 0.4 10 0.9 The shares should also be supported by the 0.8 10.0 1.4 premium often accorded to China healthcare 8 1.2 8.0 industry leaders.

6 0.4 Risks to Achieving Price Target 4 5.0 Hepatitis market quickly becomes more 2 competitive.

0 Adverse government pricing policies. Bear M&As a drag Pipeline Current Base More Pipeline More Bull Case products products Case robust churns out mega profitable Case underperfrom sales product sales blockbusters M&As Patent litigation from multinationals or local Source: Morgan Stanley Research,Thomson Reuters competitors.

11360 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation

DCF Is Our Primary Valuation Methodology

Our key DCF assumptions remain the same. In this analysis, we use a cost of equity of 9.5%, which we derive from a capital asset pricing model (CAPM) calculation of the required return on equity. We assume a market risk premium of 4.5% and a risk-free rate of 3.31% on an adjusted beta of 0.92, per Bloomberg. We add a risk premium of 2% to reflect that SBP does not trade on bourses in its native market of mainland China. To err on the conservative side, we assume a perpetual growth rate of only 4%. This works out to a base-case value of HK$8.0 per share in 12 months, which we take as our 12-month price target. Other key assumptions include an optimal capital structure with 50% long-term debt. All of these parameters are unchanged. Our bear case rises from HK$4.33 to HK$5.0 and our bull case rises from HK$9.0 to HK$10.0.

Risks to Our Price Target

Key downside risks to achieving our one-year price target include:

1) Unanticipated competitive pressure resulting in faster-than-expected market share erosion;

2) Unsuccessful new product launches;

3) Pipeline failure;

4) Irrational price cuts by competitors that undermine SBP’s key products during provincial drug tenders; and

5) Unfavorable government policy on drugs included in the NDRL.

11461 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 62: Sino Biopharm: Discounted Cash Flow

Source: Morgan Stanley Research

11562 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Financials

Exhibit 63: Sino Biopharm: Change to Our Model

Source: Morgan Stanley Research

11663 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 64: Sino Biopharm: Annual Income Statement

Source: Morgan Stanley Research

11764 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Valuation & Charts

Exhibit 65: Performance of Chinese Healthcare, Weighted Average (including Domestic and Offshore Stocks)

Source: Thomson Reuters; Morgan Stanley Research Exhibit 66: Forward P/E Band of A-share China Exhibit 67: Forward P/E Band of Offshore Healthcare Stocks, Weighted Average Listed China Healthcare Stocks, Weighted Average

Source: Thomson Reuters,; Morgan Stanley Research

Source: Thomson Reuters; Morgan Stanley Research

Exhibit 68: 2016E Sales Growth Forecast by Exhibit 69: 2016E EPS Growth Forecast by Segment, YoY% Segment, YoY%

Source: Morgan Stanley Research. Bloomage, Sinovac, and SSY are Source: Morgan Stanley Research. Bloomage, Sinovac, and SSY are not classified above. not classified above.

11865 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 70: 2016E Sales and EPS Estimates

Source: Morgan Stanley Research Estimates; Thomson Reuters for consensus estimates Exhibit 71: 2016E Sales and EPS Estimates (Continued)

Source: Morgan Stanley Research Estimates; Thomson Reuters for consensus estimates Exhibit 72: 2016E Sales YoY Growth % (Morgan Stanley Estimates)

Source: Morgan Stanley Research

11966 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 73: 2016E EPS YoY Growth % (Morgan Stanley Estimates)

Source: Morgan Stanley Research

12067 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 74: China Healthcare Comps Sheet

Priced as of November 24, 2015. Source: Thomson Reuters, Morgan Stanley Research E= Morgan Stanley Research estimates for covered stocks. All the above stocks are MS covered stocks.

12168 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 75: Selected Companies

Priced as of November 24, 2015. E = Thomson Reuters estimates. Source: Company data, Thomson Reuters

12269 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 76: Chinese Pharmaceuticals Comps Sheet

Priced as of November 24, 2015. E = Morgan Stanley Research estimates except for non-covered stocks, w hich are from Thomson Reuters. MS covered stocks are in bold. Source: Thomson Reuters; Morgan Stanley Research.

12370 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 77: Chinese Traditional Chinese Medicine Comps Sheet

12471 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 78: Biotech Comps Sheet

12572 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 79: Chinese Medical Device Comps Sheet

12673 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 80: Chinese Drug Distribution Comps Sheet

12774 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH Exhibit 82: Chinese Contract Research Organization Comps Sheet

12875 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

Disclosure Section The information and opinions in Morgan Stanley Research were prepared or are disseminated by Morgan Stanley Asia Limited (which accepts the responsibility for its contents) and/or Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research), and/or Morgan Stanley Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited (A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents), and/or Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, which accepts responsibility for its contents), and/or Morgan Stanley India Company Private Limited, regulated by the Securities and Exchange Board of India (“SEBI”) and holder of licenses as a Research Analyst (SEBI Registration No. INH000001105); Stock Broker (BSE Registration No. INB011054237 and NSE Registration No. INB/INF231054231), Merchant Banker (SEBI Registration No. INM000011203), and depository participant with National Securities Depository Limited (SEBI Registration No. IN-DP-NSDL-372-2014) which accepts the responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research, and/or PT Morgan Stanley Asia Indonesia and their affiliates (collectively, "Morgan Stanley"). For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA. For valuation methodology and risks associated with any price targets referenced in this research report, please contact the Client Support Team as follows: US/Canada +1 800 303-2495; Hong Kong +852 2848-5999; Latin America +1 718 754-5444 (U.S.); London +44 (0)20-7425-8169; Singapore +65 6834-6860; Sydney +61 (0)2-9770-1505; Tokyo +81 (0)3-6836-9000. Alternatively you may contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY 10036 USA. Analyst Certification The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Sean Wu. Unless otherwise stated, the individuals listed on the cover page of this report are research analysts. Global Research Conflict Management Policy Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at www.morganstanley.com/institutional/research/conflictpolicies. Important US Regulatory Disclosures on Subject Companies As of October 30, 2015, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: JD.com, Inc.. Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of 3SBio, China Biologic Products, China Medical System, China Traditional Chinese Medicine, CSPC Pharmaceutical Group, Harmonicare, Lee's Pharmaceutical, Phoenix Healthcare Group. Within the last 12 months, Morgan Stanley has received compensation for investment banking services from 3SBio, China Biologic Products, China Medical System, China Traditional Chinese Medicine, Harmonicare, Lee's Pharmaceutical. In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from 3SBio, Beijing Tongrentang, Biosensors International, Bloomage Biotechnology, China Biologic Products, China Medical System, China Traditional Chinese Medicine, Concord Medical Services Holdings Ltd, CSPC Pharmaceutical Group, Fosun Pharmaceutical, Guangzhou Baiyunshan Pharma, Harmonicare, Lee's Pharmaceutical, Mindray, Phoenix Healthcare Group, PW Medtech, Shandong Weigao, Shanghai Pharmaceutical, Sino Biopharmaceutical, Sinopharm Group, Sinovac Biotech Ltd., The United Laboratories, Tongrentang Technologies, Universal Health International, WuXi Pharmatech. Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from 3SBio, China Traditional Chinese Medicine, Concord Medical Services Holdings Ltd, Fosun Pharmaceutical, Lee's Pharmaceutical, Mindray, PW Medtech, Sino Biopharmaceutical, The United Laboratories, WuXi Pharmatech. Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: 3SBio, Beijing Tongrentang, Biosensors International, Bloomage Biotechnology, China Biologic Products, China Medical System, China Traditional Chinese Medicine, Concord Medical Services Holdings Ltd, CSPC Pharmaceutical Group, Fosun Pharmaceutical, Guangzhou Baiyunshan Pharma, Harmonicare, Lee's Pharmaceutical, Mindray, Phoenix Healthcare Group, PW Medtech, Shandong Weigao, Shanghai Pharmaceutical, Sino Biopharmaceutical, Sinopharm Group, Sinovac Biotech Ltd., The United Laboratories, Tongrentang Technologies, Universal Health International, WuXi Pharmatech. Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: 3SBio, China Traditional Chinese Medicine, Concord Medical Services Holdings Ltd, Fosun Pharmaceutical, Lee's Pharmaceutical, Mindray, PW Medtech, Sino Biopharmaceutical, The United Laboratories, WuXi Pharmatech. Morgan Stanley & Co. LLC makes a market in the securities of China Biologic Products, Mindray, Sinovac Biotech Ltd., WuXi Pharmatech. The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making, providing liquidity, fund management, commercial banking, extension of credit, investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report. Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions. STOCK RATINGS Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Global Stock Ratings Distribution (as of October 31, 2015) For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative weightings (see 12976 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

COVERAGE UNIVERSE INVESTMENT BANKING CLIENTS (IBC) STOCK RATING CATEGORY COUNT % OF TOTAL COUNT % OF TOTAL % OF RATING IBC CATEGORY Overweight/Buy 1210 36% 340 43% 28% Equal-weight/Hold 1445 43% 346 44% 24% Not-Rated/Hold 91 3% 9 1% 10% Underweight/Sell 651 19% 95 12% 15% TOTAL 3,397 790

Data include common stock and ADRs currently assigned ratings. Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months. Analyst Stock Ratings Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months. Analyst Industry Views Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below. In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below. Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below. Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index or MSCI sub-regional index or MSCI AC Asia Pacific ex Japan Index. Important Disclosures for Morgan Stanley Smith Barney LLC Customers Important disclosures regarding the relationship between the companies that are the subject of Morgan Stanley Research and Morgan Stanley Smith Barney LLC or Morgan Stanley or any of their affiliates, are available on the Morgan Stanley Wealth Management disclosure website at www.morganstanley.com/online/researchdisclosures. For Morgan Stanley specific disclosures, you may refer to www.morganstanley.com/researchdisclosures. Each Morgan Stanley Equity Research report is reviewed and approved on behalf of Morgan Stanley Smith Barney LLC. This review and approval is conducted by the same person who reviews the Equity Research report on behalf of Morgan Stanley. This could create a conflict of interest. Other Important Disclosures Morgan Stanley is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Morgan Stanley produces an equity research product called a "Tactical Idea." Views contained in a "Tactical Idea" on a particular stock may be contrary to the recommendations or views expressed in research on the same stock. This may be the result of differing time horizons, methodologies, market events, or other factors. For all research available on a particular stock, please contact your sales representative or go to Matrix at http://www.morganstanley.com/matrix. Morgan Stanley Research is provided to our clients through our proprietary research portal on Matrix and also distributed electronically by Morgan Stanley to clients. Certain, but not all, Morgan Stanley Research products are also made available to clients through third-party vendors or redistributed to clients through alternate electronic means as a convenience. For access to all available Morgan Stanley Research, please contact your sales representative or go to Matrix at http://www.morganstanley.com/matrix. Any access and/or use of Morgan Stanley Research is subject to Morgan Stanley's Terms of Use (http://www.morganstanley.com/terms.html). By accessing and/or using Morgan Stanley Research, you are indicating that you have read and agree to be bound by our Terms of Use (http://www.morganstanley.com/terms.html). In addition you consent to Morgan Stanley processing your personal data and using cookies in accordance with our Privacy Policy and our Global Cookies Policy (http://www.morganstanley.com/privacy_pledge.html), including for the purposes of setting your preferences and to collect readership data so that we can deliver better and more personalized service and products to you. To find out more information about how Morgan Stanley processes personal data, how we use cookies and how to reject cookies see our Privacy Policy and our Global Cookies Policy (http://www.morganstanley.com/privacy_pledge.html). If you do not agree to our Terms of Use and/or if you do not wish to provide your consent to Morgan Stanley processing your personal data or using cookies please do not access our research. Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to the circumstances and objectives of those who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of an investment or strategy will depend on an investor's circumstances and objectives. The securities, instruments, or strategies discussed in Morgan Stanley Research may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in some or all of them. Morgan Stanley Research is not an offer to buy or sell or the solicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy. The value of and income from your investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions of companies or other factors. There may be time limitations on the exercise of options or other rights in securities/instruments transactions. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. If provided, and unless otherwise stated, the closing price on the cover page is that of the primary exchange for the subject company's securities/instruments. The fixed income research analysts, strategists or economists principally responsible for the preparation of Morgan Stanley Research have received 13077 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH compensation based upon various factors, including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues), client feedback and competitive factors. Fixed Income Research analysts', strategists' or economists' compensation is not linked to investment banking or capital markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks. The "Important US Regulatory Disclosures on Subject Companies" section in Morgan Stanley Research lists all companies mentioned where Morgan Stanley owns 1% or more of a class of common equity securities of the companies. For all other companies mentioned in Morgan Stanley Research, Morgan Stanley may have an investment of less than 1% in securities/instruments or derivatives of securities/instruments of companies and may trade them in ways different from those discussed in Morgan Stanley Research. Employees of Morgan Stanley not involved in the preparation of Morgan Stanley Research may have investments in securities/instruments or derivatives of securities/instruments of companies mentioned and may trade them in ways different from those discussed in Morgan Stanley Research. Derivatives may be issued by Morgan Stanley or associated persons. With the exception of information regarding Morgan Stanley, Morgan Stanley Research is based on public information. Morgan Stanley makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan Stanley Research change apart from when we intend to discontinue equity research coverage of a subject company. Facts and views presented in Morgan Stanley Research have not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley business areas, including investment banking personnel. Morgan Stanley Research personnel may participate in company events such as site visits and are generally prohibited from accepting payment by the company of associated expenses unless pre-approved by authorized members of Research management. Morgan Stanley may make investment decisions that are inconsistent with the recommendations or views in this report. To our readers in Taiwan: Information on securities/instruments that trade in Taiwan is distributed by Morgan Stanley Taiwan Limited ("MSTL"). Such information is for your reference only. The reader should independently evaluate the investment risks and is solely responsible for their investment decisions. Morgan Stanley Research may not be distributed to the public media or quoted or used by the public media without the express written consent of Morgan Stanley. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities/instruments. MSTL may not execute transactions for clients in these securities/instruments. To our readers in Hong Kong: Information is distributed in Hong Kong by and on behalf of, and is attributable to, Morgan Stanley Asia Limited as part of its regulated activities in Hong Kong. If you have any queries concerning Morgan Stanley Research, please contact our Hong Kong sales representatives. Certain information in Morgan Stanley Research was sourced by employees of the Shanghai Representative Office of Morgan Stanley Asia Limited for the use of Morgan Stanley Asia Limited. Morgan Stanley is not incorporated under PRC law and the research in relation to this report is conducted outside the PRC. Morgan Stanley Research does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors shall have the relevant qualifications to invest in such securities and shall be responsible for obtaining all relevant approvals, licenses, verifications and/or registrations from the relevant governmental authorities themselves. Morgan Stanley Research is disseminated in Brazil by Morgan Stanley C.T.V.M. S.A.; in Mexico by Morgan Stanley México, Casa de Bolsa, S.A. de C.V which is regulated by Comision Nacional Bancaria y de Valores. Paseo de los Tamarindos 90, Torre 1, Col. Bosques de las Lomas Floor 29, 05120 Mexico City; in Japan by Morgan Stanley MUFG Securities Co., Ltd. and, for Commodities related research reports only, Morgan Stanley Capital Group Japan Co., Ltd; in Hong Kong by Morgan Stanley Asia Limited (which accepts responsibility for its contents) and by Bank Morgan Stanley AG, Hong Kong Branch; in Singapore by Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research) and by Bank Morgan Stanley AG, Singapore Branch (Registration number T11FC0207F); in Australia to "wholesale clients" within the meaning of the Australian Corporations Act by Morgan Stanley Australia Limited A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents; in Australia to "wholesale clients" and "retail clients" within the meaning of the Australian Corporations Act by Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, which accepts responsibility for its contents; in Korea by Morgan Stanley & Co International plc, Seoul Branch; in India by Morgan Stanley India Company Private Limited; in Indonesia by PT Morgan Stanley Asia Indonesia; in Canada by Morgan Stanley Canada Limited, which has approved of and takes responsibility for its contents in Canada; in Germany by Morgan Stanley Bank AG, Frankfurt am Main and Morgan Stanley Private Wealth Management Limited, Niederlassung Deutschland, regulated by Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin); in Spain by Morgan Stanley, S.V., S.A., a Morgan Stanley group company, which is supervised by the Spanish Securities Markets Commission (CNMV) and states that Morgan Stanley Research has been written and distributed in accordance with the rules of conduct applicable to financial research as established under Spanish regulations; in the US by Morgan Stanley & Co. LLC, which accepts responsibility for its contents. Morgan Stanley & Co. International plc, authorized by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority, disseminates in the UK research that it has prepared, and approves solely for the purposes of section 21 of the Financial Services and Markets Act 2000, research which has been prepared by any of its affiliates. RMB Morgan Stanley (Proprietary) Limited is a member of the JSE Limited and regulated by the Financial Services Board in South Africa. RMB Morgan Stanley (Proprietary) Limited is a joint venture owned equally by Morgan Stanley International Holdings Inc. and RMB Investment Advisory (Proprietary) Limited, which is wholly owned by FirstRand Limited. The information in Morgan Stanley Research is being disseminated by Morgan Stanley Saudi Arabia, regulated by the Capital Market Authority in the Kingdom of Saudi Arabia , and is directed at Sophisticated investors only. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services Authority (the DFSA), and is directed at Professional Clients only, as defined by the DFSA. The financial products or financial services to which this research relates will only be made available to a customer who we are satisfied meets the regulatory criteria to be a Professional Client. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the QFCRA. As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided exclusively to persons based on their risk and income preferences by the authorized firms. Comments and recommendations stated here are general in nature. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations. The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or representations relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages relating to such data. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley Research, or any portion thereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley.

13178 China Healthcare | November 27, 2015 MORGAN STANLEY RESEARCH

INDUSTRY COVERAGE: China Healthcare

COMPANY (TICKER) RATING (AS OF) PRICE* (11/26/2015)

Isabella Zhao Aier Eye Hospital Group (300015.SZ) E (11/26/2015) Rmb32.21 Beijing Tongrentang (600085.SS) U (11/03/2014) Rmb26.59 Beijing Tongrentang Chinese Medicine (8138.HK) O (01/14/2015) HK$8.90 Bloomage Biotechnology (0963.HK) O (11/04/2015) HK$18.16 China Shineway Pharmaceutical (2877.HK) U (08/22/2013) HK$10.36 China Traditional Chinese Medicine (0570.HK) O (11/16/2015) HK$5.23 Concord Medical Services Holdings Ltd (CCM.N) U (04/11/2014) US$4.72 Consun Pharma (1681.HK) O (05/07/2014) HK$4.63 Guangzhou Baiyunshan Pharma (0874.HK) E (07/16/2015) HK$20.45 Guangzhou Baiyunshan Pharma (600332.SS) U (11/03/2015) Rmb29.37 Harmonicare (1509.HK) O (08/11/2015) HK$7.59 Sinovac Biotech Ltd. (SVA.O) E (10/07/2015) US$5.42 Tasly Pharmaceutical Group Co. Ltd (600535.SS) E (04/29/2015) Rmb37.90 The United Laboratories (3933.HK) E (04/04/2014) HK$4.42 Tongrentang Technologies (1666.HK) E (04/11/2014) HK$12.14 Universal Health International (2211.HK) O (03/19/2015) HK$3.06 WuXi Pharmatech (WX.N) E (10/05/2015) US$45.66 Yunnan Baiyao Group (000538.SZ) O (04/11/2014) Rmb70.45

Sean Wu Sinopharm Group (1099.HK) O (11/04/2015) HK$32.50

Yolanda Hu 3SBio (1530.HK) O (07/16/2015) HK$10.22 Biosensors International (BIOS.SI) ++ S$0.81 China Biologic Products (CBPO.O) O (07/08/2014) US$119.88 China Medical System (0867.HK) O (01/27/2014) HK$10.92 CSPC Pharmaceutical Group (1093.HK) O (08/15/2012) HK$7.26 Fosun Pharmaceutical (2196.HK) O (12/12/2014) HK$25.55 Fosun Pharmaceutical (600196.SS) O (12/12/2014) Rmb25.75 Jiangsu Hengrui (600276.SS) O (04/20/2015) Rmb50.54 Lee's Pharmaceutical (0950.HK) O (01/27/2011) HK$8.51 MicroPort Scientific Corp. (0853.HK) U (08/22/2013) HK$3.15 Mindray (MR.N) U (12/12/2014) US$26.40 Phoenix Healthcare Group (1515.HK) O (04/20/2015) HK$11.38 PW Medtech (1358.HK) O (12/12/2013) HK$1.66 Shandong Weigao (1066.HK) HK$5.66 Shanghai Pharmaceutical (601607.SS) E (06/05/2012) Rmb19.87 Shanghai Pharmaceutical (2607.HK) E (06/05/2012) HK$17.16 Sino Biopharmaceutical (1177.HK) O (05/14/2010) HK$7.31 SSY Group Ltd (2005.HK) E (09/10/2015) HK$1.98

Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

13279

MORGAN STANLEY RESEARCH ASIA/PACIFIC

Morgan Stanley Asia Limited+ Morgan Stanley appreciates your support in the Bin Li Institutional Investor 2015 All-Asia Research [email protected] and Sales Team Survey. +852 2239 7596 Request your ballot. Laurence Tam For more information on Morgan Stanley participants [email protected] view all +852 2239 1753

January 30, 2015

Industry View China Healthcare Attractive 2014 China R&D: Richer This report includes: Morgan Stanley Proprietary Pipeline of Novel Drugs China New Drug Database updated as of Dec. 31, 2013, key findings on R&D output by domestic drug companies and CFDA review time in 2013, pipeline 2014 continues Chinese companies’ climb up the breakdown by therapeutic classes and companies. pharma R&D ladder. In our comprehensive This is the third year we are publishing this coverage of China’s R&D landscape, we outline comprehensive R&D report. three major findings this year. See inside for

comprehensive analyses. R&D Leverage of Top R&D Companies 1) A handful of companies dominate pharma R&D Rmb mn Company Leverage Pipeline NPV R&D Spend in China: We valued the innovative and generic Lee's 66X 3,821 58 pipelines of each of the top R&D companies in China. Sihuan 52X 7,864 152 Consistent with our understanding, Hengrui still has the CSPC 33X 14,971 457 most valuable NPV (net of R&D spend), with value Fudan 30X 5,537 187 north of Rmb30bn. It has 21 novel drugs in the pipeline, United Lab 27X 7,773 285 the highest within our coverage. Lee’s and Sihuan are Hengrui 16X 35,804 2,248 the most efficient, generating above average return on Fosun 10X 11,251 1,124 relatively smaller R&D budgets. We measured Sinobiopharm 9X 14,994 1,755 efficiency using the concept of “R&D Leverage” - Luye 3X 2,058 608 pipeline NPV divided by R&D spending. Livzon 2X 2,619 1,115 SH Pharma 1X 1,748 1,327 2) The case for a me-too strategy is still strong: Of the 144 novel chemical drugs in China’s pipeline, we Pipeline NPVs of Major R&D Houses in China estimate roughly three out of four are derived from an (Rmb mn)

existing class of drugs and/or attacking a known 40,000 molecular target. Popular grounds for re-engineering 35,000 are the tinibs (oncology) and gliptins (diabetes), where 30,000 30 and 6 molecules respectively are in development by 25,000 20,000 Chinese companies. The quinoline antibiotics and 15,000 dipines (cardiovascular) classes are also popular. 10,000 5,000 3a) Incrementally more new drugs…In 2014, 59 - n ui rm u an ab s cere L novel chemical drugs applied to enter trial, up from 50 engr CSPC Fo m hu H Si Si biopha United ino in 2013, while 23 entered clinical trial, up from seven S entering in 2013. The total novel drug pipeline of China Morgan Stanley does and seeks to do business with from 2010-2014 reached 376 drugs, including biologics, companies covered in Morgan Stanley Research. As close to 40% of which are in oncology. a result, investors should be aware that the firm may have a conflict of interest that could affect the 3b) …significantly more FTM generics: The FTM objectivity of Morgan Stanley Research. Investors generic strategy has become significantly more popular should consider Morgan Stanley Research as only a single factor in making their investment decision. in 2014. Category 3.1 generics drove the spike in IND submissions, increasing from 152 in 2013 to 245 drugs For analyst certification and other important disclosures, refer to the Disclosure Section, in 2014. It also drove the increase in approvals, located at the end of this report. increasing from 16 in 2013 to 51 in 2014. += Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. 133 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Trends in 2014:

. Our pipeline valuations of major R&D houses, net of . Flat approval numbers in 2014: 287 drug NDAs were investment: Hengrui Rmb36bn, Sinobiopharm Rmb15bn, approved in 2014 vs. 261 in 2013. Chemical 1.1 CSPC Rmb15bn, Fosun Rmb11bn, Sihuan Rmb8bn, approvals stayed flat at four in both years, whilst biologics United Lab Rmb8bn. went from 17 to 12 in 2013-2014.

. A ranking of R&D productivity by R&D leverage: Lee’s Stats from our analysis: 66x, Sihuan 52x, CSPC 33x, Fudan 30x, United Lab 27x, Hengrui 16x, Fosun 10x. R&D leverage equals NPV . Three out of four new chemical drugs in China’s R&D pipeline are me-too/me-better. divided by R&D spending in 2009-2013.

. Popular me-too/me-better R&D strategies: “tinib” . Hengrui is clearly the most innovative company (oncology), “dipines” (cardiovascular), “xacins” within our coverage: It has 21 innovative drugs in its (quinolone antibiotics), “gliptins” (diabetes). pipeline (15 chemical, 6 biologic), of which 12 are in clinical trial and 1 has recently been approved. Of the 118 . # of IND submissions in 2014: 672 (vs. 581 in 2013). generic drugs within its pipeline, over half (64) are . # of IND approvals in 2014: 231 (vs. 134 in 2013). category 3, i.e. approved elsewhere but not in China, i.e. FTM. . # of NDA submissions in 2014: 240 (vs. 244 in 2013).

. Fosun, Sihuan, and Sinobiopharm are up-and- . # of NDA approvals in 2014: 287 (vs. 261 in 2013). coming: These have 12, 7, and 7 innovative drugs within their pipelines. Fosun has 40 category 3 drugs in the . Top new drug IND filers from 2010-2014: Hengrui, Hansoh, Xuanzhu (Sihuan). making, while Sihuan and Sinobiopharm boast 10 and

61. . Top therapeutic classes for chemical 3.1 IND filing approvals in 2014: infectious disease, CNS, oncology. . The innovators devote most resources to oncology: Hengrui has half of its innovative pipeline in oncology. . Top therapeutic classes for chemical 3.1 NDA filings Looking across our coverage, companies devote most submitted in 2014: cardiovascular, CNS, oncology.

programs to oncology, followed by endocrinology . Top NDA filing submitters for chemical 3.1 in 2014: (basically diabetes) and infectious diseases. From 2010- Luoxin, Qilu, Huahai, CSPC. 2014, 45% of all new drug INDs were in oncology. . # of new chemical drugs approved between 2010-2014: . Companies are latching on to the FTM category 3 14, including Hengrui’s apatinib. strategy in 2014: Of the 598 chemical drugs applying to . Deepest innovative pipeline within our coverage: Hengrui enter clinical trial in 2014, around 40% are cat. 3.1 (245), (118 drugs). up significantly from 2013’s 152. Of the 200 entering clinical trial in 2014 (INDs approved), 51 were category . Deepest generic pipeline within our coverage: 3.1. Sinobiopharm (142 generics, 61 cat. 3).

. Private companies carry the weight of innovation: . Total number of new drugs entering the pipeline from Half of the new drug INDs in 2014 were submitted by 2010-2014: 244.

Chinese private companies, 40% by Chinese listed * IND and NDA numbers, where not specified, refer to unique companies. These suggest ample M&A opportunities for drug filings. listed companies.

We acknowledge the contribution of Tony Ding to this report.

2 134 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Theme 1: A Handful of Companies Dominate R&D in China

This is the third report we have published on the state of Exhibit 2 China’s pharma R&D. Compared with 2013, 70% more drug Pipeline values offer premium to current valuation candidates entered clinical trial in 2014. In all, 59 novel 160% NPV/Mkt Cap candidates entered trial, compared to 50 in 2013, enriching 140% 148% China’s pipeline. And Hengrui remains the leader. 120% 100% 80% We have modeled the NPV of companies’ innovative 77% 57% 60% 50% pipelines. Hengrui still leads in the valuation of innovative 48% pipeline, followed by Sinobiopharm and CSPC. We estimate 40% 22% 20% 19% 20% 9% Hengrui’s pipeline to be worth around Rmb36bn and 0% 4% Sinobiopharm’s and CSPC’s to be worth Rmb15bn and Rmb15bn. Our first section details the full valuation of each company’s pipeline, including the generics pipeline and juxtaposition with each company’s market cap.

Source: GBi Source, Reuters, Company Data, Morgan Stanley Research Exhibit 1 Hengrui has the most valuable pipeline by NPV We looked at R&D productivity from several angles. (Rmb mn)

40,000 Exhibit 3 35,000 Hengrui has been most productive getting drugs 30,000 into clinical trial ranked by number of INDs 25,000 INDs R&D Spend INDs approved 20,000 submitted (Rmb mn) 15,000 10,000 Hengrui 51 32 2,248 5,000 Sihuan 16 10 152 - Hisun 14 8 1,268 i re n n e ru sun e uy rm SPC c Lab vzo L ha eng pharm C Fo m Lee's Li Lee's 11 4 58 H o Sihua ted tchison P bi Si u Uni H SH ino S Sinobiopharm 781,755 Note: Values in Rmb mn. Luye 77608 Source: GBi Source, Morgan Stanley Research Estimates CSPC 63457

Note: R&D is 2009-2013, while IND numbers are 2010-2014. We measure a five-year time span with a lag time of one year. R&D numbers are in Rmb mn. Source: GBi Source, Reuters, Morgan Stanley Research

In the above table we picked the top R&D houses in China by number of new drug IND filings from 2010-2014 against its R&D spend in 2009-2013. We visualize this information in the next page with a bubble chart.

3 135 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 4 Hengrui is the largest R&D house in China by number of Chemical 1.1 filings

40 Hengrui Bubble Size stands for RD expenses 35

25 IND Approval 20

15 Sinobiopharm Sihuan 10 Luye Hisun 5 Lee's CSPC 0 -10 0 10 20 30 40 50 60 -5 IND Fillings

Note: The size of the bubble represents the relative R&D spend in 2009-2013. Above charts the largest listed R&D houses in China. The INDs represent the period 2010-2014.

In the above chart, we pick the top R&D houses in China by number of new drug IND filings from 2010-2014 and visualize them by investment (R&D spend represented by bubble size) vs. return (INDs submitted and approved). Thus, the further out a company is from the origin, the greater the number of INDs it generated with the R&D spend. Among those with the largest R&D spends (Hengrui, Sinobipoharm and Hisun), Hengrui is farthest out from the origin, speaking to its R&D productivity.

4 136 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 5 Hengrui has the largest pipeline by NPV (Rmb mn)

40,000 NPV Hengrui

30,000

20,000 1 Sinobiopharm CSPC Fosun 10,000 United Lab Sihuan Livzon SH Pharma Lee's Luye 0 0 500 1,000 1,500 2,000 2,500 R&D Spending (2009-2013)

Note: NPV values are in Rmb mn. Source: GBi Source, Reuters, Morgan Stanley Research

In Exhibit 4 we plotted the pipeline value of each company against its R&D spend in the five year period 2009-2013. Qualitatively, Hengrui is able to generate excess return from R&D above its peers. The line through the origin has slope of 10, representing the median R&D leverage (NPV divided by R&D spend) a company generates, i.e. Fosun with 10x. Companies that lie to the left of the line generate above average return (within our R&D set) and companies to the right generate below average return.

5 137 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Below, we look at the value created from R&D projects in R&D Leverage: Lee’s and Sihuan come out at the top category 1 and 3 molecules, net of the R&D investment in We looked at the R&D leverage of a company – pipeline value 2009-2013. Our estimation suggests Hengrui’s aggregate divided by its R&D spend in 2009-2013 – as a measure of the R&D projects would create Rmb34bn of value and value generated per R&D dollar spent. Surprisingly, Lee’s and Sinobiopharm’s would create Rmb13bn of value. Sihuan emerged at the top, where each dollar invested generated 66 and 52 in value respectively. This is a measure Exhibit 5 of how “smartly” a company is spending its R&D dollars – on Hengrui’s R&D would create the most future value the most innovative projects, the most profitable markets, and (Rmb mn) quickest path to success. Pipeline Value Company Spend Generic InnovativeValue Created Leverage Caveats: We note that Lee’s uses partnership or co- Hengrui 2,248 11,875 23,929 35,804 33,557 16X development approach to R&D; it uses primarily the in- Sinobiopharm1,755 6,935 8,059 14,994 13,239 9X licensing model. Thus, its financial statement R&D may CSPC 457 9,053 5,918 14,971 14,514 33X underestimate the true costs of its R&D programs, hence the Fosun 1,124 3,895 7,357 11,251 10,127 10X high leverage in the scenario below. Also, in our valuation Sihuan 152 1,179 6,685 7,864 7,712 52X model, we ascribe more value to innovative molecules (in the United Lab 285 1,741 6,032 7,773 7,488 27X range of hundreds of millions Rmb peak sales) vs. generic Fudan 187 161 5,376 5,537 5,349 30X molecules (in the range of tens of millions Rmb peak sales). Lee's 58 355 3,466 3,821 3,763 66X Thus, companies with primarily generics pipelines will have Livzon 1,115 1,899 721 2,619 1,504 2X Luye 608 683 1,375 2,058 1,450 3X significantly less leverage and premium.

SH Pharma 1,327 1,748 - 1,748 421 1X Note: All values are in Rmb mn. R&D spend is from 2009-2013. Source: GBi Source, Reuters, Morgan Stanley Research Estimates

Exhibit 6 R&D Leverage: Lee’s and Sihuan generate the most “bang for the buck” focusing on highly profitable projects Lee's 66x Sihuan 52x CSPC 33x Fudan Zhangjiang 29x United Lab 27x Hengrui 16x Fosun 10x Sinobiopharm 9x Luye 3x Livzon 2x 1 SH Pharma 1x

Note: The above figures are pipeline value divided by aggregate R&D spend from 2009-2013. Source: GBi Source, Reuters, Morgan Stanley Research Estimates

6 138 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Pipeline NPV Detailed Analysis Pipeline NPV ranking: Exhibit 8 We use NPV of each company’s R&D’s projects to rank them Hengrui’s pipeline offers up to 55% premium (Rmb by values. Our inclusion set is all the innovative drugs mn) (chemical 1 + therapeutic biologics) and FTM generics 120,000 Rmb mn Hengrui Intrinsic NPV (category 3) in development, beginning with the submission of an IND application. We generally ascribe a market potential in 100,000 the hundreds of million Rmb range to an innovative products, 23,929 23,929 and a market potential in the tens of million Rmb range to an 80,000 FTM generic. The time to reach peak sales and launch profile 11,875 11,875 are based on therapeutic area (level of competition, market 60,000 98,970 growth). For both innovative and generic candidates, we apply 40,000 success probabilities to them at different stages of 63,165 63,165 development. In the following analyses, we peg each 20,000 company’s pipeline value to its market cap to get a sense of premium potential. That is, assuming none of the pipeline 0 value is reflected in its current valuation, what is the maximum Market Cap Generic drugs Innovative drugs Mkt Cap+ premium available from this exercise? Innovative+ Generics Note: Values in Rmb mn. Exhibit 7 Source: GBi Source, Morgan Stanley Research Estimates Hengrui and Simcere have the most valuable pipelines (Rmb mn) Fudan Zhangjiang’s pipeline value comprises 60% Rmb mn Generic Innovative Total biologics Hengrui 11,875 23,929 35,804 Our valuation of Fudan’s pipeline suggests a maximum CSPC 9,053 5,918 14,971 premium of +118%, given Fudan is still a small company now. Sinobiopharm 6,935 8,059 14,994 It is interesting to note that biologics make up 60% of total Fosun 3,895 7,357 11,251 pipeline value. United Lab 1,741 6,032 7,773

Sihuan 1,179 6,685 7,864 Exhibit 9 Fudan Zhangjiang 161 5,376 5,537 Fudan Zhangjiang’s pipeline has potential to more Hutchison - 2,925 2,925 than double its valuation (Rmb mn) Lee's 355 3,466 3,821 Luye 683 1,375 2,058 12,000 Rmb mn Fudan Zhangjiang Intrinsic NPV Livzon 1,899 721 2,619 Shanghai Pharm 1,748 - 1,748 10,000 Source: GBi Source, Morgan Stanley Research 8,000 5,376 5,376 Hengrui’s oncology programs drive pipeline value 6,000 Our valuation of its pipeline suggests a maximum boost to 10,217 161 161 company valuation by +18% and +38% from its generic and 4,000 innovative pipelines. The maximum supposes that the market 4,680 4,680 has not priced in any value of the pipeline. Oncology 2,000 programs make up 56% of the value of its innovative pipeline. 0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research Estimates

7 139 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Simcere’s pipeline is all about oncology Exhibit 11 Our estimate puts a valuation of Rmb7.1bn to Simcere’s United’s insulin franchise has potential to more innovative pipeline and a valuation of Rmb3.7bn to Simcere’s than double its valuation (Rmb mn) generic pipeline. Of its innovative pipeline, 96% of value 14,000 Rmb mn TUL Intrinsic Value comes from oncology candidates. Simcere is not listed. 12,000

Fosun has a diversified innovative pipeline 10,000 6,032 6,032 Our valuation puts its innovative pipeline at Rmb7.4bn and its generic pipeline at Rmb3.9bn. Combined these offer up to 8,000 20% premium to its market valuation. Fosun’s innovative 6,000 1,741 1,741 13,037 programs span oncology biologics, insulins, EPOs, and TNFs. 4,000 Exhibit 10 5,265 5,265 Fosun’s pipelines offer up to 22% premium (Rmb 2,000 mn) - 70,000 Market Cap Generic drugs Innovative drugs Mkt Cap+ Rmb mn Fosun Intrinsic NPV Innovative+ Generics 60,000 7,357 7,357 3,895 3,895 Note: Values in Rmb mn. 50,000 Source: GBi Source, Morgan Stanley Research

40,000 CSPC’s pipeline is diversified therapeutically We valued CSPC’s innovative pipeline at Rmb5.9bn and its 30,000 63,228 51,977 51,977 generic pipeline at Rmb9.1bn. Combined these offer up to 20,000 49% premium to current market valuation. We also priced in tumor antibiotic (liposomal mitoxantrone), which just entered 10,000 Phase 2 trial in mid-Jan 2015. Other pipeline candidates

0 include an SNRI for depression and a GLP-1 drug for Market Cap Generic drugs Innovative drugs Mkt Cap+ diabetes. Innovative+ Generics Exhibit 12 Note: Values in Rmb mn. CSPC’s pipeline offers up to 49% premium (Rmb Source: GBi Source, Morgan Stanley Research mn) Insulins drive United Lab’s pipeline premium 50,000 CSPC Intrinsic NPV We put United’s innovative pipeline at Rmb6.0bn and its Rmb mn generic pipeline at Rmb1.7bn. The three insulins it has (fast, 5,918 5,918 40,000 short, mixed) make up 56% of its innovative pipeline value. All 9,053 9,053 told, its innovative + generic pipelines offer up to 148% premium to its current valuation. 30,000 46,252 20,000 31,282 31,282

10,000

0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research

8 140 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Sihuan’s pipeline is diversifying away from Lee’s program could potential double its valuation cardiovascular We valued Lee’s innovative pipeline at Rmb3.5bn. The We valued Sihuan’s innovative pipeline at Rmb6.7bn and its candidates consist of Phase 2 oncology candidate gimatecan, generic pipeline at Rmb1.2bn. Its innovative pipeline consists valued at Rmb1.2bn. It has a modest generic pipeline worth of candidates in diabetes (DPP-4), two antibiotics, oncology Rmb355mn. (tinib), gastroenterology (proton pump inhibitor), and botox. Exhibit 15 Exhibit 13 Lee’s pipeline could offer up to 77% premium (Rmb Sihuan’s pipeline offers +19% premium (Rmb mn) mn)

52,000 Rmb mn Sihuan Intrinsic Value 10,000 Rmb mn Lee's Intrinsic Value

50,000 8,000 48,000 3,466 3,466 6,685 6,685 6,000 46,000 355 355 8,778 44,000 50,038 4,000 1,179 1,179 42,000 4,958 4,958 2,000 40,000 42,174 42,174

38,000 0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Innovative+ Generics Generics Note: Values in Rmb mn. Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research Source: GBi Source, Morgan Stanley Research

Sinobiopharm has a vibrant program in oncology Hutchison’s primarily oncology pipeline boasts We valued Sinobiopharm’s innovative pipeline at Rmb8.1bn Rmb2.9bn in value and its generic pipeline at Rmb6.9bn. Of its innovative Five of its 7 candidates in development are oncology, with pipeline, 66% of the value is oncology, including one tinib combined value of Rmb1.6bn, all belonging to the tinib class each in Phases 1 and 2 trial. of drugs. The other two candidates are in autoimmune disease. Exhibit 14 Sinobiopharm’s pipeline offers up to 50% premium Luye’s pipeline offers marginal premium 50,000 Rmb mn Sinbiopharm Intrinsic Value It has two candidates in innovation pipeline, a DPP-4 for diabetes and an SNRI for depression. Combined we valued

40,000 8,059 8,059 these at Rmb1.4bn, with another Rmb683mn coming from generics. 6,935 6,935 30,000

20,000 44,958 29,964 29,964 10,000

0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research

9 141 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 16 Luye’s pipeline offers +9% premium (Rmb mn) Betta’s pipeline is worth Rmb1.2bn We valued Betta’s innovative pipeline at Rmb661mn, 30,000 Rmb mn Luye Intrinsic Value including one monoclonal antibody for cancer. It has four 3.1 25,000 1,375 1,375 candidates and 1.6 in generic pipeline which we valued at 683 683 Rmb571mn. 20,000 Shanghai Pharm’s pipeline is all generics 15,000 25,548 We valued the generic pipeline at Rmb1.7bn. 23,490 23,490 10,000 Exhibit 18 Shanghai’s generic pipeline represents 4% 5,000 premium (Rmb mn)

0 50,000 Rmb mn SH Pharm Intrinsic Value Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ 1,748 1,748 Generics 40,000 Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research 30,000

Livzon is not big on innovation 43,334 43,334 45,082 Livzon’s innovation has one candidate, a TNF, valued at 20,000 Rmb721mn. 10,000 Exhibit 17

Livzon’s pipeline offers 20% premium (Rmb mn) 0 Market Cap Generic drugs Innovative drugs Mkt Cap+ 16,500 Rmb mn Livzon Intrinsic Value Innovative+ 16,000 Generics

15,500 721 721 Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research 15,000

14,500 1,899 1,899 14,000 15,964

13,500

13,000 13,344 13,344 12,500

12,000 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

Note: Values in Rmb mn. Source: GBi Source, Morgan Stanley Research

10 142 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Theme 2: The Case for a “Me Too” Strategy in China is Strong

We looked at the new drug pipeline (INDs + NDAs) between out-compete others. Thus far, incremental innovation, i.e. 2010-2014. Of the 244 new chemical drugs, we estimate improving upon an existing molecule, has worked out to be a three-fourths to be “me-too” or “me-better”, which we define lower risk and higher return strategy for pharma companies. as targeting an existing molecular target and/or tweaking/improving an existing molecule or class of Examples of “me better” strategies molecules. The rest are natural extracts, minerals, and new We found the following to be hotbeds for engineering “me classes of molecules. better” molecules.

Exhibit 19 “tinib” class in oncology: Hengrui has built an entire Three out of four chemical drugs are “me-too’’ company out of engineering existing molecules for more potency and new applications. Apatinib, targeting a known receptor VEGFR2, and a modification of the existing “tinib” class of drugs was approved in 2014 for marketing as a third- Others, 63 line treatment gastric cancer. One will see that tinib drugs target only a handful of molecular targets. They are generally called kinase inhibitor because they target protein kinases Me-too, 181 and the receptors that switch them on. For investors in the US, we have all seen a TV commercial on a tinib drug.

Exhibit 20 Tinib drugs we have all heard of (see Brand Name

Note: Above is 2010-2014 data for Chemical 1.1 drugs in all phases of application. column) Source: GBi Source, Morgan Stanley Research Generic Name Brand Name Target Afatinib Gilotrif EGFR What works in China: “me-too” or “me-better” Axitinib Inlyta VEGFR China is climbing up the pharma development ladder. The Bosutinib Bosulif BcrAbl R&D data we have represented shows that as of 7-8 years Crizotinib Xalkori ALK/Met ago, CFDA approvals comprised generic drugs mainly. As the Dasatinib Sprycel BcrAbl market is now flooded with tons of generics in many major Erlotinib Tarceva ErbB1 therapeutic categories, the CFDA has applied the brakes on Fostamatinib Experimental Syk approving new generic applications. In particular, in 2014 it Gefitinib Iressa EGFR has accepted and approved more category 3.1 FTF generics, Ibrutinib Imbruvica BTK i.e. drugs targeting niche therapeutic areas where the Imatinib Gleevec BcrAbl originator (typically mid-sized Japanese and European Lapatinib Tykerb ErbB1 pharma lacking the wherewithal or intentions to enter China) Lenvatinib Experimental VEGFR has not registered the drug in China. This is a step up in the Mubritinib Experimental Unclear pharma R&D ladder. Nilotinib Tasigna BcrAbl Pazopanib Votrient VEGFR Pegaptanib Macugen VEGF However, at the highest end, i.e. development entirely novel Ruxolitinib Jakafi JAK drugs with a new molecular target, successes have been far Sorafenib Nexavar VEGFR and between. In 2014, we witnessed the high profile failures Sunitinib Sutent VEGFR of two major first-in-class therapeutics: CMS’ Phase 3 Tofacitinib Xeljanz JAK program for liver cancer for tyroserleutide (10 years of Vandetanib Caprelsa RET development), and Guangzhou Pharma’s HBV therapeutic Vemurafenib Zelboraf BRAF vaccine. We note to investors however, that both companies Source: Morgan Stanley Research had not bet their futures on these two binary events. “dipine” class in cardiovascular: This is a class of drugs On the demand side, China vast and under-developed that block calcium channels, e.g., Norvasc, Zanidip, and pharma market does not necessitate disruptive innovation to Procardia, to reduce hypertension. Sihuan has made a whole

11 143 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

listed company out of engineering cardio meds. Its new kid on Exhibit 22 the block is tylerdipine, a chemical 1.1 calcium channel The most recent graduating class of quinolones is blocker, which was approved to enter clinical trial in 2014. its fourth generation Dipine drugs are even more common as they deal with a prevalent condition. Cinoxacin Nalidixic acid Oxolinic acid Exhibit 21 First generation The dipine class has a large alumni base Piromidic acid Generic Name Brand Name Pipemidic acid Amlodipine Norvasc Rosoxacin Aranidipine Sapresta Ciprofloxacin Azelnidipine Calblock Enoxacin Barnidipine HypoCa Fleroxacin Benidipine Coniel Lomefloxacin Cilnidipine Atelec Second generation Nadifloxacin Clevidipine Cleviprex Norfloxacin Isradipine DynaCirc Ofloxacin Efonidipine Landel Pefloxacin Felodipine Plendil Rufloxacin Lacidipine Motens Balofloxacin Lercanidipine Zanidip Grepafloxacin Manidipine Calslot Levofloxacin Nicardipine Cardene Third generation Pazufloxacin Nifedipine Procardia Sparfloxacin Nilvadipine Nivadil Temafloxacin Nimodipine Nimotop Tosufloxacin Nisoldipine Baymycard Clinafloxacin Nitrendipine Cardif Gatifloxacin Pranidipine Acalas Gemifloxacin Fourth generation Moxifloxacin Source: Morgan Stanley Research Sitafloxacin

Trovafloxacin Quinolone antibiotics: The class drugs end in “xacin” and Prulifloxacin have a fluoride motif attached to the main bone. Newcomers Source: Morgan Stanley Research in 2014 include Anhui Huanqiu’s antofloxacin which was approved to enter trial and Taigen’s (Taiwan based) “gliptin” class in diabetes: Alternatively called the DPP-4 nemonoxacin (without fluoride motif) which submitted inhibitors, this class of oral drugs treats type 2 diabetes. The an NDA. first member sitagliptin (Januvia) was approved by the US FDA in 2006. There are now about ten other variants on the market. In 2014, seven companies filed for or got trial approval for their own gliptin variant: Chengdu Yuandong, Chongqing Fuchuang, Jiangsu Hansoh, Nanjing Changao, Shandong Luye, Sihuan, and CSPC.

12 144 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 23 Exhibit 24 The gliptin class is relatively younger Thirty novel tinibs in development by Chinese Generic Name Brand Name Approval companies Sitagliptin Januvia 2006 (US) English Chinese Company Chinese Name Status Vildagliptin Galvus 2007 (EU) 赛拉替尼 Qilu Pharma 齐鲁制药 IND Approval Saxagliptin Onglyza 2009 (US) 舒布替尼 Runzhong 连云港润众 IND Approval Linagliptin Trajenta 2011 (US) Flumatinib 氟马替尼 Hongchuang 连云港宏创 IND Approval Anagliptin Suiny 2012 (JP) 氟卓替尼 Hongchuang 连云港宏创 IND Approval Teneligliptin Tenelia 2012 (JP) 艾维替尼 ACEA Biosciences ACEA生物 IND Approval Gemigliptin Zemiglo 2012 (KR) Icotinib 埃克替尼 Betta 贝达 NDA Approval Alogliptin Nesina 2013 (US) Flumatinib 氟马替尼 Hansoh 豪森 IND Approval Dutogliptin Investigational 氟卓替尼 Hansoh 豪森 IND Approval Source: Morgan Stanley Research Sipatinib 西帕替尼 Hansoh 豪森 IND Approval Henatinib 海那替尼 Hansoh 豪森 IND Approval Chinese developers are serious about tinib drugs Apatinib 阿帕替尼 Hengrui 恒瑞 NDA Approval We have pulled out the innovative tinibs (chemical 1.1) Pyrotinib 吡咯替尼 Hengrui 恒瑞 IND Approval developed by Chinese companies from 2009-2014 (see Simotinib 西莫替尼 Simcere 先声 IND Approval Exhibit 24). Here are snapshots of a few under our coverage. 舒布替尼 Chia Tai Tianqing 正大天晴 IND Approval Anlotinib 安罗替尼 Chia Tai Tianqing 正大天晴 IND Approval Hengrui’s apatinib was a high profile success in 2014. It is 迈华替尼 Huadong Medicine 华东医药 IND Approval a novel targeted oral drug aimed at extending survival for late- 莱洛替尼 Dongyangguang 东阳光药业 IND submitted stage gastric cancer patients that launched in December 博昔替尼 Dongyangguang 东阳光药业 IND submitted 2014. It is also in development for liver cancer. Hengrui also 博昔替尼胶 Dongyangguang 东阳光药业 IND submitted has pyrotinib in Phase 1 trial, which selected for HER2 宁格替尼 Dongyangguang 东阳光药业 IND Approval positive advanced breast cancer patients. Pirotinib 哌罗替尼 Xuanzhu Medical 轩竹医药 IND submitted 美迪替尼 Harbin Gloria 誉衡药业 IND Approval Sinobiopharm has two tinibs in development. Its 舒布替尼 Volitinib 沃利替尼 Hutchison Med 和记黄埔医药 IND Approval is a variation on sunitinib and entered Phase 1 in August 2012. Theliatinib 席栗替尼 Hutchison Med 和记黄埔医药 IND Approval It has shown promise (human tissues) in breast and ovarian Epitinib 易吡替尼 Hutchison Med 和记黄埔医药 IND Approval cancers. Its anlotinib is in Phase 2 now. The trial compares it Fruquintinib 呋喹替尼 Hutchison Med 和记黄埔医药 IND Approval to sunitinib for advanced renal cell carcinoma patients. Sulfatinib 索凡替尼 Hutchison Med 和记黄埔医药 IND Approval 伯瑞替尼 Purunao Bio 浦润奥生物 IND submitted Sihuan pirotinib is a global program. It entered clinical trial Delitinib 德立替尼 Institute of Materia M 中国科学院上 IND Approval in October 2013, and Sihuan is applying for trial also in the Allitinib 艾力替尼 Allist 艾力斯医药 IND Approval US, Japan, and EU. Note: 2009-2014 chemical 1.1 filings. Source: GBi Source, Morgan Stanley Research

Dipines are less targeted given lower profitability Calcium channel blockers have been around a long time and are highly genericized. Hence, there is less effort to out- engineer the existing ones than there is in tinibs. Sihuan is developing tylerdipine, its sixth chemical 1.1 drug to obtain IND trial approval. Similar to pirotinib, Sihuan is applying for patents in the US, Japan, and EU as well.

Exhibit 25 Novel dipines developed by Chinese companies English Chinese Company Chinese Name Status Tylerdipine 泰乐地平 Xuanzhu Medical 轩竹医药 IND Approval Nitrendipine 尼群地平 Yikang Pharma 益康药业 IND Approval Note: 2009-2014 chemical 1.1 filings. Source: Company Data, Morgan Stanley Research

13 145 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Taigen is developing a new quinolone Sihuan’s imigliptin started a Phase 1 trial in 1H2013, its fourth Its China partner Zhejiang Medicine is handling registration in chemical 1.1 drug approved to enter clinical trial. CSPC is co- China, which is at the factory inspection stage. The Taiwan developing DBPR108 with Taiwan’s Genovate Biotechnology. FDA has already granted marketing approval to oral form of A Phase 1 trial with healthy subjects in Taiwan has been nemonoxacin for community acquired pneumonia. In completed (by National Health Research Institutes). December 2014, Taigen signed up marketing partner 文德藥業 for the Taiwan market. Sihuan made a failed attempt at a Exhibit 27 quinolone previously. Novel gliptins developed by Chinese companies English Chinese Company Chinese Name Status Exhibit 26 Ulogliptin 优格列汀 Yuandong Pharma 苑东药业 IND submitted Novel xacins developed by Chinese companies Fotagliptin 复格列汀 Fuchuang Pharma 复创医药 IND Approval English Chinese Company Chinese Name Status Besigliptin 贝格列汀 Hansoh 豪森 IND Approval Antofloxacin 安妥沙星 Anhui Huanqiu 环球药业 IND Approval 澳格列汀 Changao Pharma 长澳医药 IND submitted 哌诺沙星 Xuanzhu Medical 轩竹医药 IND Failed Evogliptin 艾格列汀 Luye 绿叶 IND Approval Nemonoxacin 奈诺沙星 Zhejiang Medicine 浙江医药 NDA submitted Imigliptin 依格列汀 Xuanzhu Medical 轩竹医药 IND Approval Note: 2009-2014 chemical 1.1 filings. DBPR108 CSPC Zhongqi 石药集团 IND submitted Source: Company Data, Morgan Stanley Research Note: 2009-2014 chemical 1.1 filings. Source: Company Data, Morgan Stanley Research Three Chinese companies are gearing for their own novel gliptins. Fosun currently has fotagliptin in clinical trial.

14 146 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Theme 3: Incrementally More New Drugs in 2014; Significantly More FTM Generics

This section includes our analysis on the following: The number of novel drugs applying was 59, nine more than in 2013, also the highest since 2007. Biologic applications 1) IND and NDA filings also kept pace at 74 molecules, vs. 82 in 2013.

2) IND and NDA approvals Exhibit 29 Nine more novel drugs applied for trial in 2014

3) Approval speeds Class 1.1 Class 3.1 Class 6 350 4) Biologics vs. Chemical drugs 5 300 60 5) Innovative vs. Generic drugs (Class 1 vs. Class 3) 250 200 4 68 245 201 6) Therapeutic breakdowns 34 15 150 73 73 152 100 7) Domestic and MNCs 123 110 124 93 50 90 63 50 59 23 25 28 8) Private vs. Public companies 0 14 20 2007 2008 2009 2010 2011 2012 2013 2014

9) 2014 and 2015 YTD Source: GBi Source, Morgan Stanley Research

Richer Pipeline by the Year Hengrui steals the show INDs submitted: Higher Throughput and Higher Quality The number of new Chemical 1.1 INDs similarly jumped from The year 2014 saw a record number of drug INDs entering 50 in 2013 to 59 in 2014. Chemical 1.1 represents the the review queue with CFDA – 598 chemical and 74 biologics, innovative filings – me-too, me-better, or entirely new NCEs vs. 2013’s 499 and 82 respectively. These numbers are the (new chemical entities). Hengrui leads the pack. highest in the past eight years. Exhibit 30 Hengrui filed the most new drug INDs in 2014 Exhibit 28 Number of INDs on steady rise Jiangsu Hengrui 13 Chemical INDs Biologic INDs Guangdong 10 Dongyangguang 800 Hefei Siu-Fung 7 700 74 600 Jiangsu Hansoh 6 82 500 53 39 Shaanxi Synthetic 4 55 52 56 71 400 Jiangsu Vcare 4 300 598 482 486 499 BeiGene 4 200 445 424 441 438 100 Xiweiai Pharmaceutical 3

0 Zhejiang Huahai 3 2007 2008 2009 2010 2011 2012 2013 2014 Zhejiang Betta 3 Note: Chemical INDs include all application categories, while biologics only include therapeutic, not preventive ones. Source: GBi Source, Morgan Stanley Research Note: New drugs refers to Chemical 1.1 filings. Above refers to number of filings, not unique drugs. Source: GBi Source, Morgan Stanley Research

15 147 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Biologic INDs declined from 82 in 2013 to 74 in 2014 Exhibit 33 Of the 149 INDs filed representing the 74 biologics in 2014, Private companies accounted for half of all novel 97 (65%) were filed by domestic companies, with the rest drug IND filings from 2010-2014 coming from MNCs. Six out of the top 10 filers were MNCs, Academic with Roche leading the pack. institutions, 51 MNCs, 2 Exhibit 31 Domestic companies filed 65% of biologic INDs in Domestic Listed, 2014 184

Domestic Private, 236 MNCs, 52

Note: A total of 473 new drug INDs were submitted to the CFDA from 2010-2014. Source: GBi Source, Morgan Stanley Research

Domestics, 97 Private companies carried 50% of the innovation, while listed companies carried 39%. Thus, M&A opportunities abound for listed companies interested in acquiring pipeline products. The top five filers were Hengrui (listed), Hansoh (listed), Source: GBi Source, Morgan Stanley Research Xuanzhu (Sihuan’s subsidiary), Dongyangguang (not listed),

and Hisun (listed). Below charts the breakdown by therapeutic Exhibit 32 area. Six of top 10 biologic filers are MNCs, 2014 Exhibit 34 Roche 10 Oncology leads the new drug IND filings, 2010-2014

Qilu 9 Others, 11% Sanofi 7

Novo 6 Gastroenterology, 5% Hisun 5 Pfizer 5 Cardiovascular, 7% J&J 5 Oncology, 45% Chia Tai 4 Haber 4

Bayer 4 Endocrinology, 11%

Source: GBi Source, Morgan Stanley Research

Who’s innovating? Private vs. public companies We looked at the period 2010-2014 at the new drug Infectious Disease, 20% (Chemical 1.1) INDs filed. Note: A Total of 184 INDs with therapeutic area classifications by GBi Source, 2010-2014. Note this total is a lot fewer than the 473 in total regardless of therapeutic classification. Source: GBi Source, Morgan Stanley Research

FTF chemical 3.1 generics also a driver in increased submissions: These are drugs that are approved elsewhere but have not been registered in China, essentially first-to- market (FTM). This could be due to a number of reasons including a lack of resources to enter from the originator (e.g., small to mid-sized Japanese or European pharma

16 148 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

companies), or niche therapeutic areas that do not warrant Exhibit 36 strategic considerations for the originators. The number of INDs throughput declined over 2008-2014 Chemical 3.1 INDs that entered the queue spiked from 2013’s 120% 152 to 2014’s 245, an increase of 93 comparable to the 100% increase of 99 in overall chemical filings. 96.4% 90.7% 80% 2015 has started off strong, with nine new drugs filed 76.9% As of January 9, there had been six new chemical drug and 60% 62.1% 54.9% 57.0% 55.8% six biologics INDs filed in 2015. These represent nine unique drugs and include Hengrui’s long-acting insulin INS061. 40%

20% INDs approved: Higher Throughput and Higher Quality The number of IND approvals out the pipeline also saw a 0% spike in 2014, 200 chemical INDs and 31 biologic INDs vs. 2008 2009 2010 2011 2012 2013 2014

122 and 12 in 2013. We tried to measure the throughput using Note: A simplistic measure of IND pipeline throughput – that year’s INDs approved divided by a simplistic measure, the year’s approved drug INDs divided INDs submitted. Source: GBi Source, Morgan Stanley Research by the year’s submitted drug INDs. This effectively is CFDA’s “administrative throughput” (Exhibit 36). In percentage terms, Chemical 1.1 INDs up significantly in 2014 the CFDA did crank more INDs through the pipeline in 2014 The number of INDs approved, i.e., entering clinical trial, vs. 2013 (34% vs. 23%). Note that the number of INDs spiked from seven in 2013 to 23 in 2014. Hengrui remained approved is effectively the number entering human clinical China’s top drug innovator, with eight Chemical 1.1 trials. applications making it through to clinical trial, followed by Hisun’s 5 and Hansoh’s 4. Note that two of the top ten are Exhibit 35 Overall INDs approved saw a rebound in 2014 academic institutions: Chinese Academy of Medical Sciences and PLA Institute of Radiation Medicine. Chemical Total Biologic

600 Exhibit 37 23 novel drugs entered trial in 2014 vs. 7 in 2013 500 33 39 Class 1.1 Class 3.1 Class 6 400 300 35 54 300 38 42 250 71 33 443 443 200 331 321 200 89 278 289 240 100 150 159 76 23 0 47 100 64 40 2008 2009 2010 2011 2012 2013 2014 127 79 50 77 62 45 Source: GBi Source, Morgan Stanley Research 43 54 24 34 34 0 13 17 17 2008 2009 2010 2011 2012 2013 2014

Source: GBi Source, Morgan Stanley Research

17 149 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 38 Who are the approved Chemical 3.1 INDs? Hengrui leads in chemical 1.1 IND approvals in 2014 Close to two-thirds of the 165 Chemical 3.1 INDs entering Company Name Chinese Name Number clinical trials in 2014 belong to infectious disease, CNS, and 1 Hengrui Medicine 江苏恒瑞医药 8 oncology. Given NDA approval times of 2-4 years (2008-2014 2 Zhejiang Hisun 浙江海正药业 5 data), we can expect a similar profile to emerge in this time 3 Ascentagepharma 江苏亚盛医药 4 frame. 4 Hefei Siu-Fung USTC 兆科药业(合肥)4 5 Jiangsu Hansoh 江苏豪森药业 4 Exhibit 40 6 Chinese people's Liberation Army 中国人民解放军军事医学 3 Infectious disease leads Chemical 3.1 IND 7 Guangdong Dongyangguang Pha 广东东阳光药业 3 approvals in 2014

8 Hangzhou Huadong Medicine Gro 杭州华东医药集团新药研 3 Infectious Disease (Antimicrobial) 74 9 Chinese Academy of Medical Scie 中国医学科学院药物研究 3 Psychotic disorders 33 10 Shandong Luye 山东绿叶制药 3 Oncology 33 11 Shanghai Aoqi 上海奥奇医药科技 3 12 ACEA Biosciences Inc. 美国ACEA生物科学 2 Gastroenterology 25 13 China Pharmaceutical University 中国药科大学 2 Circulatory system 25 14 China State Institute of Pharmace 中国医药工业研究总院 2 Antirheumatic and Antiinflammatory 18 15 Gansu Yupu Institute Of Cancer a 甘肃玉璞肿瘤心血管病研 2 Nervous system 17 16 Hainan General Sanyang Pharma 海南通用三洋药业 2 Respiratory system and antiallergic 8 17 Hangzhou Weixing Pharmaceutic 杭州威星药业 2 18 Lianyungang Hongchuang Pharm 连云港宏创医药 2 Genital system 8 19 Liaoning Lantian Pharmaceutical 辽宁蓝天制药有 2 0 20406080

20 Qilu Pharmaceutical 齐鲁制药 2 Note: Total = 269, representing 79 unique drugs. Note: Number of Chemical 1.1 IND filings approved in 2014. Source: GBi Source, Morgan Stanley Research Source: Company Data, Morgan Stanley Research From a company standpoint, Shandong Chuangxin and The table below details what drugs the top three companies Nanjing Huawe filed the most number of 3.1 INDs (seven received IND approvals for. each). Shandong Chuangxin submitted for roflumilast (Daliresp, COPD), cefotiam (cephalosporin antibiotic), and Exhibit 39 Hengrui, Hisun, and Hansoh’s approved INDs, 2014 minodronate (osteoporosis). Nanjing Huawe filed for azilsartan (Edarbi, hypertension), ramelteon (Rozerem, Company Drug Indication insomnia), and fingolimod (Gilenya, multiple sclerosis). 1 Hengrui 环咪德吉 Gastric and lung cancers 2 Hengrui Fasiglifam Diabetes For names under our coverage, Hengrui filed for azilsartan 3 Hisun 海博非明 Undisclosed (hypertension), while Chia Tai filed for fosaprepitant (Emend, 4 Hisun HPPH Cancer nausea) and abiraterone (Zytiga, prostate cancer). 5 Hansoh HS-10182 Solid tumors 6 Hansoh Flumatinib Leukemia Note: Each drug can have multiple INDs, e.g. for the API, finished drug, and different formulations. Source: Company Data, Morgan Stanley Research

So far, three new drug INDs approved in 2015 As of January 9, these comprised a count of seven INDs approved (two chemical, five biologic). Three of those INDs belong to Tonghua Dongbao’s ultrashort acting insulin analogue, considered a biologic.

Similar to IND submissions, it is the Chemical 3.1 filings that are driving the spike in approvals in 2014. The number went from 16 in 2013 to 51 in 2014.

18 150 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 41 Exhibit 42 Chaungxin and Huawe lead Chemical 3.1 IND filings NDAs submitted kept a steady pace in 2011-2014 in 2014 500 Company Name Chinese Name Number Chemical NDAs Biologic NDAs 1 Nanjing Huawe Science & Techno 南京华威医药科技开发 12 20 400 13 18 2 Shandong Chuangxin Pharmaceu 山东创新药物研发 10 12 3 Pharmaceutical Research Institute 北京福瑞康正医药技术研 8 300 4 Shandong Teruilin Medicine Tech 山东特瑞林医药科技发展 8 18 16 10 5 Chongqing Pharmaceutical Resea 重庆医药工业研究院 7 17 418 407 401 200 371 6 Nanjing Haina Pharmaceutical 南京海纳医药科技 7 7 Beijing Collab Pharma 北京科莱博医药开发 6 242 250 234 100 223 8 Jiangsu Hansoh Pharmaceutical 江苏豪森药业股份 6 山东罗欣药业股份 9 Shandong Luoxin Pharmacy Stoc 6 0 10 Tianjin Hankang Pharmaceutical B 天津市汉康医药生物技术 6 2007 2008 2009 2010 2011 2012 2013 2014

11 Beijing D-Venturepharm T. D. 北京德众万全医药科技 5 Source: GBi Source, Morgan Stanley Research 12 Jinan Bestcomm Pharmaceutical 济南百诺医药科技开发 5 13 Nanjing Sanhome Pharmaceutica 南京圣和药业 5 Close to half FTM Chemical 3.1; fewer than 10 Chemical 14 Shandong Jewim Pharmaceutical 山东京卫制药 5 1.1’s 15 Beijing Mega Medicine S.&T. 北京满格医药科技 4 Most candidates that make it through to NDAs are chemical 16 Beijing Sun-Novo Pharmaceutical 北京阳光诺和药物研究 4 3.1 (109 out of 223 chemicals), while only three NDAs 17 Chongqing Lybon Drug Developm 重庆礼邦药物 4 submitted are chemical 1.1 drugs. 18 Shandong Institute of Pharmaceu 山东省医药工业研究所 4 19 Sichuan Dihon Medical Developm 四川滇虹医药 4 Exhibit 43 20 Zhejiang Xianju Pharmaceutical 浙江仙琚制药 4 Chemical 3.1 made up the bulk of NDAs filed in Source: GBi Source, Morgan Stanley Research 2014

Class 1.1 Class 3.1 Class 6 NDAs submitted: Dominated by Chemical 3.1 Filings 350 The number of chemical NDAs submitted has maintained a steady pace since 2011 at 200-250 per year, while biologics 300 hovered at around 10-20 per year. NDAs submitted have a 250 high chance of getting accepted by the CFDA, as a 200 227 submission implies a successful trial has been conducted. 198 215 199 The number is also consistent with the number of INDs 150 2 entering the trial queue, i.e., approved (200 chemicals and 31 100 34 10 biologics in 2014), granted most chemicals are not new drugs 50 110 109 76 61 67 53 76 and therefore do not need extended clinical trials to prove 60 0 1 668 334 3 efficacy. 2007 2008 2009 2010 2011 2012 2013 2014

Note: A total of 223 chemical NDAs were filed in 2014. Source: GBi Source, Morgan Stanley Research

Who are the biggest Chemical 3.1 NDA filers? Cardiovascular, CNS, and oncology dominated the Chemical 3.1 NDA filings in 2014.

19 151 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 44 Exhibit 46 Cardiovascular leads NDAs submitted in 2014 Luoxin’s Chemical 3.1 NDA pipeline, 2014 Drug Original Indication Cardiovascular 38 1 Apixaban Eliquis Venous thromboemobolism

CNS 34 2 Bortezomib Velcade Multiple myeloma 3 Dasatinib Sprycel Leukemia Oncology 28 4 Erlotinib Tarceva NSCLC Infectious Disease 21 5 Esomeprazole Nexium GERD 6 Ezetimibe Zetia Hypercholesterol Endocrinology 18 7 Flupertine Katadolon Pain Analgesics 10 8 Gefitinib Iressa Lung cancer

0 1020304050 9 Lapatinib Tykerb Breast cancer 10 Parecoxib Dynastat Perioperative pain Source: GBi Source, Morgan Stanley Research 11 Rivaroxaban Xarelto Coagulation

Exhibit 45 12 Sorafenib Nexavar Liver cancer Luoxin filed the most Chemical 3.1 NDAs in 2014 13 Tadalafil Cialis Erectile dysfunction Company Name Chinese Name Number 14 Vildagliptin Galvus Type 2 diabetes 1 Shandong Luoxin Pharmacy 山东罗欣药业 14 Source: GBi Source, Morgan Stanley Research 2 Qilu Pharmaceutical 齐鲁制药 13 3 Zhejiang Huahai Pharmaceutical 浙江华海药业 11 For companies under our coverage, CSPC and Hengrui 4 Jiangsu Hansoh Pharmaceutical 江苏豪森药业 9 submitted 10 and four Chemical 3.1 NDAs respectively, 5 Lianyungang Hongchuang Pharm 连云港宏创医药 8 representing seven and two unique drugs. Hengrui submitted 6 CSPC 石家庄制药集团欧意药业 8 NDAs for ticagrelor (Brilinta, platelet aggregation) and 7 Inner Mongolia Baiyi Pharmaceut 内蒙古白医制药 7 ondansetron (Zofran, nausea). 8 Sichuan Kelun Pharmaceutical 四川科伦药业 6 9 Lianyugang Runzhong Pharmace 连云港润众制药 5 Exhibit 47 CSPC’s Chemical 3.1 NDA pipeline, 2014 10 Sichuan Baili Pharmaceutical 四川百利药业 5 11 Beijing SL Pharmaceutical 北京双鹭药业 4 Drug Original Indication 12 Changzhou Pharmaceutical Facto 常州制药厂 4 1 Cefozopran N/A 4th-generation cephalosporin 13 Jiangsu Aosaikang Pharmaceutic 江苏奥赛康药业 4 2 Ivabradine Procoralan Angina 14 Jiangsu Hengrui Medicine 江苏恒瑞医药 4 3 Pramipexole Mirapex Parkinson's Note: Total number of Chemical 3.1 NDAs filed in 2014 = 295. Source: Company Data, Morgan Stanley Research 4 Rivaroxaban Xarelto Coagulation 5 Sitagliptin Januvia Type 2 diabetes Shandong Luoxin emerged as the top submitter of Chemical 6 Sorafenib Nexavar Liver cancer 3.1 NDA filings. Its 14 NDAs represented 14 unique chemical 7 Ticagrelor Brilinta Platelet aggregation drugs. Source: GBi Source, Morgan Stanley Research

NDAs approved: approvals flat This continues the trend in previous years. Chemical approvals increased from 244 in 2013 to 275 in 2014, whilst biologic approvals dropped from 17 in 2013 to 12 in 2014. A majority (167) of the approvals were in chemical 6 (very generic drugs), same as previous years. The number approved for Chemical 3.1 was 43. Chemical 1.1 new drugs stayed flat at four from 2013-2014.

20 152 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 48 Exhibit 50 Total NDAs approved saw a small rise from 2013 IND approval times up in 2014 (months)

30 800 Chemical Total Biologic 25 700 20 25 13 23 600 21 20 19 19 20 500 17 15 400 8 679 639 300 10 12 10 10 17 200 350 5 298 275 100 237 244 0 0 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014

Source: GBi Source, Morgan Stanley Research Source: GBi Source, Morgan Stanley Research

Exhibit 51 2015’s first major approval: Chipscreen’s lymphoma NDA approval times up in 2014 (months) tablet Private company Shenzhen Chipscreen nabbed the first 50 45 approval in 2015 right out of the gate. Chipscreen is a 40 discovery company that uses genomic screening. Chidamide is a small molecule that is a histone deacetylase inhibitor. The 32 30 31 current NDA approval is for the indication of non-Hodgkin’s 28 27 26 27 lymphoma. The molecule is also in clinical trial for non-small 20 cell lung cancer and breast cancer.

Exhibit 49 10 CFDA is approving fewer category 6 generics 0 600 2008 2009 2010 2011 2012 2013 2014

Class 1.1 Class 3.1 Class 6 500 Source: GBi Source, Morgan Stanley Research

400 NDA approval time was up significantly in 2014, 45 months vs. 2013’s 27 months. 454 300 479 Exhibit 52 200 260 NDAs throughput down through 2008-2014 203 161 167 100 153 180% 166.4% 88 160% 62 35 28 34 45 43 155.2% 0 2217 2 44 140% 2008 2009 2010 2011 2012 2013 2014 120% Source: GBi Source, Morgan Stanley Research 100% 85.2% Administrative approval times up in 2014 80% 73.3% 68.3% Both IND and NDA approval times were up in 2014. 60% 58.8% 62.1% 40% 20% 0% 2008 2009 2010 2011 2012 2013 2014

Source: GBi Source, Morgan Stanley Research

21 153 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Appendix

China is catching up in biologic approvals, although biosimilars dominate Exhibit 54 Below shows the biologic filings and approvals comparison Biologic NDA filings, US vs. China between the US and China. 50 US China

41 41 41 Exhibit 53 40 36 36 34 33 Most recent trial success stats in US 31 30 25 26 Lead indications All indications 86% 83% 23 23 23 23 20 68% 67% 64% 60% 10

39% 32% 0 2008 2009 2010 2011 2012 2013 2014 15% 10% Source: GBi Source, US FDA, Morgan Stanley Research

LOA from Phase 1 to Phase 2 to Phase 3 to NDA/BLA to Phase 1 Phase 2 Phase 3 NDA/BLA approval Exhibit 55 Biologic NDA approvals, US vs. China Note: Data represents 7,300 development paths from 2003-2011 for 835 drug developers. Source: Nature Biotechnology (Jan 9, 2014), Morgan Stanley Research 50 US China

41 39 40 38 33 30 30 26 27 24 21 20 18 16 14 11 10 10

0 2008 2009 2010 2011 2012 2013 2014

Source: GBi Source, Morgan Stanley Research

22 154 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Morgan Stanley’s Proprietary China New Drug Database

We present our updated comprehensive new drug database as follows:

Section 1: Pipeline information of our coverage companies

Section 2: Therapeutic section-new drug database sorted by therapeutic class and indication

Section 3: Company section-new drug database sorted by company names

Please note that throughout the report, we use the CFDA classification of innovative drugs and generic drugs as below.

CFDA classification of drugs for registration

Chemicals 1- Chemicals never approved for marketing anywhere in the world

1.1-API produced by synthetic or semi-synthetic methods and their formulation 1.2-Effective monomers extracted from natural materials or by fermentation and their formulation 1.3-Optical isomers produced by resolution or synthesis from a known drug and their formulation 1.4-Pharmaceutical products transformed from a marketed product with multi-components and containing fewer components of that product 1.5-New compounds 1.6-New indications (not approved anywhere in the world) for a drug marketed in China

Chemicals 3-Chemicals approved for marketing elsewhere in the world but not in China

3.1-Formulation and their API approved elsewhere in the world, and/or with changed to dosage form but no change to administration route 3.2-Compound formulation approved elsewhere in the world, and/or with change to dosage form but no change to administration route 3.3-Formulation approved elsewhere in the world with change to administration route 3.4-Formulation approved in China with new indications approved elsewhere in the world

Biologics 1-Biologics never approved for marketing anywhere in the world. Biologics 2-Monoclonal antibodies

Our definition of innovative and generic drugs

Innovative drugs- Chemicals 1.1, 1.2, 1.3 and Biologics 1, 2 Generic drugs-Chemicals 1.5, 1.6, 3.1, 3.2, 3.3, 3.4

23 155 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Exhibit 56 Hengrui has the deepest pipeline within our coverage as of 2014 (Rmb mn) Company Name Innovative Drug Generic Drugs Total NPV Hengrui 23 77 100 35,804 Sinobiopharm 8 67 75 14,994 CSPC 6 44 50 14,971 Fosun 12 44 56 11,251 Simcere 7 21 28 10,722 Sihuan 7 10 17 7,864 United Lab 5 9 14 7,773 Fudan Zhangjiang 7 1 8 5,537 Lee's 6 4 10 3,821 Hutchison 7 7 2,925 Livzon 2 11 13 2,619 Luye 2 7 9 2,058 Shanghai Pharm 17 17 1,604 Total 98 315 413 Source: GBi Source, Morgan Stanley Research

Exhibit 57 Pipelines within our coverage as of 2013 (USD mn) Company Name Innovative Drug Generic Drugs Total NPV Hengrui Medicine 20 57 77 2,496 CSPC Pharm 7 28 35 1,118 Sinobiopharm 7 39 46 840 Sihuan 7 10 17 492 Lee's Pharm 7 9 16 447 Shanghai Pharm 1 8 9 212 The United Labs 10 10 210 Fosun Pharm 3 24 27 Simcere 8 16 24 Total 62 202 264 Source: GBi Source, Morgan Stanley Research

24 156 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

3SBio Pipeline Summary Therapeutic Class Innovative Drug Generic Drugs Total Autoimmune disease 2 2 Cardiovascular 2 1 3 Endocrinology 1 1 Metabolic disease 1 1 Oncology 2 2 Total 6 3 9

3SBio Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status AT-101 Chemical 1.1 pan-Bcl-2 inhibitor NSCLC Oncology IND approved Voclosporin N/A Chemical N/A Calcineurin inhibitor Organ transplant Autoimmune disease IND approved Human anti-TNFα monoclonal antibody 人源抗-TNFα单克隆抗体 Biologic Therapeutic Bio TNFα inhibitor Rheumatoid arthritis Autoimmune disease IND review Recombinant erythropoiesis stimulating protein 重组红细胞生成刺激蛋白(CHO细胞) Biologic Therapeutic Bio Protein Anemia Cardiovascular IND approved Recombinant human interleukin-3 重组人白细胞介素-3 Biologic Therapeutic Bio Colony stimulating factor Anemia Cardiovascular NDA approved Superparamagnetic ferumoxides 超顺磁氧化铁 Chemical N/A MR contrast agent MR contrast agent Cardiovascular IND approved Recombinant urate oxidase 重组假丝酵母尿酸氧化酶 Biologic Therapeutic Bio Enzyme Hyperuricemia Oncology IND review

3SBio Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Cinacalcet 西那卡塞 Chemical 3.1 Calcium mimetic Hyperparathyroidism Endocrinology IND review Sevelamer 司维拉姆 Chemical 3.1 Phosphate binder Hyperphosphatemia Metabolic disease IND review Ferumoxytol 静脉补铁制剂 Chemical Superparamagnetic iron oxidIron deficiency anemia in CCardiovascular IND review

25 157 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Betta Pipeline Summary Therapeutic Class Innovative Drug Generic Drugs Total Autoimmune disease 1 1 Metabolic disease 1 1 Oncology 2 2 4 Respiratory 1 1 Total 2 5 7

Betta Pharma Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status BPI-9016M N/A Chemical 1.1 Lung, liver, stomach cance Oncology IND review Panitumumab 帕尼单抗 Biologic Therapeutic Bio Human mAb Colorectal cancer Oncology IND review

Betta Pharma Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Clofarabine 克罗拉滨 Chemical 3.1 Purine analogue Acute lymphoblastic leukemOncology NDA review Pirfenidone 吡非尼酮 Chemical 3.1 Immunosuppressant Idiopathic pulmonary fibros Respiratory IND review Sodium phenylbutyrate 苯丁酸钠 Chemical 3.1 Histone deacetylases inhibit Urea cycle disorders Metabolic disease IND approved Vorinostat 伏立诺他 Chemical 3.1 Histone deacetylases inhibit Cutaneous T-cell lymphom Oncology IND review

26 158 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

CMS Pipeline Summary Therapeutic Class Innovative Drug Generic Drug Total Oncology 1 1 Total 1 1

China Medical System Innovative drugs English Name Chinese Name Category Class Me chanism Indication Therapeutic Area Status Tyroserleutide 酪丝亮肽 Chemical 1.1 Liver cancer Oncology Failed Phase 3 interim an

27 159 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

CSPC 50,000 CSPC Intrinsic NPV Pipeline Summary Rmb mn Therapeutic Class Innovative Drug Generic DrugsGrand Total 5,918 5,918 Antirheumatic and Antiinflamm 22 40,000 Cardiovascular 3 3 9,053 9,053 Circulatory system 5 5 Endocrinology 2 1 3 30,000 Gastroenterology 1 1 46,252 Oncology 1 13 14 20,000 Psychotic disorders 6 6 31,282 31,282 Respiratory 1 1 Infectious Disease 15 15 10,000 Total 6 44 50 0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

28 160 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

CSPC Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Compound amlodipine and atorvastatin calcium复方氨氯地平阿托伐他汀 Chemical 1.1 Statins Hypertension+hyperlipidemCardiovascular IND approved DBPR108 DBPR108 Chemical 1.1 Endocrinology IND submitted L-Butylphthalide tablet and injection 左旋丁苯酞片 Chemical 1.1 Inhibiting apoptosis of neuroAcute stroke Cardiovascular IND approved Pinocembrin injection 注射用匹诺塞林 Chemical 1.1 Antioxidant Acute stroke Cardiovascular IND approved SKLB1028 SKLB1028 Chemical 1.1 Oncology IND submitted Glucagon Like Peptide-1 Receptor Agonist 胰高血糖素样肽-1受体激动剂 Therapeutic Stimulating insulin secretion Diabetes Endocrinology Supplemental application

29 161 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

CSPC Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Meloxicam 美洛昔康 Chemical 2 NSAID Fever Antirheumatic and Ant NDA approved Afatinib 阿法替尼 Chemical 3.1 Tyrosine kinase inhibitor NSCLC Oncology IND review Biapenem 比阿培南 Chemical 3.1 Carbapenem Bacterial infections Infectious Disease NDA approved Bortezomib 硼替佐米 Chemical 3.1 Proteasome inhibitor Cancer Oncology NDA review Cefcapene Pivoxil 头孢卡品 Chemical 3.1 Cephalosporin 3rd Bacterial infections Infectious Disease NDA review Cefoselis 头孢噻利 Chemical 3.1 Cephalosporin Bacterial infections Infectious Disease NDA review Cefozopran 头孢唑兰 Chemical 3.1 Cephalosporin 4rd Bacterial infections Infectious Disease NDA review Cefpirome 头孢匹罗 Chemical 3.1 Cephalosporin 4th Bacterial infections Infectious Disease NDA approved Ceritinib 色瑞替尼 Chemical 3.1 ALK inhibitor Cancer Oncology IND review Dasatinib 达沙替尼 Chemical 3.1 Tyrosine kinase inhibitor Cancer Oncology NDA review Desvenlafaxine 去甲文拉法辛 Chemical 3.1 SNRI Depression Psychotic disorders IND review Doripenem 多尼培南 Chemical 3.1 Carbapenem Bacterial infections Infectious Disease IND review Dronedarone 决奈达隆 Chemical 3.1 Multichannel blocker Atrial fibrillation Circulatory system IND approved Duloxetine 度洛西汀 Chemical 3.1 SNRI Depression Psychotic disorders IND approved Ertapenem 厄他培南 Chemical 3.1 Carbapenem antibiotic Gram-positive and negativ eInfectious Disease NDA approved Esomeprazole 埃索美拉唑 Chemical 3.1 Proton pump inhibitor GERD Gastroenterology IND review Favipiravir 法匹拉韦 Chemical 3.1 Inhibition of RNA polymera sInfluenza Infectious Disease IND review Flucloxacillin 氟氯西林 Chemical 3.1 Beta-lactam Bacterial infections Infectious Disease NDA approved Fosaprepitant Dimeglumine 福沙匹坦二甲葡胺 Chemical 3.1 NK1 receptors antagonist Cancer Oncology IND review Gefitinib 吉非替尼 Chemical 3.1 Tyrosine kinase inhibitor Cancer Oncology NDA review Ifenprodil 艾芬地尔 Chemical 3.1 NMDA receptor inhibitor PTSD Psychotic disorders IND approved Iloperidone 伊潘立酮 Chemical 3.1 Mixed 5HT2A/D2 antagonis Schizophrenia Psychotic disorders IND approved Imatinib 甲磺酸依马替尼 Chemical 3.1 Tyrosine kinase inhibitor Cancer Oncology NDA approved Ivabradine 伊伐布雷定 Chemical 3.1 Inhibition of funny channel Angina Circulatory system NDA review Lurasidone 鲁拉西酮 Chemical 3.1 Serotonin/dopamine receptoSchizophrenia Psychotic disorders IND review

30 162 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

CSPC Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Metoprolol 美托洛尔 Chemical 3.1 Beta blocker Hypertension Circulatory system NDA review Moxifloxacin 莫西沙星 Chemical 3.1 Quinolone 4th Bacterial infections Infectious Disease NDA review Regorafenib 瑞戈非尼 Chemical 3.1 Multi-kinase inhibitor Colorectal cancer Oncology IND review Saxagliptin 沙格列汀 Chemical 3.1 Diabetes Endocrinology Endocrinology IND review Sofosbuvir 索非布韦 Chemical 3.1 Inhibitor of viral RNA synthe Hepatitis C Infectious Disease IND review Sorafenib 索拉非尼 Chemical 3.1 Liver cancer Tyrosine kinase inhibitor Oncology NDA review Sunitinib 舒尼替尼 Chemical 3.1 Tyrosine kinase inhibitor Cancer Oncology NDA review Tebipenem Pivoxil 泰比培南酯 Chemical 3.1 Ear infection Beta-lactam Infectious Disease IND review Theophylline 茶碱 Chemical 3.1 COPD Phosphodiesterase inhibitoRespiratory IND review Ticarcillin 替卡西林 Chemical 3.1 Gram-negative bacteria Beta lactam antibiotic Infectious Disease NDA approved Tofacitinib 托法替布 Chemical 3.1 JAK inhibitor Rheumatoid arthritis Antirheumatic and AntiIND review Vilazodone 维拉佐酮 Chemical 3.1 Serotonin/dopamine receptoDepression Psychotic disorders IND review Ambroxol/amoxicillin 阿莫氨溴 Chemical 3.2 Sodium channel inhibitor Excessive mucus Infectious Disease NDA review Amlodipine,Valsartan,Hydrochlorothiazide 氨氯缬沙噻嗪 Chemical 3.2 Calcium channel blocker, ARHypertension Circulatory system IND review Amoxicillin, Flucloxacillin 氟氯西林, 阿莫西林 Chemical 3.2 Beta-lactam Bacterial infections Infectious Disease IND approved Candesartan Cilexetil,Amlodipine 坎地沙坦酯氨氯地平 Chemical 3.2 Calcium channel blocker, ARHypertension Circulatory system IND review Doxorubicin 多柔比星(阿毒素) Chemical 3.4 Liposomal anthracycline ant Cancer Oncology IND approved Paclitaxel, Albumin 紫杉醇, 白蛋白 Chemical 3.4 Nanoparticle Cancer Oncology IND review Liposomal mitoxantrone 鹽酸米托蒽醌脂質體 Chemical 5 Non-Hodgkin lymphoma Oncology IND approved

31 163 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Fudan Zhangjiang Pipeline Summary Therapeutic Class Innovative Drug Generic Drugs Total Autoimmune disease 1 1 Cardiovascular 1 1 Dermatology 1 1 Endocrinology 1 1 Oncology 2 1 3 Opthalmology 1 1 Total 7 1 8

Fudan Zhangjiang Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Duteroporphyrin 多替泊芬 Chemical 1.1 Radiosensitizer Cancers Oncology IND approved Hemoporfin 海姆泊芬 Chemical 1.1 Radiosensitizer Nevus flammeus Dermatology NDA approved Reteplase 瑞替普酶 Biologic Therapeutic Bio Tissue plasminogen activatoHeart attack Cardiovascular IND review Human Parathyroid Hormone 1-34 人甲状旁腺激素1-34 Biologic Therapeutic Bio Parathyroid hormone analogOsteoporosis Endocrinology NDA approved Recombinant Human Interleukin-1 Receptor An 重组人白细胞介素-1受体拮抗剂 Biologic Therapeutic Bio Interleukin inhibitor Non-bacterial keratitis Opthalmology NDA approved Recombinant Human Lymphotoxin α Derivative Biologic Therapeutic Bio Cytotoxic antibiotic Tumors Oncology IND approved Recombinant Human Tumor Necrosis Factor-α 重组人肿瘤坏死因子受体突变体-Fc融合Biologic Therapeutic Bio TNF-α inhibitor Ankylosing spondylitis Autoimmune disease IND approved

Fudan Zhangjiang Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Liposomal vincristine 注射用硫酸长春新碱脂质体浓溶液 Chemical 5 Vinca alkaloid Non-Hodgkin's lymphoma Oncology IND approved

32 164 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Fosun 70,000 Fosun Intrinsic NPV Pipeline Summary Rmb mn Therapeutic Class Innovative Drug Generic Drug Total 60,000 7,357 7,357 Analgesics and anesthetics 3 3 3,895 3,895 Autoimmune disease 2 2 50,000 Cardiovascular 2 8 10 CNS 6 6 40,000 Endocrinology 3 6 9 Gastroenterology 1 1 30,000 63,228 51,977 51,977 Infectious disease 2 6 8 Oncology 3 3 6 20,000 Respiratory 6 6 10,000 Urology 5 5

Total 12 44 56 0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

Fosun Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Rubitecan 鲁比特康 Chemical 1.1 Oncology NDA approved Fotagliptin 复格列汀 Chemical 1.1 DPP-4 inhibitor Diabetes Endocrinology IND approved Influenza Vaccine-Subunit 流行性感冒亚单位 Biologic Preventive Bio Vaccine Infectious disease IND approved Rabies Vaccine 人用狂犬病疫苗 Biologic Preventive Bio Vaccine Infectious disease NDA review Insulin Analogues-Ultrashort acting, Lispro, Asp 胰岛素类似物-超短效, 赖脯, 门冬, 谷赖Biologic Therapeutic Bio Diabetes Endocrinology IND approved Insulin Analogues-Longacting, Glargine, Detem 胰岛素类似物-长效, 甘精, 地特 Biologic Therapeutic Bio Diabetes Endocrinology IND review Erythropoietin 重组人红细胞生成素 Biologic Therapeutic Bio red blood cell growth factor Anemia Cardiovascular IND approved Streptokinase 链激酶 Biologic Therapeutic Bio Cardiovascular Manufacturing approved Rituximab 利妥昔单抗 Biologic Therapeutic Bio mAb Cancer Oncology IND approved Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 Biologic Therapeutic Bio mAb Musculoskeletal Autoimmune disease IND review 人源化抗VEGF单克隆抗体 Biologic Therapeutic Bio mAb Cancer Autoimmune disease IND review Recombinant Humanized Anti-HER2 Monoclona重组人HER2单克隆抗体 Biologic Therapeutic Bio Oncology IND review

33 165 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Fosun Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Emorfazone 依莫法宗 Chemical 2 NSAID Pain Analgesics and anesth IND review Candesartan Cilexetil 坎地沙坦酯 Chemical 2 Angiotensin II receptor antagHypertension Cardiovascular IND approved Desloratadine 地氯雷他定 Chemical 2 Tricyclic antihistamine Allergies Respiratory NDA approved Rasagiline 雷沙吉兰 Chemical 2 MAO inhibitor Parkinson's disease CNS IND approved Tofacitinib 托法替布 Chemical 3.1 JAK inhibitor Rheumatoid arthritis Autoimmune disease IND review Moxifloxacin 莫西沙星 Chemical 3.1 Quinolone 4th Bacterial infections Infectious disease NDA review Tauroursodeoxycholic Acid 牛磺熊去氧胆酸 Chemical 3.1 Ambiphilic bile acid Biliary cirrhosis Urology IND review Alacepril 阿拉普利 Chemical 3.1 ACE inhibitor Hypertension Cardiovascular NDA approved Manidipine 马尼地平 Chemical 3.1 Calcium channel blocker Hypertension Cardiovascular NDA approved Cefcapene Pivoxil 头孢卡品 Chemical 3.1 Cephalosporin 3rd Bacterial infections Infectious disease IND approved Cefbuperazone 头孢拉宗 Chemical 3.1 Cephalosporin 2nd Bacterial infections Infectious disease IND approved Sivelestat 西维来司他 Chemical 3.1 Inhibitor of neutrophil elastasAcute respiratory failure Respiratory NDA review Limaprost, Alfadex 利马前列素,阿法环糊精 Chemical 3.1 Combination therapry Stroke Cardiovascular IND review Palonosetron 帕洛诺司琼 Chemical 3.1 5-HT3 antagonist Chemotherapy-induced nauOncology NDA review Sulpirid 舒必利 Chemical 3.1 Atypical antipsychotic Schizophrenia CNS IND approved Pitavastatin 匹伐他汀 Chemical 3.1 HMG CoA reductase inhibitoHypercholesterol Cardiovascular IND approved Allopurinol 别嘌醇 Chemical 3.1 Xanthine oxidase inhibitor Gout Endocrinology IND approved Bortezomib 硼替佐米 Chemical 3.1 Proteasome inhibitor Cancer Oncology IND review Mitiglinide 米格列奈 Chemical 3.1 Meglitinide Diabetes Endocrinology IND approved Dabigatran 达比加群 Chemical 3.1 Direct thrombin inhibitor Blood thinner Cardiovascular IND review Dutasteride 度他雄胺 Chemical 3.1 Testosterone-5-alpha reduct Urology IND review Febuxostat 非布司他 Chemical 3.1 Xanthine oxidase inhibitor Gout Endocrinology IND approved Ciclesonide 环索奈德 Chemical 3.1 Glucocorticoid Asthma Respiratory IND approved Strontium Ranelate 雷奈酸锶 Chemical 3.1 Metal Osteoporosis Endocrinology IND approved Modafinil 莫达非尼 Chemical 3.1 Activation of cytochrome P4 Sleepiness CNS NDA approved Pregabalin 普瑞巴林 Chemical 3.1 Anticonvulsant Epilepsy CNS IND approved

34 166 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Fosun Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Methylnaltrexone Bromide 溴甲纳曲酮 Chemical 3.1 Peripherally acting opioid anOpioid induced constipationGastroenterology IND approved Agomelatine 阿戈美拉汀 Chemical 3.1 5HT2 antagonist Depression CNS IND approved Canagliflozin 卡格列净 Chemical 3.1 SGLT2 protein inhibitor Type 2 diabetes Endocrinology IND review Iloperidone 伊潘立酮 Chemical 3.1 Mixed 5HT2A/D2 antagonistSchizophrenia CNS IND approved Abiraterone 阿比特龙 Chemical 3.1 CYP17A1 inhibitor Cancer Urology IND review 异吡乙平 Chemical 3.2 Vaccines Infectious disease NDA approved Cough/Cold & Allergy Preparations 咳嗽感冒制剂 Chemical 3.2 Analgesic + antipyretic Fever Respiratory IND review Aspirin,Clopidogrel 阿司匹林,氯吡格雷 Chemical 3.2 Antiplatelet Coronary artery disease Cardiovascular IND review Isotretinoin, Erythromycin 异维A酸, 红霉素 Chemical 3.2 Unclear Cystic acne Dermatology NDA approved Lovastatin,Nicotinic Acid 洛伐他汀,烟酸 Chemical 3.2 Statins Hypercholesterol Cardiovascular NDA approved Pioglitazone,Glimepiride 吡格列酮,格列美脲 Chemical 3.2 TZD Type 2 diabetes Endocrinology IND approved Dextromethorphan Hydrochloride, Chlorphenam复方沙芬那敏 Chemical 3.2 combination therapry Cough Respiratory IND review Clindamycin,Tretinoin 克林霉素,磷酸酯维A酸 Chemical 3.2 lincosamide Bacterial infections Infectious disease IND approved 度他坦洛 Chemical 3.2 Urology IND review Ibuprofen 布洛芬 Chemical 3.3 NSAID Pain Analgesics and anesth IND approved Loxoprofen 洛索洛芬 Chemical 3.3 NSAID Pain Analgesics and anesth IND approved Oxybutynin 奥昔布宁 Chemical 3.3 Anticholinergic Urinary incontinence Urology IND approved Olopatadine 奥洛他定 Chemical 3.3 Histamine H1 antagonist Chemotherapy-induced Respiratory IND review

35 167 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Hutchison Pipeline Summary Therapeutic Class Innovative Drug Generic Drugs Total Autoimmune disease 2 2 Oncology 5 5 Total 7 7

Hutchison MediPharma Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Epitinib 易吡替尼 Chemical 1.1 EGFR inhibitor Brain tumors Oncology IND approved Fruquintinib 呋喹替尼 Chemical 1.1 VEGFR inhibitor Solid tumors Oncology IND approved Sulfatinib 索凡替尼 Chemical 1.1 VEGFR/FGFR dual inhibitor Neuroendocrine tumors Oncology IND approved Theliatinib 席栗替尼 Chemical 1.1 EGFR inhibitor NSCLC Oncology IND approved Volitinib 沃利替尼 Chemical 1.1 ATP-competitive c-Met inhibSolid tumors Oncology IND review HMPL-004 Biologic Anti-TNF alpha Ulcerative colitis Autoimmune disease IND approved HMPL-523 Biologic Syk Rheumatoid arthritis Autoimmune disease IND approved

36 168 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Hengrui 120,000 Pipeline Summary Rmb mn Hengrui Intrinsic NPV Therapeutic Class Innovative Drug Generic Drug Total 100,000 Analgesics and anesthetics 1 5 6 Autoimmune disease 3 2 5 23,929 23,929 Cardiovascular 1 19 20 80,000 CNS 7 7 11,875 11,875 Endocrinology 5 8 13 60,000 Gastroenterology 7 7 98,970 Infectious disease 1 4 5 40,000 nutrition 1 1 63,165 63,165 Oncology 11 9 20 20,000 Ophthalmology 4 4 Respiratory 4 4 0 Surgery 1 3 4 Market Cap Generic drugs Innovative drugs Mkt Cap+ Urology 4 4 Innovative+ Generics Total 23 77 100

37 169 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Hengrui Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Cadrofloxacin 卡屈沙星 Chemical 1.1 Fourth-generation quinoloneBroad-spectrum antibiotic Infectious disease NDA approved Famitinib 法米替尼 Chemical 1.1 VEGFR/PDGFR/c-Kit inhibit Gastrointestinal stromal tumOncology Supplemental application Fasiglifam 呋格列泛 Chemical 1.1 GPR40 agonist Type 2 diabetes Endocrinology IND approved Felotaxel 非洛他赛 Chemical 1.1 Tubulin targeting Cancers Oncology IND approved HAO472 Chemical 1.1 Synthetic natural substancesBlood cancers Oncology IND approved Henagliflozin proline 脯氨酸恒格列净 Chemical 1.1 Alpha glucosidase inhibitor Type 2 diabetes Endocrinology IND approved Morphine-6-glucuronide 吗啡-6-葡萄糖醛酸 Chemical 1.1 Metabolite of morphine Pain Analgesics and anesth IND review Retagliptin 瑞格列汀 Chemical 1.1 DPP-4 inhibitor Type 2 diabetes Endocrinology IND approved SHR-0302 Chemical 1.1 Long-acting insulin Diabetes Endocrinology IND review SHR3680 Chemical 1.1 Androgen antagonist Prostate cancer Oncology IND review SHR4640 Chemical 1.1 URAT1 inhibitor Arthritis Autoimmune disease IND review SHR6390 Chemical 1.1 CDK4/6 inhibitor Arthritis Autoimmune disease IND review 海曲泊帕乙醇胺 Chemical 1.1 TpoRA Low platelet count in chem Cardiovascular IND approved 吡咯替尼 Chemical 1.1 Protein kinase inhibitor HER2 breast cancer Oncology IND approved 甲苯磺酸瑞马唑仑 Chemical 1.1 N/A Anesthetic Surgery IND approved Bevacizumab 贝伐珠单抗 Biologic Therapeutic Bio Monoclonal antibody Colorectal cancer Oncology IND approved INS061 Biologic Therapeutic Bio Long-acting insulin Diabetes Endocrinology IND review Interferon α2b 重组人干扰素α2b Biologic Therapeutic Bio Interferon Leukemia Oncology IND approved Pegylated Recombinant Human Granulocyte CoPEG化重组人粒细胞刺激因子 Biologic Therapeutic Bio Colony stimulating factor Myelosuppression Oncology NDA review SHR-1314 Biologic Therapeutic BioN/A N/A Autoimmune disease IND review SHR-A1201 Biologic Therapeutic Bio Monoclonal antibody Cancers Oncology IND review

38 170 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Hengrui Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Carbidopa, Levodopa 卡比多巴, 左旋多巴 Chemical 1.5 Dopaminergic agent Parkinson's CNS IND review Erdosteine, Ambroxol 厄多司坦,氨溴索 Chemical 1.5 Mucolytic Chronic obstructive bronch Respiratory IND approved Hydroxyethyl Starch, Sodium Citrate 羟乙基淀粉, 枸橼酸钠林格 Chemical 1.5 N/A Anticoagulant Cardiovascular IND review Irbesartan, Amlodipine 厄贝沙坦,氨氯地平 Chemical 1.5 ARB + calcium channel blocHypertension Cardiovascular IND approved Retagliptin,Metformin 瑞格列汀,二甲双胍 Chemical 1.5 Lowering blood sugar levels Diabetes Endocrinology IND approved Tegaserod 替加色罗 Chemical 2 5-HT4 agonist Irritable bowel syndrome Gastroenterology IND approved Tazobactam, Ceftazidime 他唑巴坦, 头孢他啶 Chemical 3 Inhibition of bacterial β-lacta Antibiotic Infectious disease IND approved Abiraterone 阿比特龙 Chemical 3.1 CYP17A1 inhibitor Prostate cancer Oncology IND review Articaine 阿替卡因 Chemical 3.1 Amide Dental local anesthetic Analgesics and anesth Manufacturing approved Azilsartan Medoxomil 阿齐沙坦酯 Chemical 3.1 ARB Hypertension Cardiovascular IND approved Bimatoprost 贝美前列素 Chemical 3.1 Prostaglandin analogue Glaucoma Ophthalmology NDA review Cabazitaxel 卡巴他赛 Chemical 3.1 Taxanes Prostate cancer Oncology IND review Caspofungin 卡泊芬净 Chemical 3.1 Echinocandins (antifungal) Fungal infections Infectious disease ANDA review Cinacalcet 西那卡塞 Chemical 3.1 Calcimimetic Hyperparathyroidism Endocrinology IND review Clevidipine 氯维地平 Chemical 3.1 Calcium channel blocker Hypertension Cardiovascular IND review Clofarabine 克罗拉滨 Chemical 3.1 Purine analogue Leukemia Oncology IND approved Daptomycin 达托霉素 Chemical 3.1 Lipopeptide antibiotic Gram-positive bacteria Infectious disease NDA review Desflurane 地氟烷 Chemical 3.1 Fluorinated methyl ethyl etheAnesthesia Surgery IND review Dronedarone 决奈达隆 Chemical 3.1 Class III antyarrhythmic Cardiac arrhythmias Cardiovascular NDA review Dutasteride 度他雄胺 Chemical 3.1 Inhibition of testosterone-DHProstatic hyperplasia Urology NDA review Edoxaban 伊多塞班 Chemical 3.1 Direct factor Xa inhibitor Venous thromboembolism Cardiovascular IND review Esomeprazole 埃索美拉唑 Chemical 3.1 Proton pump inhibitor GERD Gastroenterology IND review Ethyl Icosapentate 二十碳五烯酸乙酯 Chemical 3.1 Derivative of omega-3 fatty aReduction of triglycerides Cardiovascular IND review Everolimus 依维莫司 Chemical 3.1 mTOR inhibitor Organ transplant rejection Autoimmune disease IND review Gabobutrol 钆布醇 Chemical 3.1 Paramagnetic contrast medi MRI contrast agent CNS ANDA review Gimeracil 吉美嘧啶 Chemical 3.1 Pyrimidine analogue Stomach cancer Oncology Manufacturing approved Ivabradine 伊伐布雷定 Chemical 3.1 Inhibition of funny channel Angina Cardiovascular NDA review Landiolol 兰地洛尔 Chemical 3.1 Beta blocker Cardiac arrhythmias Cardiovascular IND review Lanthanum Carbonate 碳酸镧 Chemical 3.1 Phosphate binder Hyperphosphatemia Endocrinology IND review Limaprost 利马前列素 Chemical 3.1 Prostaglandin E1 analogue Lumbar spinal canal stenosCNS IND review Limaprost, Alfadex 利马前列素,阿法环糊精 Chemical 3.1 Prostaglandin Buerger's disease Cardiovascular IND review Magnesium Acetate 醋酸镁 Chemical 3.1 N/A N/A nutrition IND review Mitiglinide 米格列奈 Chemical 3.1 Meglitinide Type 2 diabetes Endocrinology IND approved Omega-3-acid ethyl ester 欧米加-3-酸乙酯90 Chemical 3.1 Reduction of triglycerides Myocardial infarct Cardiovascular IND review Ondansetron 昂丹司琼 Chemical 3.1 Serotonin 5-HT3 receptor anNausea Oncology NDA review Oteracil 奥替拉西 Chemical 3.1 Reducing the production of 5Gastric cancer Oncology Manufacturing approved Oxandrolone 氧雄龙 Chemical 3.1 Anabolic steroid Weight regaining Endocrinology IND approved Paricalcitol 帕立骨化醇 Chemical 3.1 Vitamin D2 analogue Hyperparathyroidism Endocrinology NDA review

39 171 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Hengrui Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Paroxetine 帕罗西汀 Chemical 3.1 SSRI Depression CNS IND review Peramivir 帕拉米韦 Chemical 3.1 Neuraminidase inhibitor Influenza Infectious disease IND approved Phentermine 芬特明 Chemical 3.1 TAAR1 agonist Obesity Gastroenterology IND review Potassium Acetate 醋酸钾 Chemical 3.1 Electrolyte Diabetic ketoacidosis Endocrinology IND review Pramipexole 普拉克索 Chemical 3.1 Dopamine agonist Parkinson's CNS IND review Pregabalin 普瑞巴林 Chemical 3.1 Reduction of glutamate releaEpilepsy CNS IND review Regadenoson 类伽腺苷 Chemical 3.1 Coronary vasodilator Myocardial perfusion imagi Cardiovascular IND review Roflumilast 罗氟司特 Chemical 3.1 Inhibitor of PDE-4 COPD Respiratory IND review Solifenacin 索利那新 Chemical 3.1 Urinary antispasmodics Overactive bladder Urology IND review Tafluprost 他氟前列素 Chemical 3.1 Prostaglandin analogue Glaucoma Ophthalmology IND review Tamibarotene 他米巴罗汀 Chemical 3.1 Synthetic retinoid Leukemia Oncology IND approved Tapentadol 他喷他多 Chemical 3.1 Opioid Pain Analgesics and anesth IND review Theophylline 茶碱 Chemical 3.1 Methylxanthine COPD Respiratory IND review Ticagrelor 替格瑞洛 Chemical 3.1 Antagonist of P2Y12 receptoHeart attack Cardiovascular NDA review Tolvaptan 托伐普坦 Chemical 3.1 Vasopressin antagonist Low blood sodium Cardiovascular NDA review Topiramate 托吡酯 Chemical 3.1 Sulfamate-substituted mono Epilepsy CNS IND review Ulipristal 优力司特 Chemical 3.1 Selective progesterone rece Emergency contraceptive Urology IND review Cetirizine,Pseudoephedrine 西替利嗪,伪麻黄碱 Chemical 3.2 Second-generation antihista Allergy Respiratory Manufacturing approved Dutasteride,Tamsulosin 度他雄胺,坦洛新 Chemical 3.2 Inhibitor of testosterone-dihyProstatic hyperplasia Urology IND review Ezetimibe, Atorvastatin 依折麦布，阿托伐他汀 Chemical 3.2 HMG CoA reductase inhibitoHypercholesterol Cardiovascular IND review Metformin, Rosiglitazone 二甲双胍, 罗格列酮 Chemical 3.2 Biguanide class Type 2 diabetes Endocrinology NDA approved Nutrition-Carbohydrate, Misc 营养类-糖类, 其他 Chemical 3.2 Fructose and sodium chloridPost-surgery Surgery IND review Nutrition-Carbohydrates, Amino Acids, Lipids 营养类-糖类, 氨基酸, 脂类 Chemical 3.2 IV nutrition Short bowel syndrome Gastroenterology IND review Nutrition-Lipids 营养类-脂类 Chemical 3.2 Parenteral nutrition Short bowel syndrome Gastroenterology IND review Olmesartan Medoxomil, Amlodipine 奥美沙坦酯,氨氯地平 Chemical 3.2 ARB + calcium channel blocHypertension Cardiovascular IND review Oteracil,Tegafur 奥替拉西,替加氟 Chemical 3.2 Pyrimidine analogue Stomach cancer Oncology Manufacturing approved Paracetamol, Tramadol 氨酚曲马多 Chemical 3.2 Opioid Pain Analgesics and anesth NDA approved Phentermine,Topiramate 芬特明,托吡酯 Chemical 3.2 TAAR1 agonist Obesity Gastroenterology IND review Sodium Citrate 枸橼酸钠 Chemical 3.2 Salt solution Salt solution Cardiovascular IND approved Tafluprost, Timolol 他氟前列素,噻吗洛尔 Chemical 3.2 Prostaglandin analogue Glaucoma Ophthalmology IND review Bepotastine Besilate 苯磺贝他斯汀 Chemical 3.3 Antihistamine Allergic conjunctivitis Ophthalmology IND review Cyanocobalamin 氰钴胺 Chemical 3.3 Vitamn B12 Surgical removal of stomacSurgery IND approved Ketorolac Tromethamine 酮咯酸氨丁三醇 Chemical 3.3 NSAID Pain Analgesics and anesth IND review Lidocaine 利多卡因 Chemical 3.3 Sodium channel blocking Arrhythmia Cardiovascular IND review Paracetamol 对乙酰氨基酚 Chemical 3.3 Analgesics and anesth Rebamipide 瑞巴派特 Chemical 3.3 Free radical scavenger Gastritis Gastroenterology IND review Paclitaxel, Albumin 紫杉醇, 白蛋白 Chemical 3.4 Taxanes Breast cancer Oncology ANDA review

40 172 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Luye Pipeline Summary Therapeutic Class Innovative Drug Generic Drugs Total Analgesic 1 1 CNS 1 4 5 Endocrinology 1 1 2 Oncology 1 1 Total 2 7 9

Luye Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status 安舒法辛 Chemical 1.1 Venlafaxine analogue Depression CNS IND approved Evogliptin 艾格列汀 Chemical 1.1 DPP-4 inhibitor Type 2 diabetes Endocrinology IND approved

Luye Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Exenatide 艾塞那肽 Chemical 2 GLP-1 agonist Type 2 diabetes Endocrinology IND review Huperzine A 石杉碱甲 Chemical 2 Sesquiterpene alkaloid Dementia CNS IND approved Risperidone 利培酮 Chemical 2 Atypical antipsychotic Schizophrenia CNS IND approved Rotigotine 罗替戈汀 Chemical 2 Dopamine agonist Parkinson's, depression CNS IND approved Triptorelin 曲普瑞林 Chemical 2 Gonadotropin releasing hormHormone responsive canceOncology IND review Propofol 丙泊酚 Chemical 3.1 Potentiation of GABA receptPain Analgesic NDA approved Ropinirole 罗匹尼罗 Chemical 3.1 Dopamine agonist Parkinson's CNS IND approved

41 173 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Livzon Pipeline Summary Therapeutic Class Innovative Drug Generic Drug Total Autoimmune disease 1 1 2 Cardiovascular 1 1 CNS 2 2 Endocrinology 1 1 Infectious disease 1 4 5 Oncology 1 1 Orthopedics 1 1 Total 2 11 13

Livzon Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Inactivated Japanese Encephalitis Vaccine 乙型脑炎灭活疫苗 Biologic Preventive Bio Vaccine Encephalitis Infectious disease NDA review Tumor Necrosis Factor α Monoclonal Antibody Biologic Therapeutic Bio Monoclonal antibody N/A Autoimmune disease IND approved

Livzon Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Pioglitazone 吡格列酮 Chemical 1 Thiazolidinedione Diabetes Endocrinology NDA approved Edaravone 依达拉奉 Chemical 2 Free radical scavenger Stroke CNS IND review Penciclovir 喷昔洛韦 Chemical 2 Guanosine analogue antiviraHerpes virus infection Infectious disease NDA review Risedronate 利塞膦酸 Chemical 2 Bisphosphonate Osteoporosis Orthopedics IND approved Temozolomide 替莫唑胺 Chemical 2 Alkylating agent Brain cancer Oncology IND approved Blonanserin 布南色林 Chemical 3.1 Atypical antipsychotic Schizophrenia CNS NDA review Cefotetan 头孢替坦 Chemical 3.1 Second-generation cephalosGram-negative bacteria Infectious disease IND review Hydroxyethyl Starch 羟乙基淀粉 Chemical 3.1 Volume expander Shock following severe blooCardiovascular NDA approved Pazufloxacin 帕珠沙星 Chemical 3.1 Fluoroquinoline antibiotic Broad-spectrum antibiotic Infectious disease NDA approved Tacrolimus 他克莫司 Chemical 3.1 Macrolide calcineurin inhibitoOrgan transplant Autoimmune disease IND approved Amoxicillin 阿莫西林 Chemical 3.2 β-lactam antibiotic Gram-positive and -negativInfectious disease NDA approved

42 174 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Lee's 10,000 Pipeline Summary Rmb mn Lee's Intrinsic Value Therapeutic Class Innovative Drug Generic Drugs Total Autoimmune disease 1 1 8,000 Cardiovascular 1 1 2 3,466 3,466 Endocrinology 1 1 6,000 Infectious disease 1 1 355 355 Oncology 2 2 8,778 Ophthalmology 2 2 4,000 Orthopedics 1 1 Total 6 4 10 4,958 4,958 2,000

0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

Lee's Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Germinal peptide 生发肽 Chemical 1.1 N/A N/A Ophthalmology IND review Gimatecan 吉马替康 Chemical 1.1 Novel camptothecin Soft tissue sarcoma Oncology IND approved Thymopolypeptides 胸腺肽 Chemical 1.1 Immunosuppressant T-cell deficiency Ophthalmology IND review 司来普伐肽 Chemical 1.1 N/A Monilia albican bacteria Infectious disease IND review JX-594 N/A Biologic Therapeutic Bio Oncolytic virus Liver cancer Oncology IND approved Anfibatide 抗血小板溶栓素 Platelet 1b receptor antagonMyocardial infarct Cardiovascular Phase 2

Lee's Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Raloxifene 雷洛昔芬 Chemical 2 Selective estrogen receptor Osteoporosis Orthopedics IND approved Bemiparin Sodium 贝米肝素钠 Chemical 3.1 Heparin Anticoagulant Cardiovascular IND approved Hyaluronate 玻璃酸 Chemical 3.1 Glycosaminoglycan Osteoarthritis Autoimmune disease IND approved Combination gel for acne Chemical New formulation Endocrinology IND approved

43 175 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Simcere Pipeline Summary Therapeutic Class Innovative Drug Generic Drugs Total

Analgesic 1 1

Autoimmune disease 1 1 Cardiovascular 4 4 CNS 5 5 Infectious disease 1 1 2 Metabolic disease 1 1 Oncology 5 9 14 Total 7 21 28

Simcere Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Simotinib 西莫替尼 Chemical 1.1 EGFR inhibitor NSCLC Oncology IND approved 对甲苯磺酸噻尔非尼 Chemical 1.1 Protein kinase inhibitor Oncology IND approved Metatinib trometamol 麦他替尼氨丁三醇 Chemical 1.1 Protein kinase inhibitor Solid tumors Oncology IND approved Rabies vaccine 人用狂犬病疫苗 Biologic Preventive Bio N/A Rabies Infectious disease IND approved Abatacept 阿巴西普 Biologic Therapeutic Bio Preventing activation of T ceRheumatoid arthritis Autoimmune disease IND review PEG-Endostatin 聚乙二醇化重组人血管内皮抑制素 Biologic Therapeutic Bio Suppressing angiogenesis NSCLC Oncology IND approved Humanized anti-VEGF monoclonal antibody 人源化抗VEGF单克隆抗体 Biologic Therapeutic Bio Monoclonal antibody N/A Oncology IND approved

44 176 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Simcere Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Edaravone 依达拉奉 Chemical 1.5 Antioxidant Stroke CNS IND approved Azilsartan medoxomil 阿齐沙坦酯 Chemical 3.1 Angiotensin II receptor antagHypertension Cardiovascular IND review Bendamustine 苯达莫司汀 Chemical 3.1 Nitrogen mustard analogue Leukemia Oncology NDA review Biapenem 比阿培南 Chemical 3.1 Carbapenem antibiotic Antimicrobial Infectious disease IND approved Bortezomib 硼替佐米 Chemical 3.1 Proteosome inhibitor Multiple myeloma Oncology ANDA review Canagliflozin 卡格列净 Chemical 3.1 SGLT2 protein inhibitor Type 2 diabetes Metabolic disease IND review Erlotinib 厄洛替尼 Chemical 3.1 Protein kinase inhibitor NSCLC, pancreatic cancersOncology NDA review Ezetimibe 依折麦布 Chemical 3.1 Lipid modifying agent Hypercholesterol Cardiovascular NDA review Floxuridine 氟脲苷 Chemical 3.1 Antimetabolites Colorectal cancer Oncology IND applied Imatinib 伊马替尼 Chemical 3.1 Protein kinase inhibitor Leukemia Oncology NDA approved Lapatinib 拉帕替尼 Chemical 3.1 Protein kinase inhibitor Breast cancer Oncology IND review Levodopa 左旋多巴 Chemical 3.1 Increasing dopamine concenParkinson's CNS IND approved Lurasidone 鲁拉西酮 Chemical 3.1 Indole derivative Antipsychotic CNS IND review Palonosetron 帕洛诺司琼 Chemical 3.1 5-HT3 antagonist Nausea Oncology IND approved Pomalidomide 泊马度胺 Chemical 3.1 Angiogenesis inhibition Multiple myeloma Oncology IND review Pramipexole 普拉克索 Chemical 3.1 Dopamine agonist Parkinson's CNS NDA approved Prasugrel 普拉格雷 Chemical 3.1 Platelet aggregation inhibito Acute coronary syndromes Cardiovascular IND review Vilazodone 维拉佐酮 Chemical 3.1 Serotonin reuptake inhibitor Depression CNS IND review 盐酸替吡嘧啶 Chemical 3.1 Cancer Oncology IND review Azilsartan+amlodipine 阿齐沙坦，氨氯地平 Chemical 3.2 Calcium channel blocker Hypertension Cardiovascular IND review Ibuprofen 布洛芬 Chemical 3.3 NSAID Pain Analgesic IND review

45 177 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Sihuan 52,000 Pipeline Summary Rmb mn Sihuan Intrinsic Value Therapeutic Class Innovative Drug Generic Drug Total 50,000 Cardiovascular 1 4 5 CNS 1 3 4 48,000 Endocrinology 1 1 6,685 6,685 Gastroenterology 1 1 46,000 Infectious disease 2 1 3 Oncology 1 1 44,000 50,038 Respiratory 1 1 1,179 1,179 Urology 1 1 42,000 Total 7 10 17 40,000 42,174 42,174

38,000 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics Sihuan Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status 依格列汀 Chemical 1.1 DPP-4 inhibitors Type 2 diabetes Endocrinology IND approved 百纳培南 Chemical 1.1 Carbapenem antibiotic Beta-lactam antiobiotic resiInfectious disease IND approved Tylerdipine 泰乐地平 Chemical 1.1 Innovative calcium channel bHypertension Cardiovascular IND approved Pirotinib 哌罗替尼 Chemical 1.1 Second generation pan-HERLung and breast cancers Oncology IND approved 艾帕培南 Chemical 1.1 Ritipenem antibiotic Beta-lactam antiobiotic Infectious disease IND approved 安纳拉唑 Chemical 1.1 Proton pump inhibitors GERD Gastroenterology IND approved Botulinum Toxin Type A A型肉毒毒素 Biologic Therapeutic Bio From bacterium Clostridium Neuromuscular disorders CNS IND review

Sihuan Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Cefoselis 头孢噻利 Chemical 3.1 Cephalosporin Beta-lactam antibiotic Infectious disease NDA review Mildronate 米屈肼 Chemical 3.1 Fatty acid oxidation inhibitor Myocardial infarct Cardiovascular NDA review Ranolazine 雷诺嗪 Chemical 3.1 Inhibition of inward sodium cAngina Cardiovascular IND approved Triflusal 三氟柳 Chemical 3.1 Platelet aggregation inhibito Prevention of stroke Cardiovascular IND approved Valproate 丙戊酸 Chemical 3.1 Blocker of sodium ion channEpilepsy CNS IND review Lacosamide 拉科酰胺 Chemical 3.1 Acting through voltage-gatedDiabetic neuropathic pain CNS IND review Paroxetine 帕罗西汀 Chemical 3.1 SSRI Depression CNS IND review Avanafil 阿伐那非 Chemical 3.1 PDE5 inhibitor Erectile dysfunction Urology IND review Ezetimibe 依折麦布 Chemical 3.1 Inhibition of cholesterol absoHypercholesterol Cardiovascular IND review Ambroxol 氨溴索 Chemical 3.3 Release of surfactant by typ Excessive mucus Respiratory IND review

46 178 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Sinobiopharm 50,000 Pipeline Summary Rmb mn Sinbiopharm Intrinsic Value Therapeutic Class Innovative Drug Generic Drugs Total Analgesics and anesthetics 1 1 40,000 8,059 8,059 Autoimmune disease 1 1 Cardiovascular 1 8 9 6,935 6,935 30,000 CNS 4 4 Endocrinology 1 7 8 Gastroenterology 5 5 20,000 44,958 Infectious disease 1 9 10 29,964 29,964 Oncology 4 21 25 ophthalmology 2 2 10,000 Respiratory 1 4 5 Surgery and others 1 1 0 Urology 4 4 Market Cap Generic drugs Innovative drugs Mkt Cap+ Total 8 67 75 Innovative+ Generics

Sinobiopharm Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Anlotinib 安罗替尼 Chemical 1.1 Oncology IND approved Sinotecan 喜诺替康 Chemical 1.1 Camptothecin analog target Cancers Oncology IND approved 舒布替尼 Chemical 1.1 Targets: PDGFR-β, c-Kit, VEBreast and ovarian cancersOncology IND approved Human Coagulation Factor VIII 人凝血因子VIII Biologic Therapeutic Bio Blood-clotting protein anti-heHemophilia Cardiovascular IND review Insulin Analogues-Longacting, Glargine, Detem 胰岛素类似物-长效, 甘精, 地特 Biologic Therapeutic Bio Promoting absorption of glucDiabetes Endocrinology IND review Interferon α-2a PEG 聚乙二醇干扰素α-2a Biologic Therapeutic Bio Antiviral + immunosuppressaHep B and C Infectious disease IND review Lecithinized superoxide dismutase 磷脂化重组人铜锌超氧化物歧化酶 Biologic Therapeutic Bio Catalysis of the dismutation Idiopathic pulmonary fibros Respiratory IND review Trastuzumab 曲妥珠单抗 Biologic Therapeutic Bio Interference of HER2/neu reHER2-positive breast canceOncology IND review

47 179 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Sinobiopharm Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Tenofovir,Carnitine 替诺福韦,卡尼汀 Chemical 1.5 Nucleotide reverse transcrip Ischemic stroke Infectious Disease IND approved Cabozantinib 卡博替尼 Chemical 1.6 Tyrosine kinase inhibitor Multiple cancers Oncology IND review Glycyrrhizin 异甘草酸镁注射液 Chemical 1.6 Surgery and others NDA review Dofetilide 多非利特 Chemical 2 Blockage of raipid compone Cardiac arrhythmia Cardiovascular IND approved Pazufloxacin 帕珠沙星 Chemical 2 Fluoroquinolone Antibiotic Infectious disease IND approved Abiraterone 阿比特龙 Chemical 3.1 CYP17A1 inhibitor Cancer Urology IND approved Alogliptin 阿格列汀 Chemical 3.1 DPP-4 inhibitor Type 2 Diabetes Endocrinology IND review Amantadine 金刚烷胺 Chemical 3.1 Dopaminergic substance Parkinson's CNS IND approved Amphotericin B 两性霉素B Chemical 3.1 Antifungal Fungal infections Infectious disease IND approved Aprepitant 阿瑞匹坦 Chemical 3.1 Blockage of NK1 receptor Chemo-induced nausea Gastroenterology IND review Arformoterol 阿福特罗 Chemical 3.1 Beta-adrenoceptor agonist COPD Respiratory IND review Axitinib 阿昔替尼 Chemical 3.1 Tyrosine kinase inhibitor Breast cancer Oncology IND review Azelnidipine 阿折地平 Chemical 3.1 Dihydropyridine calcium chaHypertension Cardiovascular Manufacturing approved Azilsartan, Medoxomil 阿齐沙坦酯 Chemical 3.1 Angiotensin II receptor antagHypertension Cardiovascular IND review Bazedoxifene 巴多昔芬 Chemical 3.1 3rd generation SERM Osteoporosis Endocrinology IND review Bendamustine 苯达莫司汀 Chemical 3.1 Alkylating agent Cancer Oncology NDA review Bosutinib 博舒替尼 Chemical 3.1 Tyrosine kinase inhibitor Leukemia Oncology IND review Cabazitaxel 卡巴他赛 Chemical 3.1 Derivative of plant Cancer Oncology IND review Canagliflozin 卡格列净 Chemical 3.1 SGLT2 inhibitor Type 2 Diabetes Endocrinology IND review Ciclesonide 环索奈德 Chemical 3.1 Glucocorticoid Asthma Respiratory NDA review Cinacalcet 西那卡塞 Chemical 3.1 Calcimimetic Hyperparathyroidism Endocrinology IND review Cleviprex Butyrate,Fat Emulsion 丁酸氯维地平,脂肪乳 Chemical 3.1 Calcium channel blocker Hypertension Cardiovascular IND review Clofarabine 克罗拉滨 Chemical 3.1 Purine nucleoside antimetabCancer Oncology IND approved Darifenacin Hydrobromide 氢溴酸达非那新 Chemical 3.1 M3 muscarinic acetylcholineOveractive bladder Urology NDA review Degarelix 地加瑞克 Chemical 3.1 GnRH blocker Prostate cancer Oncology IND review Doripenem 多尼培南 Chemical 3.1 Beta-lactam Bacterial infections Infectious disease NDA review Dutasteride 度他雄胺 Chemical 3.1 Dual 5-α reductase inhibitor BPH Urology IND review Floxuridine 氟脲苷 Chemical 3.1 Antimetabolites Colorectal cancer Oncology IND review Fosaprepitant Dimeglumine 福沙匹坦二甲葡胺 Chemical 3.1 antiemetic Cancer Oncology IND approved Fosfluconazole 磷氟康唑 Chemical 3.1 Triazole antifungal Fungal infections Infectious disease IND review Hydroxyethyl Starch 羟乙基淀粉 Chemical 3.1 Starch derivative/volume expShock Cardiovascular Manufacturing approved Lansoprazole 兰索拉唑 Chemical 3.1 PPI GERD Gastroenterology IND review Lidocaine 利多卡因 Chemical 3.1 Anesthetic Pain Analgesics and anesth IND approved Limaprost 利马前列素 Chemical 3.1 Vasodilator Thrombosis CNS NDA review Lubiprostone 鲁比前列酮 Chemical 3.1 Blocking CIC-2 chloride cha Constipation Gastroenterology IND review Lurasidone 鲁拉西酮 Chemical 3.1 5HT and dopamin D2 antagoSchizophrenia CNS IND review

48 180 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Sinobiopharm Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Memantine 美金刚 Chemical 3.1 NMDA receptor antagonist Alzheimer's Disease CNS IND approved Miriplatin 米铂 Chemical 3.1 Lipophilic platinum complex Cancer Oncology IND review Moxifloxacin 莫西沙星 Chemical 3.1 Quinolone 4th Bacterial infections Infectious disease IND review Nelarabine 奈拉滨 Chemical 3.1 Inhibition of DNA synthesis aLeukemia Oncology NDA review Palonosetron 帕洛诺司琼 Chemical 3.1 5-HT3 antagonist Chemo-induced nausea Gastroenterology NDA approved Pantoprazole 泮托拉唑 Chemical 3.1 PPI GERD Gastroenterology IND approved Pazopanib 培唑帕尼 Chemical 3.1 Tyrosine kinase inhibitor Renal cell carcinoma Oncology IND review Pirfenidone 吡非尼酮 Chemical 3.1 Non-peptide low mol Pulmonary fibrosis Respiratory IND approved Pixantrone Maleate 马来酸匹杉琼 Chemical 3.1 Topoisomerase II poison an Cancer Oncology IND review Polymyxin 多粘菌素 Chemical 3.1 Antibiotics Bacterial infections Infectious Disease NDA review Pomalidomide 泊马度胺 Chemical 3.1 Anti-angiogenic and immunoCancer Oncology IND review Pralatrexate 普拉曲沙 Chemical 3.1 Antifolate Peripheral T-cell lymphomaOncology IND review Raltitrexed 雷替曲塞 Chemical 3.1 Inhibitor of thymidylate synthColorectal cancer Oncology Manufacturing approved Regorafenib 瑞戈非尼 Chemical 3.1 RTK inhibitor Colorectal cancer Oncology IND review Roflumilast 罗氟司特 Chemical 3.1 PDE-4 inhibitor Asthma Respiratory IND review Romidepsin 罗米地辛 Chemical 3.1 Natural extract Cancer Oncology IND review Rosuvastatin 瑞舒伐他汀 Chemical 3.1 Statins Hypercholesterolemia Cardiovascular Manufacturing approved Sitagliptin 西格列汀 Chemical 3.1 DPP-4 inhibitor Type 2 Diabetes Endocrinology IND review Sofosbuvir 索氟布韦 Chemical 3.1 RNA polymerase inhibition Hepatitis C Infectious disease IND review Solifenacin 索利那新 Chemical 3.1 Cholinergic receptor antago Overactive bladder Urology NDA review Temsirolimus 坦罗莫司 Chemical 3.1 mTOR inhibitor Renal cell carcinoma Oncology IND review Tioconazole 噻康唑 Chemical 3.1 Imidazole antifungal Fungal infections Infectious Disease NDA review Tofacitinib 托法替布 Chemical 3.1 JAK inhibitor Rheumatoid arthritis Autoimmune disease IND review Vorinostat 伏立诺他 Chemical 3.1 Histone deacetylase inhibito Cancer Oncology IND approved 维莫地布 Chemical 3.1 Oncology IND review 替吡拉西 Chemical 3.1 ophthalmology IND review Olmesartan Medoxomil,Amlodipine 奥美沙坦酯,氨氯地平 Chemical 3.2 Angiotensin II receptor antagHypertension Cardiovascular IND approved Saxagliptin, Metformin 沙格列汀,二甲双胍 Chemical 3.2 DPP-4 inhibitor Type 2 Diabetes Endocrinology IND review Simvastatin,Nicotinic Acid 辛伐他汀,烟酸 Chemical 3.2 HMG-CoA reductase inhibitoHypercholesterolemia Cardiovascular IND approved Sitagliptin, Metformin 西格列汀, 二甲双胍 Chemical 3.2 DPP-4 inhibitor Type 2 Diabetes Endocrinology IND review Trifluridine 曲氟尿苷，替吡拉西 Chemical 3.2 Anti-herpesvirus Eye infection ophthalmology IND review

49 181 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Shanghai Pharm 50,000 Rmb mn Pipeline Summary SH Pharm Intrinsic Value Therapeutic Class Innovative Drug Generic Drugs Total 1,748 1,748 Analgesics and anesthetics 1 1 40,000 Cardiovascular 3 3 CNS 4 4 30,000 Gastroenterology 1 1 Infectious disease 1 1 43,334 43,334 45,082 Ophthalmology 1 1 20,000 Psychotic disorders 1 1 Respiratory 4 4 10,000 Urology 1 1 Total 17 17 0 Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

Shanghai Pharm Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Esflurbiprofen 艾氟洛芬 Chemical 2 NSAID Pain Analgesics and anesth IND approved Desloratadine 地氯雷他定 Chemical 2 Antihistamine Allergies Respiratory NDA approved Edaravone 依达拉奉 Chemical 2 Free radical scavenger and Ischemic stroke CNS IND approved 七叶亭苷 Chemical 3.1 Ophthalmology IND approved Rasagiline 雷沙吉兰 Chemical 3.1 MAO inhibitor Parkinson's disease CNS NDA review Tioconazole 噻康唑 Chemical 3.1 Imidazole and triazole derivaFungal infection Infectious disease NDA approved Prasugrel 普拉格雷 Chemical 3.1 Platelet inhibitor Acute coronary syndrome Cardiovascular IND review Sodium Azulenesulfonate 薁磺酸钠 Chemical 3.1 Antiinflammatory componen Sore throat Gastroenterology IND approved Tiotropium 噻托溴铵 Chemical 3.1 Anticholinergic bronchodilatoCOPD Respiratory IND approved Ezetimibe 依折麦布 Chemical 3.1 Decrease cholesterol absorpHypercholesterolemia Cardiovascular NDA review Manidipine 马尼地平 Chemical 3.1 Calcium channel blocker Hypertension Cardiovascular NDA review Eplerenone 依普利酮 Chemical 3.1 aldosterone antagonist Heart failure Urology NDA review Agomelatine 阿戈美拉汀 Chemical 3.1 5HT2 antagonist Depression CNS NDA review Lurasidone 鲁拉西酮 Chemical 3.1 Indole derivatives Schizophrenia Psychotic disorders IND review Cetirizine,Pseudoephedrine 西替利嗪,伪麻黄碱 Chemical 3.2 Antihistamine Allergies Respiratory NDA approved Hydrocodone 氨酚可酮 Chemical 3.2 Opium alkaloids Cough Respiratory IND approved Oxiracetam 奥拉西坦 Chemical 3.3 Unclear Dementia CNS NDA approved

50 182 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

United Lab 14,000 Pipeline Summary Rmb mn TUL Intrinsic Value Therapeutic Class Innovative Drug Generic Drugs Total 12,000 Autoimmune disease 1 1 CNS 2 2 10,000 6,032 6,032 Endocrinology 4 4 Infectious disease 2 2 8,000 Oncology 1 1 Oncology 1 1 6,000 1,741 1,741 13,037 Respiratory 2 2 Urology 1 1 4,000 Total 5 9 14 5,265 5,265 2,000

- Market Cap Generic drugs Innovative drugs Mkt Cap+ Innovative+ Generics

United Lab Innovative drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Darbufelone 达布非隆 Chemical 1.1 Novel NSAID NSCLC Oncology NDA approved Insulin Analogues-Ultrashort acting, Lispro, Asp 胰岛素类似物-超短效, 赖脯, 门冬, 谷赖Biologic Therapeutic Bio Insulins and analogue Diabetes Endocrinology IND approved Insulin Analogues-Longacting, Glargine, Detem 胰岛素类似物-长效, 甘精, 地特 Biologic Therapeutic Bio Insulins and analogue Diabetes Endocrinology NDA review Insulin Analogues-Mixed 胰岛素类似物-混合 Biologic Therapeutic Bio Insulins and analogue Diabetes Endocrinology IND approved Human Parathyroid Hormone 1-34 人甲状旁腺激素1-34 Biologic Therapeutic Bio Parathyroid hormone and anHypoparathyroidism Endocrinology NDA review

United Lab Generic drugs English Name Chinese Name Category Class Mechanism Indication Therapeutic Area Status Edaravone 依达拉奉 Chemical 2 Antioxidant Stroke CNS IND review Imatinib 伊马替尼 Chemical 3.1 Tyrosine kinase inhibitor Leukemia Oncology NDA review Tadalafil 他达拉非 Chemical 3.1 PDE5 inhibitor Erectile dysfunction Urology NDA review Levetiracetam 左乙拉西坦 Chemical 3.1 Presynaptic calcium channe Epilepsy CNS NDA review Doripenem 多尼培南 Chemical 3.1 Carbapenems Ultra broad spectrum antibiInfectious disease IND review Febuxostat 非布司他 Chemical 3.1 Xanthine oxidase inhibitor Gout Autoimmune disease NDA review Pazufloxacin 帕苏沙星 Chemical 3.1 Fluoroquinolone Broad spectrum antibiotic Infectious disease NDA approved Salicylamide 水杨酰胺 Chemical 3.1 Salicylic acid derivative Allergy Respiratory NDA approved Cough/Cold & Allergy Preparations 咳嗽感冒制剂 Chemical 3.2 N/A Cough Respiratory NDA approved

51 183 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Section – New Drug Database Sorted by Therapeutic Class and Indication

52 184 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Analgesics and anesthetics Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Analgesics and anesthetics Dalian Tianyu Pharmaceutical Co. Ltd大连天宇制药有限公司 Chem 1.1 苯胺洛芬 IND Approval Analgesics and anesthetics Sichuan Haisco Pharmaceutlcal Co. 四川海思科制药有限公司Chem 1.1 HSK3486 HSK3486 IND submitted Analgesics and anesthetics Xiamen Zhaoyang Bioengineering Co厦门朝阳生物工程有限公Chem 1.2 Tetrodotoxin 河豚毒素 IND Approval Analgesics and anesthetics Yichang Humanwell Pharmaceutical 宜昌人福药业有限责任公Chem 1.1 Propofol 丙泊酚 IND Approval Analgesics and anesthetics Zhejiang Jianfeng Pharmaceutical Co浙江尖峰药业有限公司 Chem 1.1 Ketoprofen 酮洛芬 IND Failed Analgesics and anesthetics Zonk Drug R&D Limited 广东中科药物研究有限公Chem 1.1 苯胺洛芬 IND Approval

53 185 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Antirheumatic and Antiinflammatory Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Antirheumatic and Antiinflammatory 3SBio 三生制药 Therapeutic Bio 1 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND Approval Antirheumatic and Antiinflammatory Beijing Tide Pharmaceutical Co. Ltd. 北京泰德制药有限公司 Therapeutic Bio 1 磷脂化重组人铜锌超氧化物歧化酶IND submitted Antirheumatic and Antiinflammatory Biotech Pharmaceuticals Co. Ltd. 百泰生物药业有限公司 Therapeutic Bio 2 人源化抗CD6单抗 IND Approval Antirheumatic and Antiinflammatory Chengdu Jinkai Biotechnology Co. Lt成都金凯生物技术有限公Therapeutic Bio 2 Recombinant Anti-CD20 Monoclonal Antibod重组抗CD20单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Genor Biopharma Co. Ltd. 嘉和生物药业有限公司 Therapeutic Bio 2 Recombinant Anti-TNF-alpha Human Mouse 重组抗TNF-alpha人鼠嵌合单克隆抗IND Approval Antirheumatic and Antiinflammatory Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Chem 1.1 Thymopolypeptides 胸腺肽 IND submitted Antirheumatic and Antiinflammatory Hualan Genetic Engineering Co. Ltd. 华兰基因工程有限公司 Therapeutic Bio 2 Rituximab 利妥昔单抗 IND submitted Antirheumatic and Antiinflammatory Institute of Materia Medica, Shangha 中国科学院上海生命科学Chem 1.1 Arteether Amine Maleate 马来酸蒿乙醚胺 IND submitted Antirheumatic and Antiinflammatory Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 SHR-0302 IND submitted Antirheumatic and Antiinflammatory Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 Imrecoxib 艾瑞昔布 IND Approval Antirheumatic and Antiinflammatory Jiangsu Zhonghe Pharmaceutical Te 江苏众合医药科技有限公Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Jiangxi Boya Biological Pharmacy Co江西博雅生物制药股份有Therapeutic Bio 1 Human Immunoglobulin 人免疫球蛋白 IND submitted Antirheumatic and Antiinflammatory Jiannenglong Medical Technology (S健能隆医药技术（上海）Therapeutic Bio 1 Recombinant Human Interleukin 22-Fc Fusio重组人白介素22-Fc融合蛋白 IND submitted Antirheumatic and Antiinflammatory Jiaochen Biopharmaceutical Technol 交晨生物医药技术（上海Therapeutic Bio 1 Recombinant Human Interleukin-1 Receptor 重组人白细胞介素-1受体拮抗剂 IND submitted Antirheumatic and Antiinflammatory Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Shanghai Hengrui Pharmaceuticals C上海恒瑞医药有限公司 Therapeutic Bio 1 SHR-1314 SHR-1314 IND submitted Antirheumatic and Antiinflammatory Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Shanghai Kexin biotech Co., Ltd 上海科新生物技术股份有Therapeutic Bio 1 Recombinant Human Immunoglobulin ε and γ重组人免疫球蛋白ε和γ的Fc融合蛋 IND submitted Antirheumatic and Antiinflammatory Shanghai Pharmaceuticals Holding C上海医药集团股份有限公Therapeutic Bio 2 Recombinant Anti-CD20 Monoclonal Antibod重组抗CD20单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Simcere Pharmaceutical Group 先声药业 Chem 1.1 Iguratimod 艾拉莫德 NDA Approval Antirheumatic and Antiinflammatory Sinoasis Pharmaceuticals, Inc 百奥泰生物科技（广州）Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Suzhou Chang Zheng-Cinkate Pharm苏州长征-欣凯制药有限公Chem 1.1 泰瑞米特 IND Approval Antirheumatic and Antiinflammatory TIPR Pharmaceutical Responsible Co天津药物研究院药业有限Chem 1.1 知非沙班 IND submitted Antirheumatic and Antiinflammatory Wuhan Institute of Biological Product 武汉生物制品研究所 Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Yangtze River Pharmaceutical Group扬子江药业集团有限公司Chem 1.1 Iguratimod 艾拉莫德 NDA submitted Antirheumatic and Antiinflammatory Yangtze River Pharmaceutical Group扬子江药业集团江苏海慈Chem 1.1 Iguratimod 艾拉莫德 NDA submitted Antirheumatic and Antiinflammatory Yantai Rongchang Bioengineering Co烟台荣昌生物工程有限公Therapeutic Bio 1 Recombinant Human B-lymphocyte stimulati 重组人B淋巴细胞刺激因子受体-抗 IND Approval Antirheumatic and Antiinflammatory Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Therapeutic Bio 2 Recombinant CD25 Humanised Monoclonal 重组抗CD25人源化单克隆抗体 IND submitted Antirheumatic and Antiinflammatory Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Chem 1.2 Ginsenoside CK 人参皂苷C-K IND Approval

54 186 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Blood system and Bone Diseases Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Blood system drugs Beijing Northland Biotech Co., Ltd. 北京诺思兰德生物技术股Therapeutic Bio 1 Recombinant Human Thymosin β4 重组人胸腺素β4 IND submitted Blood system drugs Changzhou Qianhong Bio-pharma Co常州千红生化制药有限公Therapeutic Bio 1 重组人抗血栓蛋白 IND Approval Blood system drugs Chinese people's Liberation Army Ba中国人民解放军军事医学Therapeutic Bio 1 Recombinant Staphylokinase 重组葡激酶 NDA Approval Blood system drugs Chinese people's Liberation Army Mi 中国人民解放军军事医学Therapeutic Bio 1 Recombinant-RGD-Hirudin 重组双功能水蛭素 IND submitted Blood system drugs Chinese people's Liberation Army Mi 中国人民解放军军事医学Therapeutic Bio 1 Recombinant Staphylokinase Hirudin Fusion 重组葡激酶水蛭素融合蛋白 IND submitted Blood system drugs Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Therapeutic Bio 1 Pegloticase 聚乙二醇重组尿酸酶 IND Approval Blood system drugs Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Therapeutic Bio 1 Recombinant neutrphil inhibitory factor and h重组白细胞抑制因子和水蛭肽嵌合IND Approval Blood system drugs Dongguan Baolijian Bioengineering R东莞宝丽健生物工程研究Therapeutic Bio 1 人促红细胞生成素-Fc融合蛋白 IND Approval Blood system drugs Guangzhou Kaitai Biotechnology Co. 广州市恺泰生物科技有限Therapeutic Bio 1 Recombinant Human Interleukin-12 重组人白细胞介素-12 IND Approval Blood system drugs Hefei Con-source Pharmaceutical Co合肥合源药业有限公司 Chem 1.1 HYC11395 HYC11395 IND submitted Blood system drugs Hefei Medical Engineering & Medicin 合肥医工医药有限公司 Chem 1.1 吡拉格雷 IND Approval Blood system drugs Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 海曲泊帕乙醇胺 IND Approval Blood system drugs Jiangsu Vcare Pharmatech Co.,Ltd. 江苏威凯尔医药科技有限Chem 1.1 Vicagrel 维卡格雷 IND submitted Blood system drugs Shaanxi Maike Aote Technology Co. 陕西麦科奥特科技有限公Chem 1.1 普瑞巴肽 IND submitted Blood system drugs Shanghai Aoqi Pharmaceutical Techn上海奥奇医药科技有限公Chem 1.1 艾诺赛特 IND Approval Blood system drugs Shanghai Tasly Pharmaceutical Co. L上海天士力药业有限公司Therapeutic Bio 1 Recombinant Human Pro-Urokinase (rhpro-U重组人尿激酶原 IND submitted Blood system drugs Shenzhen Sciprogen Bio-Pharmaceu深圳赛保尔生物药业有限Therapeutic Bio 1 Erythropoietin 重组人红细胞生成素 IND submitted Blood system drugs TaiGen Biotechnology Co. Ltd. 太景生物科技股份有限公Chem 1.1 Burixafor 布利沙福 IND submitted Blood system drugs Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Therapeutic Bio 1 Y型PEG化重组人促红素 IND Approval Blood system drugs Yangtze River Pharmaceutical Group扬子江药业集团北京海燕Therapeutic Bio 1 Batroxobin 巴曲酶 IND submitted Bone disease Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Therapeutic Bio 2 RANKL Antibody 抗RANKL单克隆抗体 IND submitted Bone disease Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Therapeutic Bio 2 RANKL Antibody 抗RANKL单克隆抗体 IND submitted

55 187 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Circulatory system Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Circulatory system Allist Pharmaceuticals, Inc. 上海艾力斯医药科技有限Chem 1.1 Allisartan 艾力沙坦 NDA Approval Circulatory system Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 培化西海马肽 IND Approval Circulatory system Jinlin Huakang Pharmaceutical Co. L吉林华康药业股份有限公Chem 1.1 Pseudo Ginsenoside GQ 伪人参皂苷GQ IND Approval Circulatory system NCPC New Drug R&D Co. Ltd. 华北制药集团新药研究开Chem 1.3 Doxazosin 多沙唑嗪 IND Approval Circulatory system Otsuka Pharmaceutical 大冢制药株式会社 Chem 1.1 Tolvaptan 托伐普坦 NDA submitted Circulatory system Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 Tylerdipine 泰乐地平 IND Approval Circulatory system Shandong Yikang Pharmaceutical Co山东益康药业有限公司 Chem 1.1 Nitrendipine 尼群地平 IND Approval Circulatory system TIPR Pharmaceutical Responsible Co天津药物研究院药业有限Chem 1.1 他司曲洛 IND Approval Circulatory system Zensun (Shanghai) Sci & Tech Co. L 上海泽生科技开发有限公Therapeutic Bio 1 重组人纽兰格林 NDA Approval

56 188 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Dermatology and ENT/Optholamology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Dermatology and ENT/Optholamology Chengdu Kanghong Biotechnology C成都康弘生物科技有限公Therapeutic Bio 1 Conbercept 康柏西普 NDA Approval Dermatology and ENT/Optholamology Dermatology Hospital in Shandong P山东省皮肤病医院 Chem 1.1 Dithranol 地蒽酚 IND Approval Dermatology and ENT/Optholamology Hainan Hailing Chemical Pharmaceu海南海灵化学制药有限公Chem 1.1 Hemay005 IND submitted Dermatology and ENT/Optholamology Shanghai Fudan-Zhangjiang Bio-Pha上海复旦张江生物医药股Chem 1.1 海姆泊芬 NDA Approval Dermatology and ENT/Optholamology Wuhan Yicheng Biotechnology Co. L 武汉益承生物科技有限公Therapeutic Bio 1 益复肽 IND Approval

57 189 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Endocrinology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Endocrinology Beijing Dongfang Baitai Biotechnolog北京东方百泰生物科技有Therapeutic Bio 1 rExendin-4 重组促胰岛素分泌素 IND submitted Endocrinology Chengdu Yuandong Pharmaceutical 成都苑东药业有限公司 Chem 1.1 Ulogliptin 优格列汀 IND submitted Endocrinology Chongqing Fuchuang Pharmaceutica重庆复创医药研究有限公Chem 1.1 复格列汀 IND Approval Endocrinology Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Chem 1.1 Pegylated Insulin Secretion Peptide Analogu 聚乙二醇化促胰岛素分泌肽类似物IND submitted Endocrinology Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Therapeutic Bio 1 Human Insulin-Shortacting, Regular, Recomb人胰岛素-短效, 常规, 重组, 生物合成IND submitted Endocrinology Genor Biopharma Co. Ltd. 嘉和生物药业有限公司 Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Endocrinology Guangdong Dongyangguang Pharma广东东阳光药业有限公司Chem 1.1 莱洛替尼 IND submitted Endocrinology Hebei Changshan Biochemical Pharm河北常山生化药业有限公Chem 1.1 艾本那肽 IND submitted Endocrinology Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Chem 1.1 Germinal Peptide 生发肽 IND submitted Endocrinology Innovent Biologics, Inc. 信达生物制药(苏州)有限公Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Endocrinology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 诺利糖肽 IND Approval Endocrinology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 贝格列汀 IND Approval Endocrinology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 Fasiglifam 呋格列泛 IND Approval Endocrinology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 脯氨酸恒格列净 IND Approval Endocrinology Jiangsu Nhwa Pharmaceutical Co. Lt江苏恩华药业股份有限公Chem 1.1 DP-VPA DP-VPA IND submitted Endocrinology Jilin Kanghui Biotechnology Co. Ltd. 吉林康慧生物科技有限公Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Endocrinology Kerun Biopharmaceutical R&D Co. Lt重庆科润生物医药研发有Therapeutic Bio 1 Carboxypeptidase G2 重组羧肽酶G2 IND submitted Endocrinology Lanzhou Institute of Biological Produc兰州生物制品研究所 Therapeutic Bio 1 重组人睫状神经营养因子 IND Approval Endocrinology Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 诺利糖肽 IND Approval Endocrinology Nanjing Changao Pharmaceutical Sc 南京长澳医药科技有限公Chem 1.1 澳格列汀 IND submitted Endocrinology PegBio Co. Ltd. 派格生物医药（苏州）有Chem 1.1 Extenatide PEG 聚乙二醇化艾塞那肽 IND Approval Endocrinology Shandong Henli Pharmaceutical Tec 山东亨利医药科技有限责Chem 1.1 阿莫奎尼 IND submitted Endocrinology Shandong Luye Pharmaceutical Co. 山东绿叶制药有限公司 Chem 1.1 艾格列汀 IND Approval

58 190 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Endocrinology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Endocrinology Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 加格列净片 IND submitted Endocrinology Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 加格列净 IND submitted Endocrinology Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 依格列汀 IND Approval Endocrinology Shanghai Benemae Pharmaceutical 上海仁会生物制药股份有Therapeutic Bio 1 重组人胰高血糖素类多肽 IND Approval Endocrinology Shanghai Biomabs Pharmaceutical C上海百迈博制药有限公司Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 NDA submitted Endocrinology Shijiazhuang Pharma Group Zhongq 石药集团中奇制药技术（Chem 1.1 DBPR108 IND submitted Endocrinology Wuxi Hebang Bioscientific Co. Ltd. 无锡和邦生物科技有限公Therapeutic Bio 1 促胰岛素分泌肽融合蛋白 IND Failed Endocrinology Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Therapeutic Bio 1 yPEG–rhGH Y型PEG化重组人生长激素 IND Approval Endocrinology Xiweiai Pharmaceutical Technology (西威埃医药技术（上海）Chem 1.1 CVI-LM001 CVI-LM001 IND submitted Endocrinology Yangtze River Pharmaceutical Group扬子江药业集团北京海燕Therapeutic Bio 1 rExendin-4 重组促胰岛素分泌素 IND submitted Endocrinology Yiyuan Biological 杭州一元生物技术有限公Therapeutic Bio 1 Recombinant Human Glucokinase Adenoviru重组人葡萄糖激酶腺病毒 IND submitted Endocrinology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Chem 1.1 海泽麦布 IND Approval Endocrinology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Endocrinology Zhejiang Huayang Pharmaceutical C 浙江华阳药业有限公司 Therapeutic Bio 1 Recombinant Exenatide-Human Serum Albu 重组艾塞那肽-人血清白蛋白融合蛋IND submitted Endocrinology Zhuhai Livzon Monoclonal Antibodies珠海市丽珠单抗生物技术Therapeutic Bio 1 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND Approval

59 191 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Gastroenterology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Gastroenterology Beijing Molike Sci-Tech Co. Ltd. 北京摩力克科技有限公司Chem 1.1 艾索那班 IND submitted Gastroenterology Changzhou Yabang Pharmaceutical 常州亚邦制药有限公司 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA submitted Gastroenterology Chongqing Shenghuaxi Pharmaceuti 重庆圣华曦药业股份有限Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Dongguan Chang'an Dongyangguang东莞市长安东阳光新药研Chem 1.1 莫非赛定 IND Approval Gastroenterology Geli Biotechnology (Hangzhou) Co. L歌礼生物科技（杭州）有Chem 1.1 Danoprevir IND submitted Gastroenterology Haikou Pharmaceutical Factory Co. L海口市制药厂有限公司 Chem 1.1 AKF-PD 氟非尼酮 IND submitted Gastroenterology Hangzhou Zhongmei Huadong Pharm杭州中美华东制药有限公Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Hanmi Pharmaceutical 韩美药品 Therapeutic Bio 1 Live Combined B. Subtilis and E. Faecium 枯草杆菌、肠球菌 IND Approval Gastroenterology Harbin Pharma Group General Pharm哈药集团制药总厂 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Hebei Medical University Pharmaceu河北医科大学制药厂 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Henan Haohai Medical Co. Ltd. 河南昊海药业有限公司 Chem 1.1 赛拉瑞韦钾 IND submitted Gastroenterology Henan Shuzhong Pharmaceutical Co河南蜀中制药有限公司 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Hunan Fangsheng Medical Technolo 湖南方盛制药有限公司 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Hunan Warrant Pharmaceutical Co. L湖南华纳大药厂有限公司Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Institute of Materia Medica, Shangha 中国科学院上海生命科学Chem 1.1 异噻氟定 IND submitted Gastroenterology Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Therapeutic Bio 1 Human Recombinant Glucagon Like Peptide 重组人胰高血糖素样肽-1类似物融 IND submitted Gastroenterology Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Therapeutic Bio 1 Human Albumin,Interferon α2a 重组人血清白蛋白-干扰素α2a融合 IND Approval Gastroenterology Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 安纳拉唑 IND Approval Gastroenterology Shanghai Hepu Biotechnology Co. Lt上海贺普生物科技有限公Chem 1.1 贺普拉肽 IND Approval Gastroenterology Suzhou Erye Pharmaceutical Co. Ltd苏州二叶制药有限公司 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology The 302nd Hospital of PLA 解放军302医院 Chem 1.1 免疫7肽 IND Failed Gastroenterology Tianjin Linda Bioscientific Co. Ltd. 天津林达生物科技有限公Therapeutic Bio 1 Human Albumin,Interferon α2a 重组人血清白蛋白-干扰素α2a融合 IND Approval Gastroenterology TIPR Pharmaceutical Responsible Co天津药物研究院药业有限Chem 1.1 Elvucitabine 艾夫他滨 IND Failed Gastroenterology Youcare Pharmaceutical Group Co. L悦康药业集团有限公司 Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Gastroenterology Zhejiang Hailisheng Pharmaceutical 浙江海力生制药有限公司Chem 1.1 Smectite 蒙脱石 IND Approval

60 192 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Genital system Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Genital system Ascentagepharma Group Corp Limite江苏亚盛医药开发有限公Chem 1.1 Compound Gosspol Acetate 复方醋酸棉酚 IND Approval Genital system Beijing Meifuyuan Bio-Pharmaceutica北京美福源生物医药科技Therapeutic Bio 1 Interferon α2b,Human Albumin 干扰素α2b,人白蛋白 IND submitted Genital system Biomedical Engineering Center of He河北医科大学生物医学工Chem 1.1 Nutrition-Other Carbohydrate 营养类-其他糖类 NDA Approval Genital system Daiichi Sankyo 第一三共制药 Chem 1.1 Silodosin 赛洛多辛 NDA Approval Genital system Henan Topfond Pharmaceutical Co. L河南天方药业股份有限公Chem 1.1 TPN729MA IND Approval Genital system Institute of Materia Medica, Shangha 中国科学院上海生命科学Chem 1.1 TPN171H TPN171H IND submitted Genital system Kangning Jierui (Jilin) Biotechnology 康宁杰瑞（吉林）生物科Therapeutic Bio 1 Follitropin α 重组人促卵泡激素 IND submitted Genital system Shandong Tefaman Pharmaceutical 山东特珐曼药业有限公司Chem 1.1 TPN171H TPN171H IND submitted Genital system Zhejiang Deqing Anping Bio-Pharmac浙江德清安平生物制药有Therapeutic Bio 1 Interferon α2b,Human Albumin 干扰素α2b,人白蛋白 IND Failed Genital system Zhejiang Xianju Pharmaceutical Co. L浙江仙琚制药股份有限公Chem 1.1 Cymipristone 赛米司酮 NDA submitted

61 193 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Infectious Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Infectious Disease Anhui Huanqiu Pharmaceutical Co. L安徽环球药业股份有限公Chem 1.1 Antofloxacin 安妥沙星 IND Approval Infectious Disease Beijing Hua Er Dun Biotechnology Co北京华尔盾生物技术有限Therapeutic Bio 1 Hepatitis B Vaccine 乙型肝炎疫苗 IND submitted Infectious Disease Beijing Tri-Prime Genetic Engineering北京三元基因工程有限公Therapeutic Bio 1 聚乙二醇新型集成干扰素突变体 IND Approval Infectious Disease Changchun Protelight Pharmaceutica长春普莱医药生物技术有Chem 1.1 抗菌肽PL-5 IND submitted Infectious Disease Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Chem 1.1 Tenofovir Dipivoxil 替诺福韦双特戊酯 IND Approval Infectious Disease Chinese people's Liberation Army Mi 中国人民解放军军事医学Chem 1.1 美索舒利 IND Approval Infectious Disease Guangdong Dongyangguang Pharma广东东阳光药业有限公司Chem 1.1 依米他韦 IND Approval Infectious Disease Guangzhou Nanxin Pharmaceutical C广州南新制药有限公司 Chem 1.1 Peramivir 帕拉米韦 NDA Approval Infectious Disease Guizhou Bailing Group Pharmaceutic贵州百灵企业集团制药股Chem 1.1 替芬泰 IND Approval Infectious Disease Haikou VTI Biological Institute 海口维瑅瑷生物研究院 Therapeutic Bio 1 AIDS Vaccine 艾滋病疫苗 IND Approval Infectious Disease Hainan Haochuang Pharmaceutical C海南豪创药业有限公司 Chem 1.1 Cefetamet 头孢他美 IND Approval Infectious Disease Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Chem 1.1 司来普伐肽 IND submitted Infectious Disease HNG Chembio Pharmacy Co. Ltd. 湖南有色凯铂生物药业有Chem 1.1 Peramivir 帕拉米韦 NDA Approval Infectious Disease Hunan Warrant Pharmaceutical Co. L湖南华纳大药厂有限公司Chem 1.3 Levornidazole 左奥硝唑 NDA submitted Infectious Disease Institute of Materia Medica, Chinese A中国医学科学院药物研究Chem 1.1 百可利 IND Approval Infectious Disease Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 HS-10220 HS-10220 IND submitted Infectious Disease Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 吗啉硝唑 IND Approval Infectious Disease Jiuzhang Biochemical Engineering Sc四川九章生物化工科技发Chem 1.2 Chlorogenic Acid 绿原酸 IND Approval Infectious Disease Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 HS-10220 HS-10220 IND submitted Infectious Disease Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 吗啉硝唑 NDA Approval Infectious Disease Liaoning Yisheng Bio-pharmaceutica 辽宁依生生物制药有限公Therapeutic Bio 1 Rabies Vaccine 人用狂犬病疫苗 IND submitted Infectious Disease MicuRx (Shanghai) Pharmaceuticals 盟科医药技术（上海）有Chem 1.1 MRX-I IND Approval Infectious Disease Nanjing Hailing TCM Manufacturing P南京海陵中药制药工艺技Chem 1.1 Levornidazole 左奥硝唑 IND Approval Infectious Disease Nanjing Sanhome Pharmaceutical Co南京圣和药业有限公司 Chem 1.3 Levornidazole 左奥硝唑 NDA submitted Infectious Disease Shaanxi Synthetic Pharmaceutical Co陕西合成药业有限公司 Chem 1.1 Levornidazole 左奥硝唑 IND submitted Infectious Disease Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 百纳培南 IND Approval Infectious Disease Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 哌诺沙星 IND Failed Infectious Disease Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 艾帕培南 IND Approval Infectious Disease Shanghai Zerunanke Biopharmaceut 上海泽润安珂生物制药有Therapeutic Bio 1 Recombinant Human Papillomavirus Type 16重组人乳头瘤病毒16型E7融合蛋白IND submitted Infectious Disease Sichuan Direction Pharmaceutical Co四川方向药业有限责任公Chem 1.1 Cefetamet 头孢他美 IND Approval Infectious Disease Sichuan Kelun Pharmaceutical Co. L 四川科伦药业股份有限公Chem 1.1 Cefditoren Pivoxil 头孢妥仑匹酯 IND submitted Infectious Disease Sinocelltech Ltd. 神州细胞工程有限公司 Therapeutic Bio 1 Recombinant Humanized H7N9 Monoclonal 重组人源化抗H7N9单克隆抗体 IND submitted Infectious Disease Tianjin ChaseSun Pharmaceutical Co天津红日药业股份有限公Chem 1.1 Para Toluene Sulfonate 对甲苯磺酰胺 NDA submitted Infectious Disease Tonglian Group Co Ltd. 同联集团有限公司 Chem 1.1 可利霉素 NDA submitted

62 194 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Infectious Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Infectious Disease Tonrol Bio-Pharmaceutical Co. Ltd. 同路生物制药有限公司 Therapeutic Bio 1 肠道病毒71型人免疫球蛋白(PH4) IND submitted Infectious Disease Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Therapeutic Bio 1 Interferon α-2b PEG 聚乙二醇干扰素α-2b NDA submitted Infectious Disease Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Therapeutic Bio 1 Interferon α-2a PEG 聚乙二醇干扰素α-2a IND Approval Infectious Disease Xiamen Innovax Biotech Co. Ltd. 厦门万泰沧海生物技术有Therapeutic Bio 1 抗H5N1禽流感鼠单抗 IND submitted Infectious Disease Xi'an Xintong Pharmaceutical Co. Ltd西安新通药物研究有限公Chem 1.1 Remofovir 帕拉德福韦 IND Approval Infectious Disease Yangtze River Pharmaceutical Group扬子江药业集团有限公司Chem 1.1 Cefetamet 头孢他美 IND submitted Infectious Disease Yangtze River Pharmaceutical Group扬子江药业集团江苏海慈Chem 1.1 Cefetamet 头孢他美 IND submitted Infectious Disease Zhejiang Medicine Co. Ltd. Xinchang 浙江医药股份有限公司新Chem 1.1 Nemonoxacin 奈诺沙星 NDA submitted Infectious Disease Zhejiang Pukang Biotechnology Co. L浙江普康生物技术股份有Therapeutic Bio 1 Recombinant Human Papillomavirus (Type 1重组16型人乳头瘤病毒疫苗 IND Approval Infectious Disease Zhejiang Pukang Biotechnology Co. L浙江普康生物技术股份有Therapeutic Bio 1 Human Papillomavirus Type 16 Recombinan 人乳头瘤病毒16型重组腺病毒载体IND submitted Infectious Disease Zhejiang Yongning Pharmaceutical C浙江永宁药业股份有限公Chem 1.1 舒他美 IND Approval Infectious Disease Zhejiang Yongning Pharmaceutical C浙江永宁药业股份有限公Chem 1.1 Cefdinir 头孢地尼 IND Failed Infectious Disease ZhengZhou University 郑州大学 Chem 1.1 阿兹夫定 IND Approval

63 195 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Nervous system Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Nervous system Beijing Sihuan Pharmaceutical Co. Lt北京四环制药有限公司 Chem 1.3 Phencynonate 苯环壬酯 IND Approval Nervous system Chongqing Dongze Pharmaceutical T重庆东泽医药科技发展有Chem 1.3 Oxiracetam 奥拉西坦 IND submitted Nervous system Guangdong Aixida Pharmaceutical C广东艾希德药业有限公司Chem 1.2 Ginkgolide 银杏内酯 IND submitted Nervous system Guangzhou Kangqiao Hanpu Pharma广州康乔汉普药业有限公Chem 1.2 Ginkgolide 银杏内酯 IND submitted Nervous system Guangzhou Saipute Pharmaceutical 广州市赛普特医药科技有Chem 1.1 安脑三醇 IND submitted Nervous system Guangzhou Zesheng Pharmaceutica 广州市泽盛药业科技有限Chem 1.2 Ginkgolide 银杏内酯 IND submitted Nervous system Heilongjiang Timehome Pharmaceuti黑龙江天宏药业有限公司Chem 1.2 Ginkgolide 银杏内酯 IND submitted Nervous system Institute of Materia Medica, Chinese A中国医学科学院药物研究Chem 1.1 芬乐胺 IND Approval Nervous system Institute of Microbiology and epidemi 中国人民解放军军事医学Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 NDA submitted Nervous system Jiangsu Carefree Medical Co. Ltd. 江苏柯菲平医药有限公司Chem 1.1 Ginkgolide 银杏内酯 IND Approval Nervous system Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 SHR7390 IND submitted Nervous system Jiangsu Nhwa Saide Pharmaceutical 江苏恩华赛德药业有限责Chem 1.1 Iptakalim 埃他卡林 IND Approval Nervous system Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Chem 1.2 2-莰醇 IND Approval Nervous system Livzon Group Livzon Pharmaceutical 丽珠集团丽珠制药厂 Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 NDA Approval Nervous system Nanjing Youke Pharmaceutical Co. L 南京优科制药有限公司 Chem 1.3 Oxiracetam 奥拉西坦 IND Approval Nervous system Shandong Luoxin Pharmacy Stock C 山东罗欣药业股份有限公Chem 1.2 Ginkgolide 银杏内酯 IND submitted Nervous system Shandong Luye Pharmaceutical Co. 山东绿叶制药有限公司 Chem 1.1 安舒法辛 IND Approval Nervous system Sinbioway Medicine 未名生物医药有限公司 Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 IND Approval Nervous system Staidson (Beijing) Pharmaceutical Co舒泰神（北京）药业有限Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 IND submitted Nervous system Zhejiang Apeloa Natural Medicine Co浙江普洛康裕天然药物有Chem 1.1 索法地尔 IND Approval Nervous system Zhejiang Huahai Pharmaceutical Co. 浙江华海药业股份有限公Chem 1.1 Hydroxyl pp Pyrazole Ketones 羟哌吡酮 IND submitted Nervous system Zhejiang Puluo Pharmaceutical Tech 浙江普洛医药科技有限公Chem 1.1 索法地尔 IND Approval

64 196 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Oncology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Oncology 3SBio 三生制药 Therapeutic Bio 1 重组假丝酵母尿酸氧化酶 IND submitted Oncology ACEA Biosciences Inc. 美国ACEA生物科学公司 Chem 1.1 艾维替尼 IND Approval Oncology Allist Pharmaceuticals, Inc. 上海艾力斯医药科技有限Chem 1.1 甲苯磺酸艾力替尼 IND Approval Oncology Anhui Anke Biotechnology (Group) C安徽安科生物工程(集团)股Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Oncology Ascentagepharma Group Corp Limite江苏亚盛医药开发有限公Chem 1.1 APG-1387 IND Approval Oncology BeiGene (Beijing) Co. Ltd. 百济神州（北京）生物科Chem 1.1 BGB-283 BGB-283 IND submitted Oncology Beijing Brins-Livepro Biotechnology C北京百林康源生物技术有Therapeutic Bio 1 错位双链聚核苷酸 IND Failed Oncology Beijing Fabojin Pharmaceutical Tech 北京珐博进医药技术开发Chem 1.1 可博美 IND submitted Oncology Beijing Mabworks Biotech Co. Ltd. 北京天广实生物技术有限Therapeutic Bio 2 Epidermal Growth Factor Receptor Monoclon抗人表皮生长因子受体单克隆抗体IND submitted Oncology Beijing Purunao Biotechnology Co. L 北京浦润奥生物科技有限Chem 1.1 伯瑞替尼 IND submitted Oncology Beijing Tumor Hospital, Clinical Tumo北京肿瘤医院 Chem 1.1 血管生成抑肽 IND submitted Oncology Beijing Xingda Science System Co Lt北京市兴大科学系统公司Chem 1.1 Dicycloplatin 双环铂 NDA Approval Oncology Biotech Pharmaceuticals Co. Ltd. 百泰生物药业有限公司 Therapeutic Bio 1 Nimotuzumab 尼妥珠单抗 IND Approval Oncology Centaurus Biopharma 北京赛林泰医药技术有限Chem 1.1 CT-707 IND submitted Oncology Challenge-Med Technology (Shangh 卡南吉医药科技（上海）Chem 1.1 CM082 IND Approval Oncology Chengdu DIAO Jiuhong Pharmaceut 成都地奥九泓制药厂 Therapeutic Bio 1 多功能凋亡受体激动剂 IND Approval Oncology Chengdu Hengji Medical Technology 成都恒基医药科技有限公Chem 1.1 康普瑞丁磷酸二钠 IND Approval Oncology Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Chem 1.1 舒布替尼 IND Approval Oncology Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Chem 1.1 安罗替尼 IND Approval Oncology Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Chem 1.1 喜诺替康 IND Approval Oncology Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Therapeutic Bio 2 Trastuzumab 曲妥珠单抗 IND submitted Oncology China Pharmaceutical University 中国药科大学 Chem 1.1 Wogonin 汉黄芩素 IND Approval Oncology CSPC Pharmaceutical Group Genele石药集团百克(济南)生物制Therapeutic Bio 1 Pegylated Recombinant Huamn Granulocyte PEG化重组人粒细胞刺激因子 NDA Approval Oncology Gansu Cheezheng Industrial Group C甘肃奇正藏药有限公司 Chem 1.1 Ethaselen 乙烷硒啉 IND submitted Oncology Gansu Yupu Institute Of Cancer and 甘肃玉璞肿瘤心血管病研Chem 1.1 Ammonium Nitrate 硝酸铵 IND Approval Oncology Genor Biopharma Co. Ltd. 嘉和生物药业有限公司 Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Approval Oncology Genova Biotech Co. Ltd. 杰华生物 Therapeutic Bio 1 Novaferon 重组高效抗肿瘤抗病毒蛋白 NDA submitted Oncology Guangdong Dongyangguang Pharma广东东阳光药业有限公司Chem 1.1 盐酸博昔替尼 IND submitted Oncology Guangdong Dongyangguang Pharma广东东阳光药业有限公司Chem 1.1 盐酸博昔替尼胶囊 IND submitted Oncology Guangdong Dongyangguang Pharma广东东阳光药业有限公司Chem 1.1 宁格替尼 IND Approval Oncology Guangzhou BeBetter Medicine Techn广州必贝特医药技术有限Chem 1.1 双替尼他 IND submitted Oncology Hainan General Sanyang Pharmaceu海南通用三洋药业有限公Chem 1.1 HEMAY020 IND Approval Oncology Hainan Hailing Chemical Pharmaceu 海南海灵化学制药有限公Chem 1.1 Hemay102 Hemay102 IND submitted

65 197 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Oncology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Oncology Hangzhou Huadong Medicine Group 杭州华东医药集团新药研Chem 1.1 迈华替尼 IND Approval Oncology Harbin Gloria Pharmaceuticals Co. Lt哈尔滨誉衡药业股份有限Chem 1.1 美迪替尼 IND Approval Oncology Harbin Pharma Group Bioengineering哈药集团生物工程有限公Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Failed Oncology Hefei Con-source Pharmaceutical Co合肥合源药业有限公司 Chem 1.1 莎巴比星 IND Approval Oncology Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Chem 1.1 Gimatecan 吉马替康 IND Approval Oncology Hualing Pharm-tech (Shanghai) Co. L华领医药技术（上海）有Chem 1.1 HMS5552 IND Approval Oncology Hunan Dinuo Pharmaceutical Co. Ltd湖南迪诺制药有限公司 Chem 1.2 Epothilone B 埃博霉素B IND Approval Oncology Hunan Fangsheng Medical Technolo 湖南方盛制药有限公司 Chem 1.1 迪安替康钠 IND submitted Oncology Hutchison MediPharma Limited. 和记黄埔医药（上海）有Chem 1.1 Volitinib 沃利替尼 IND Approval Oncology Hutchison MediPharma Limited. 和记黄埔医药（上海）有Chem 1.1 席栗替尼 IND Approval Oncology Hutchison MediPharma Limited. 和记黄埔医药（上海）有Chem 1.1 易吡替尼 IND Approval Oncology Hutchison MediPharma Limited. 和记黄埔医药（上海）有Chem 1.1 Fruquintinib 呋喹替尼 IND Approval Oncology Hutchison MediPharma Limited. 和记黄埔医药（上海）有Chem 1.1 Sulfatinib 索凡替尼 IND Approval Oncology Inner Mongolia Qite Biological High-T内蒙古奇特生物高科技术Chem 1.1 安替安吉肽 IND Approval Oncology Innovent Biologics, Inc. 信达生物制药(苏州)有限公Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Oncology Institute of Materia Medica, Shangha 中国科学院上海生命科学Chem 1.1 Delitinib 德立替尼 IND Approval Oncology Institute of Materia Medica, Shangha 中国科学院上海生命科学Chem 1.1 希明替康 IND Approval Oncology Institute of Materia Medica, Shangha 中国科学院上海生命科学Chem 1.1 喜诺替康 IND Approval Oncology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 HS-10182 IND Approval Oncology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 Flumatinib 氟马替尼 IND Approval Oncology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 氟卓替尼 IND Approval Oncology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 卡呋色替 IND Approval Oncology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 西帕替尼 IND Approval Oncology Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Chem 1.1 海那替尼 IND Approval Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 SHR6390 SHR6390 IND submitted Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 环咪德吉 IND Approval Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 SHR3680 IND submitted Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 HAO472 IND Approval Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 乌咪德吉 IND Approval Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 吡咯替尼 IND Approval Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 Apatinib 阿帕替尼 NDA Approval Oncology Jiangsu Pacific Meinuoke Co. Ltd. 江苏太平洋美诺克生物药Therapeutic Bio 1 美妥珠单抗 IND Approval Oncology Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Chem 1.1 Tofacitinib 托法替布 IND Approval

66 198 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Oncology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Oncology Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Chem 1.1 麦他替尼氨丁三醇 IND Approval Oncology Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Chem 1.1 对甲苯磺酸噻尔非尼 IND Approval Oncology Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Chem 1.1 西莫替尼 IND Approval Oncology Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Therapeutic Bio 1 人源化抗VEGF单克隆抗体 IND Approval Oncology Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Therapeutic Bio 1 人源化抗VEGF单克隆抗体 IND Approval Oncology Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Therapeutic Bio 1 Recombinant Human Serum Albumin,Granul重组人血清白蛋白,粒细胞刺激因子IND Approval Oncology Jiannenglong Medical Technology (S健能隆医药技术（上海）Therapeutic Bio 1 Granulocyte Colony-Stimulating Factor 重组人粒细胞集落刺激因子 IND Approval Oncology Jiannenglong Medical Technology (S健能隆医药技术（上海）Therapeutic Bio 1 rhG-CSF-Fc 重组人粒细胞集落刺激因子-Fc融合IND Approval Oncology Lianyugang Runzhong Pharmaceutic连云港润众制药有限公司Chem 1.1 舒布替尼 IND Approval Oncology Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 HS-10182 IND Approval Oncology Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 Flumatinib 氟马替尼 IND Approval Oncology Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 氟卓替尼 IND Approval Oncology Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Chem 1.1 卡呋色替 IND Approval Oncology Liaoning Lantian Pharmaceutical Co.辽宁蓝天制药有限公司 Chem 1.1 Buthionine Sulfoxinine 丁磺氨酸 IND Approval Oncology Nanjing Sanhome Pharmaceutical Co南京圣和药业有限公司 Chem 1.1 C118P IND submitted Oncology National Institutes of Pharmaceutical 中国医药研究开发中心有Chem 1.1 Paclitaxel 紫杉醇 IND submitted Oncology PharmaEngine, Inc. 智擎生技制药股份有限公Chem 1.1 Irinotecan 伊立替康 IND Approval Oncology Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Chem 1.1 赛拉替尼 IND Approval Oncology Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Therapeutic Bio 2 Recombinant Anti-EGFR Human Mouse Chim重组抗EGFR人鼠嵌合单克隆抗体 IND submitted Oncology Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Approval Oncology Qinglong High Tech Co.,Ltd. 青龙高科技股份有限公司Chem 1.1 Sinoporphyrin Sodium 华卟啉钠 IND submitted Oncology Roche Pharmaceuticals 罗氏制药 Therapeutic Bio 1 Bevacizumab 贝伐珠单抗 IND Approval Oncology Sanofi 赛诺菲 Therapeutic Bio 1 Aflibercept 阿柏西普 IND Approval Oncology Shandong New Time Pharmaceutica 山东新时代药业有限公司Therapeutic Bio 2 Rituximab 利妥昔单抗 IND submitted Oncology Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Chem 1.1 Pirotinib 哌罗替尼 IND submitted Oncology Shanghai CP Guojian Pharmaceutica上海中信国健药业股份有Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Approval Oncology Shanghai CP Guojian Pharmaceutica上海中信国健药业股份有Therapeutic Bio 2 Rituximab 利妥昔单抗 NDA submitted Oncology Shanghai CP Guojian Pharmaceutica上海中信国健药业股份有Therapeutic Bio 2 Recombinant CD25 Humanised Monoclonal 重组抗CD25人源化单克隆抗体 NDA Approval Oncology Shanghai Ecust Biomedicine Co. Ltd 上海华理生物医药有限公Chem 1.1 康布斯汀 IND Approval Oncology Shanghai Gebaide Biological Techno上海歌佰德生物技术有限Therapeutic Bio 1 重组人凋亡素2配体 NDA submitted Oncology Shanghai Haikang Pharmaceutical Te上海海抗中医药科技发展Therapeutic Bio 2 碘[131I]爱克妥昔单抗 IND Approval Oncology Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Oncology Shanghai Yasheng Pharmaceutical T上海亚盛医药科技有限公Chem 1.1 AT-406 IND Approval

67 199 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Oncology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Oncology Shanghai Yasheng Pharmaceutical T上海亚盛医药科技有限公Chem 1.1 AT-406 IND Approval Oncology Shanxi Zhendong Pharmaceutical Co山西振东制药股份有限公Chem 1.1 拉洛他赛 IND submitted Oncology Shenyang Pharmaceutical University 沈阳药科大学 Chem 1.1 Mitoxantrone 米托蒽醌 IND submitted Oncology Shenzhen Chipscreen Biosciences C深圳微芯生物科技有限责Chem 1.1 西奥罗尼 IND Approval Oncology Shenzhen Chipscreen Biosciences C深圳微芯生物科技有限责Chem 1.1 Chidamide 西达本胺 NDA Approval Oncology Shenzhen Main Luck Pharmaceutica 深圳万乐药业有限公司 Chem 1.1 多拉达唑 IND Approval Oncology Shenzhen Xinpeng Biotechnology Co深圳新鹏生物工程有限公Therapeutic Bio 1 Tumor Necrosis Factor 重组人肿瘤坏死因子 IND Approval Oncology Shijiazhuang Pharma Group Zhongq 石药集团中奇制药技术（Chem 1.1 SKLB1028 IND submitted Oncology Sinoasis Pharmaceuticals, Inc 百奥泰生物科技（广州）Therapeutic Bio 2 人源化抗VEGF单克隆抗体 IND submitted Oncology Sinocelltech Ltd. 神州细胞工程有限公司 Therapeutic Bio 1 Epidermal Growth Factor Receptor Monoclon抗人表皮生长因子受体单克隆抗体IND Approval Oncology Sinocelltech Ltd. 神州细胞工程有限公司 Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Oncology SinoMab Bioscience (Shenzhen) Lim深圳赛乐敏生物科技有限Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Oncology Suzhou Kintor Pharmaceutical Inc. 苏州开拓药业有限公司 Chem 1.1 普克鲁胺 IND submitted Oncology Suzhou Stainwei Biotech Inc. 苏州思坦维生物技术有限Therapeutic Bio 1 人源化抗VEGF单克隆抗体 IND submitted Oncology Suzhou Zejing Biological Pharmaceu苏州泽璟生物制药有限公Chem 1.1 多纳非尼 IND Approval Oncology Tianjin Jiankai Technology Co. Ltd. 天津键凯科技有限公司 Chem 1.1 Irinotecan 伊立替康 IND submitted Oncology Tianjin SinoBiotech Ltd. 天津溥瀛生物技术有限公Therapeutic Bio 1 Recombinant Human Serum Albumin,Granul重组人血清白蛋白,粒细胞刺激因子IND Approval Oncology Tianjin Tasly Group Co. Ltd. 天津天士力集团有限公司Chem 1.1 Temozolomide 替莫唑胺 IND Approval Oncology Virological Institute, Chinese Center F中国疾病预防控制中心病Therapeutic Bio 1 重组腺病毒5型EB病毒潜伏膜抗原2IND Approval Oncology Xiajiang Hemei Pharmaceutical Co. L峡江和美药业有限公司 Chem 1.1 Hemay022 Hemay022 IND Approval Oncology Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Therapeutic Bio 1 Pegylated Recombinant Huamn Granulocyte PEG化重组人粒细胞刺激因子 IND Approval Oncology Xi'an Xintong Pharmaceutical Co. Ltd西安新通药物研究有限公Chem 1.1 MB07133 IND Approval ONcology Yantai Rongchang Bioengineering Co烟台荣昌生物工程有限公Therapeutic Bio 1 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Oncology Zhejiang Betta Pharmaceutical Co. L 浙江贝达药业有限公司 Chem 1.1 BPI-9016M IND submitted Oncology Zhejiang Betta Pharmaceutical Co. L 浙江贝达药业有限公司 Chem 1.1 Icotinib 埃克替尼 NDA Approval Oncology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Chem 1.1 海博非明 IND Approval Oncology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Chem 1.1 PEG-SN38 IND submitted Oncology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Therapeutic Bio 1 Tumor Necrosis Factor 重组人肿瘤坏死因子 IND Approval Oncology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Oncology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Chem 1.2 Epothilone B 埃博霉素B IND Approval Oncology Zhejiang Xianju Pharmaceutical Co. L浙江仙琚制药股份有限公Chem 1.1 奥美克松钠 IND submitted Oncology 上海再新医药科技有限公司上海再新医药科技有限公Chem 1.1 CM118片 IND submitted Oncology 上海再新医药科技有限公司上海再新医药科技有限公Chem 1.1 CM118 IND submitted Oncology 杭州爱德程医药科技有限公司杭州爱德程医药科技有限Chem 1.1 AL8326 AL8326 IND submitted

68 200 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Oncology Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Oncology AMPO Biotechnology Co., Ltd 佛山安普泽生物医药有限Therapeutic Bio 2 Cetuximab 西妥昔单抗 IND submitted Oncology Beijing Cotimes Biotech Co. Ltd. 北京同为时代生物技术有Therapeutic Bio 1 Recombinant Anti Human DR5 Monnoclonal 重组抗人DR5单克隆抗体 IND submitted Oncology Beijing Mabworks Biotech Co. Ltd. 北京天广实生物技术有限Therapeutic Bio 2 人源化抗VEGF单克隆抗体 IND submitted Oncology Dongyao Pharmaceutical Co. Ltd. 东曜药业有限公司 Therapeutic Bio 2 TAD011单抗 IND submitted Oncology Dongyao Pharmaceutical Co. Ltd. 东曜药业有限公司 Therapeutic Bio 2 TAB008 mab TAB008单抗 IND submitted Oncology Hangzhou Minsheng Pharmaceutical 杭州民生药业集团有限公Chem 1.2 Furanodiene 呋喃二烯 IND Approval Oncology Hualan Genetic Engineering Co. Ltd. 华兰基因工程有限公司 Therapeutic Bio 2 Bevacizumab 贝伐珠单抗 IND submitted Oncology Hualan Genetic Engineering Co. Ltd. 华兰基因工程有限公司 Therapeutic Bio 2 Trastuzumab 曲妥珠单抗 IND submitted Oncology Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Therapeutic Bio 2 SHR-A1201 IND submitted Oncology Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Therapeutic Bio 2 Epidermal Growth Factor Receptor Monoclon抗人表皮生长因子受体单克隆抗体IND submitted Oncology Shanghai Hengrui Pharmaceuticals C上海恒瑞医药有限公司 Therapeutic Bio 2 Bevacizumab 贝伐珠单抗 IND submitted Oncology Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Oncology Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Therapeutic Bio 2 人源化抗VEGF单克隆抗体 IND submitted Oncology Shenzhen Main Luck Pharmaceutica 深圳万乐药业有限公司 Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Oncology Sun Yat-Sen University 中山大学 Chem 1.2 Naringin 柚皮苷 IND Approval Oncology Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted

69 201 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Respiratory system and antiallergic Indication group Developer (English) Devel oper (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Respiratory system and antiallergic Beijing Yingu Shiji Pharmaceutical C o北京银谷世纪药业有限公Chem 1.1 苯环喹溴铵 IND Approval Respiratory system and antiallergic Dongguan Kaifa Biomedicine, Inc. 东莞市凯法生物医药有限Chem 1.3 Bambuterol 班布特罗 IND Approval Respiratory system and antiallergic Guan Shiqiao Pharmaceutical Co. Ltd固安世桥制药有限公司 Chem 1.1 苯环喹溴铵 NDA submitted Respiratory system and antiallergic Shanghai Genomics, Inc. 上海睿星基因技术有限公Chem 1.1 Pirfenidone 吡非尼酮 NDA Approval Respiratory system and antiallergic Tianjin Xinchen Taifeier Pharmaceut i 天津昕晨泰飞尔医药科技Chem 1.1 布洛胺 IND submitted Respiratory system and antiallergic Virological Institute, Chinese Center F中国疾病预防控制中心病Therapeutic Bio 1 重组腺病毒艾滋病gag疫苗(Ad5-HIV IND Approval Respiratory system and antiallergic Yingu Pharmaceutical Co. Ltd. 银谷制药有限责任公司 Chem 1.1 苯环喹溴铵 NDA submitted

70 202 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Therapeutic Class-Surgery and others Indication group Developer (English) Developer (Chinese) Category Class Candidate name (English) Candidate name (Chinese) Status Surgery and others Chinese people's Liberation Army Mi 中国人民解放军军事医学Chem 1.3 Penehyclidine 戊乙奎醚 IND Approval Surgery and others Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Chem 1.1 甲苯磺酸瑞马唑仑 IND Approval Surgery and others Yichang Humanwell Pharmaceutical 宜昌人福药业有限责任公Chem 1.1 苯磺酸瑞马唑仑 IND submitted Surgery and others Yichang Humanwell Pharmaceutical 宜昌人福药业有限责任公Chem 1.1 注射用苯磺酸瑞马唑仑 IND submitted

71 203 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Section – New Drug Database Sorted by Company Name

72 204 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - A to C Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status 3SBio 三生制药 Antirheumatic and Antiinflammatory Therapeutic Bio 1 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND Approval 3SBio 三生制药 Oncology Therapeutic Bio 1 重组假丝酵母尿酸氧化酶 IND submitted ACEA Biosciences Inc. 美国ACEA生物科学公司 Oncology Chem 1.1 艾维替尼 IND Approval Allist Pharmaceuticals, Inc. 上海艾力斯医药科技有限Circulatory system Chem 1.1 Allisartan 艾力沙坦 NDA Approval Allist Pharmaceuticals, Inc. 上海艾力斯医药科技有限Oncology Chem 1.1 甲苯磺酸艾力替尼 IND Approval AMPO Biotechnology Co., Ltd 佛山安普泽生物医药有限Oncology Therapeutic Bio 2 Cetuximab 西妥昔单抗 IND submitted Anhui Anke Biotechnology (Group) C安徽安科生物工程(集团)股Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Anhui Huanqiu Pharmaceutical Co. L安徽环球药业股份有限公Infectious Disease Chem 1.1 Antofloxacin 安妥沙星 IND Approval Ascentagepharma Group Corp Limite江苏亚盛医药开发有限公Genital system Chem 1.1 Compound Gosspol Acetate 复方醋酸棉酚 IND Approval Ascentagepharma Group Corp Limite江苏亚盛医药开发有限公Oncology Chem 1.1 APG-1387 IND Approval BeiGene (Beijing) Co. Ltd. 百济神州（北京）生物科Oncology Chem 1.1 BGB-283 BGB-283 IND submitted Beijing Brins-Livepro Biotechnology C北京百林康源生物技术有Oncology Therapeutic Bio 1 错位双链聚核苷酸 IND Failed Beijing Cotimes Biotech Co. Ltd. 北京同为时代生物技术有Oncology Therapeutic Bio 1 Recombinant Anti Human DR5 Monnoclonal 重组抗人DR5单克隆抗体 IND submitted Beijing Dongfang Baitai Biotechnolog北京东方百泰生物科技有Endocrinology Therapeutic Bio 1 rExendin-4 重组促胰岛素分泌素 IND submitted Beijing Fabojin Pharmaceutical Tech 北京珐博进医药技术开发Oncology Chem 1.1 可博美 IND submitted Beijing Hua Er Dun Biotechnology Co北京华尔盾生物技术有限Infectious Disease Therapeutic Bio 1 Hepatitis B Vaccine 乙型肝炎疫苗 IND submitted Beijing Mabworks Biotech Co. Ltd. 北京天广实生物技术有限Oncology Therapeutic Bio 2 人源化抗VEGF单克隆抗体 IND submitted Beijing Mabworks Biotech Co. Ltd. 北京天广实生物技术有限Oncology Therapeutic Bio 2 Epidermal Growth Factor Receptor Monoclon抗人表皮生长因子受体单克隆抗体IND submitted Beijing Meifuyuan Bio-Pharmaceutica北京美福源生物医药科技Genital system Therapeutic Bio 1 Interferon α2b,Human Albumin 干扰素α2b,人白蛋白 IND submitted Beijing Molike Sci-Tech Co. Ltd. 北京摩力克科技有限公司Gastroenterology Chem 1.1 艾索那班 IND submitted Beijing Northland Biotech Co., Ltd. 北京诺思兰德生物技术股Blood system drugs Therapeutic Bio 1 Recombinant Human Thymosin β4 重组人胸腺素β4 IND submitted Beijing Purunao Biotechnology Co. L 北京浦润奥生物科技有限Oncology Chem 1.1 伯瑞替尼 IND submitted Beijing Sihuan Pharmaceutical Co. Lt北京四环制药有限公司 Nervous system Chem 1.3 Phencynonate 苯环壬酯 IND Approval Beijing Tide Pharmaceutical Co. Ltd. 北京泰德制药有限公司 Antirheumatic and Antiinflammatory Therapeutic Bio 1 磷脂化重组人铜锌超氧化物歧化酶IND submitted Beijing Tri-Prime Genetic Engineering北京三元基因工程有限公Infectious Disease Therapeutic Bio 1 聚乙二醇新型集成干扰素突变体 IND Approval Beijing Tumor Hospital, Clinical Tumo北京肿瘤医院 Oncology Chem 1.1 血管生成抑肽 IND submitted Beijing Xingda Science System Co Lt北京市兴大科学系统公司Oncology Chem 1.1 Dicycloplatin 双环铂 NDA Approval Beijing Yingu Shiji Pharmaceutical Co北京银谷世纪药业有限公Respiratory system and antiallergic Chem 1.1 苯环喹溴铵 IND Approval Biomedical Engineering Center of He河北医科大学生物医学工Genital system Chem 1.1 Nutrition-Other Carbohydrate 营养类-其他糖类 NDA Approval Biotech Pharmaceuticals Co. Ltd. 百泰生物药业有限公司 Antirheumatic and Antiinflammatory Therapeutic Bio 2 人源化抗CD6单抗 IND Approval Biotech Pharmaceuticals Co. Ltd. 百泰生物药业有限公司 Oncology Therapeutic Bio 1 Nimotuzumab 尼妥珠单抗 IND Approval Centaurus Biopharma 北京赛林泰医药技术有限Oncology Chem 1.1 CT-707 IND submitted Challenge-Med Technology (Shangh 卡南吉医药科技（上海）Oncology Chem 1.1 CM082 IND Approval Changchun Protelight Pharmaceutica长春普莱医药生物技术有Infectious Disease Chem 1.1 抗菌肽PL-5 IND submitted

73 205 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - C to D Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Changzhou Qianhong Bio-pharma Co常州千红生化制药有限公Blood system drugs Therapeutic Bio 1 重组人抗血栓蛋白 IND Approval Changzhou Yabang Pharmaceutical 常州亚邦制药有限公司 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA submitted Chengdu DIAO Jiuhong Pharmaceut 成都地奥九泓制药厂 Oncology Therapeutic Bio 1 多功能凋亡受体激动剂 IND Approval Chengdu Hengji Medical Technology 成都恒基医药科技有限公Oncology Chem 1.1 康普瑞丁磷酸二钠 IND Approval Chengdu Jinkai Biotechnology Co. Lt成都金凯生物技术有限公Antirheumatic and Antiinflammatory Therapeutic Bio 2 Recombinant Anti-CD20 Monoclonal Antibod重组抗CD20单克隆抗体 IND submitted Chengdu Kanghong Biotechnology C成都康弘生物科技有限公Dermatology and ENT/Optholamology Therapeutic Bio 1 Conbercept 康柏西普 NDA Approval Chengdu Yuandong Pharmaceutical 成都苑东药业有限公司 Endocrinology Chem 1.1 Ulogliptin 优格列汀 IND submitted Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Infectious Disease Chem 1.1 Tenofovir Dipivoxil 替诺福韦双特戊酯 IND Approval Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Oncology Chem 1.1 舒布替尼 IND Approval Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Oncology Chem 1.1 安罗替尼 IND Approval Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Oncology Chem 1.1 喜诺替康 IND Approval Chia Tai Tianqing Pharmaceutical Gr正大天晴药业集团股份有Oncology Therapeutic Bio 2 Trastuzumab 曲妥珠单抗 IND submitted China Pharmaceutical University 中国药科大学 Oncology Chem 1.1 Wogonin 汉黄芩素 IND Approval Chinese people's Liberation Army Ba中国人民解放军军事医学Blood system drugs Therapeutic Bio 1 Recombinant Staphylokinase 重组葡激酶 NDA Approval Chinese people's Liberation Army Mi 中国人民解放军军事医学Surgery and others Chem 1.3 Penehyclidine 戊乙奎醚 IND Approval Chinese people's Liberation Army Mi 中国人民解放军军事医学Blood system drugs Therapeutic Bio 1 Recombinant-RGD-Hirudin 重组双功能水蛭素 IND submitted Chinese people's Liberation Army Mi 中国人民解放军军事医学Blood system drugs Therapeutic Bio 1 Recombinant Staphylokinase Hirudin Fusion 重组葡激酶水蛭素融合蛋白 IND submitted Chinese people's Liberation Army Mi 中国人民解放军军事医学Infectious Disease Chem 1.1 美索舒利 IND Approval Chongqing Dongze Pharmaceutical T重庆东泽医药科技发展有Nervous system Chem 1.3 Oxiracetam 奥拉西坦 IND submitted Chongqing Fuchuang Pharmaceutica重庆复创医药研究有限公Endocrinology Chem 1.1 复格列汀 IND Approval Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Blood system drugs Therapeutic Bio 1 Pegloticase 聚乙二醇重组尿酸酶 IND Approval Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Blood system drugs Therapeutic Bio 1 Recombinant neutrphil inhibitory factor and h重组白细胞抑制因子和水蛭肽嵌合IND Approval Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Endocrinology Chem 1.1 Pegylated Insulin Secretion Peptide Analogu 聚乙二醇化促胰岛素分泌肽类似物IND submitted Chongqing Fujin Pharmaceutical Co. 重庆富进生物医药有限公Endocrinology Therapeutic Bio 1 Human Insulin-Shortacting, Regular, Recomb人胰岛素-短效, 常规, 重组, 生物合成IND submitted Chongqing Shenghuaxi Pharmaceuti 重庆圣华曦药业股份有限Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval CSPC Pharmaceutical Group Genele石药集团百克(济南)生物制Oncology Therapeutic Bio 1 Pegylated Recombinant Huamn Granulocyte PEG化重组人粒细胞刺激因子 NDA Approval Daiichi Sankyo 第一三共制药 Genital system Chem 1.1 Silodosin 赛洛多辛 NDA Approval Dalian Tianyu Pharmaceutical Co. Ltd大连天宇制药有限公司 Analgesics and anesthetics Chem 1.1 苯胺洛芬 IND Approval Dermatology Hospital in Shandong P山东省皮肤病医院 Dermatology and ENT/Optholamology Chem 1.1 Dithranol 地蒽酚 IND Approval Dongguan Baolijian Bioengineering R东莞宝丽健生物工程研究Blood system drugs Therapeutic Bio 1 人促红细胞生成素-Fc融合蛋白 IND Approval Dongguan Chang'an Dongyangguang东莞市长安东阳光新药研Gastroenterology Chem 1.1 莫非赛定 IND Approval Dongguan Kaifa Biomedicine, Inc. 东莞市凯法生物医药有限Respiratory system and antiallergic Chem 1.3 Bambuterol 班布特罗 IND Approval

74 206 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - D to H Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Dongyao Pharmaceutical Co. Ltd. 东曜药业有限公司 Oncology Therapeutic Bio 2 TAD011单抗 IND submitted Dongyao Pharmaceutical Co. Ltd. 东曜药业有限公司 Oncology Therapeutic Bio 2 TAB008 mab TAB008单抗 IND submitted Gansu Cheezheng Industrial Group C甘肃奇正藏药有限公司 Oncology Chem 1.1 Ethaselen 乙烷硒啉 IND submitted Gansu Yupu Institute Of Cancer and 甘肃玉璞肿瘤心血管病研Oncology Chem 1.1 Ammonium Nitrate 硝酸铵 IND Approval Geli Biotechnology (Hangzhou) Co. L歌礼生物科技（杭州）有Gastroenterology Chem 1.1 Danoprevir IND submitted Genor Biopharma Co. Ltd. 嘉和生物药业有限公司 Antirheumatic and Antiinflammatory Therapeutic Bio 2 Recombinant Anti-TNF-alpha Human Mouse 重组抗TNF-alpha人鼠嵌合单克隆抗IND Approval Genor Biopharma Co. Ltd. 嘉和生物药业有限公司 Endocrinology Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Genor Biopharma Co. Ltd. 嘉和生物药业有限公司 Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Approval Genova Biotech Co. Ltd. 杰华生物 Oncology Therapeutic Bio 1 Novaferon 重组高效抗肿瘤抗病毒蛋白 NDA submitted Guan Shiqiao Pharmaceutical Co. Ltd固安世桥制药有限公司 Respiratory system and antiallergic Chem 1.1 苯环喹溴铵 NDA submitted Guangdong Aixida Pharmaceutical C广东艾希德药业有限公司Nervous system Chem 1.2 Ginkgolide 银杏内酯 IND submitted Guangdong Dongyangguang Pharma广东东阳光药业有限公司Endocrinology Chem 1.1 莱洛替尼 IND submitted Guangdong Dongyangguang Pharma广东东阳光药业有限公司Infectious Disease Chem 1.1 依米他韦 IND Approval Guangdong Dongyangguang Pharma广东东阳光药业有限公司Oncology Chem 1.1 盐酸博昔替尼 IND submitted Guangdong Dongyangguang Pharma广东东阳光药业有限公司Oncology Chem 1.1 盐酸博昔替尼胶囊 IND submitted Guangdong Dongyangguang Pharma广东东阳光药业有限公司Oncology Chem 1.1 宁格替尼 IND Approval Guangzhou BeBetter Medicine Techn广州必贝特医药技术有限Oncology Chem 1.1 双替尼他 IND submitted Guangzhou Kaitai Biotechnology Co. 广州市恺泰生物科技有限Blood system drugs Therapeutic Bio 1 Recombinant Human Interleukin-12 重组人白细胞介素-12 IND Approval Guangzhou Kangqiao Hanpu Pharma广州康乔汉普药业有限公Nervous system Chem 1.2 Ginkgolide 银杏内酯 IND submitted Guangzhou Nanxin Pharmaceutical C广州南新制药有限公司 Infectious Disease Chem 1.1 Peramivir 帕拉米韦 NDA Approval Guangzhou Saipute Pharmaceutical 广州市赛普特医药科技有Nervous system Chem 1.1 安脑三醇 IND submitted Guangzhou Zesheng Pharmaceutica 广州市泽盛药业科技有限Nervous system Chem 1.2 Ginkgolide 银杏内酯 IND submitted Guizhou Bailing Group Pharmaceutic贵州百灵企业集团制药股Infectious Disease Chem 1.1 替芬泰 IND Approval Haikou Pharmaceutical Factory Co. L海口市制药厂有限公司 Gastroenterology Chem 1.1 AKF-PD 氟非尼酮 IND submitted Haikou VTI Biological Institute 海口维瑅瑷生物研究院 Infectious Disease Therapeutic Bio 1 AIDS Vaccine 艾滋病疫苗 IND Approval Hainan General Sanyang Pharmaceu海南通用三洋药业有限公Oncology Chem 1.1 HEMAY020 IND Approval Hainan Hailing Chemical Pharmaceu 海南海灵化学制药有限公Dermatology and ENT/Optholamology Chem 1.1 Hemay005 IND submitted Hainan Hailing Chemical Pharmaceu 海南海灵化学制药有限公Oncology Chem 1.1 Hemay102 Hemay102 IND submitted Hainan Haochuang Pharmaceutical C海南豪创药业有限公司 Infectious Disease Chem 1.1 Cefetamet 头孢他美 IND Approval Hangzhou Huadong Medicine Group 杭州华东医药集团新药研Oncology Chem 1.1 迈华替尼 IND Approval Hangzhou Minsheng Pharmaceutical 杭州民生药业集团有限公Oncology Chem 1.2 Furanodiene 呋喃二烯 IND Approval Hangzhou Zhongmei Huadong Pharm杭州中美华东制药有限公Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval

75 207 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - H Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Hanmi Pharmaceutical 韩美药品 Gastroenterology Therapeutic Bio 1 Live Combined B. Subtilis and E. Faecium 枯草杆菌、肠球菌 IND Approval Harbin Gloria Pharmaceuticals Co. Lt哈尔滨誉衡药业股份有限Oncology Chem 1.1 美迪替尼 IND Approval Harbin Pharma Group Bioengineering哈药集团生物工程有限公Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Failed Harbin Pharma Group General Pharm哈药集团制药总厂 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Hebei Changshan Biochemical Pharm河北常山生化药业有限公Endocrinology Chem 1.1 艾本那肽 IND submitted Hebei Medical University Pharmaceu河北医科大学制药厂 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Hefei Con-source Pharmaceutical Co合肥合源药业有限公司 Blood system drugs Chem 1.1 HYC11395 HYC11395 IND submitted Hefei Con-source Pharmaceutical Co合肥合源药业有限公司 Oncology Chem 1.1 莎巴比星 IND Approval Hefei Medical Engineering & Medicin 合肥医工医药有限公司 Blood system drugs Chem 1.1 吡拉格雷 IND Approval Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Antirheumatic and Antiinflammatory Chem 1.1 Thymopolypeptides 胸腺肽 IND submitted Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Endocrinology Chem 1.1 Germinal Peptide 生发肽 IND submitted Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Infectious Disease Chem 1.1 司来普伐肽 IND submitted Hefei Siu-Fung USTC Pharmaceutica兆科药业(合肥)有限公司 Oncology Chem 1.1 Gimatecan 吉马替康 IND Approval Heilongjiang Timehome Pharmaceuti黑龙江天宏药业有限公司Nervous system Chem 1.2 Ginkgolide 银杏内酯 IND submitted Henan Haohai Medical Co. Ltd. 河南昊海药业有限公司 Gastroenterology Chem 1.1 赛拉瑞韦钾 IND submitted Henan Shuzhong Pharmaceutical Co河南蜀中制药有限公司 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Henan Topfond Pharmaceutical Co. L河南天方药业股份有限公Genital system Chem 1.1 TPN729MA IND Approval HNG Chembio Pharmacy Co. Ltd. 湖南有色凯铂生物药业有Infectious Disease Chem 1.1 Peramivir 帕拉米韦 NDA Approval Hualan Genetic Engineering Co. Ltd. 华兰基因工程有限公司 Antirheumatic and Antiinflammatory Therapeutic Bio 2 Rituximab 利妥昔单抗 IND submitted Hualan Genetic Engineering Co. Ltd. 华兰基因工程有限公司 Oncology Therapeutic Bio 2 Bevacizumab 贝伐珠单抗 IND submitted Hualan Genetic Engineering Co. Ltd. 华兰基因工程有限公司 Oncology Therapeutic Bio 2 Trastuzumab 曲妥珠单抗 IND submitted Hualing Pharm-tech (Shanghai) Co. L华领医药技术（上海）有Oncology Chem 1.1 HMS5552 IND Approval Hunan Dinuo Pharmaceutical Co. Ltd湖南迪诺制药有限公司 Oncology Chem 1.2 Epothilone B 埃博霉素B IND Approval Hunan Fangsheng Medical Technolo 湖南方盛制药有限公司 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Hunan Fangsheng Medical Technolo 湖南方盛制药有限公司 Oncology Chem 1.1 迪安替康钠 IND submitted Hunan Warrant Pharmaceutical Co. L湖南华纳大药厂有限公司Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Hunan Warrant Pharmaceutical Co. L湖南华纳大药厂有限公司Infectious Disease Chem 1.3 Levornidazole 左奥硝唑 NDA submitted Hutchison MediPharma Limited. 和记黄埔医药（上海）有Oncology Chem 1.1 Volitinib 沃利替尼 IND Approval Hutchison MediPharma Limited. 和记黄埔医药（上海）有Oncology Chem 1.1 席栗替尼 IND Approval Hutchison MediPharma Limited. 和记黄埔医药（上海）有Oncology Chem 1.1 易吡替尼 IND Approval Hutchison MediPharma Limited. 和记黄埔医药（上海）有Oncology Chem 1.1 Fruquintinib 呋喹替尼 IND Approval Hutchison MediPharma Limited. 和记黄埔医药（上海）有Oncology Chem 1.1 Sulfatinib 索凡替尼 IND Approval

76 208 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - I to J Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Inner Mongolia Qite Biological High-T内蒙古奇特生物高科技术Oncology Chem 1.1 安替安吉肽 IND Approval Innovent Biologics, Inc. 信达生物制药(苏州)有限公Endocrinology Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Innovent Biologics, Inc. 信达生物制药(苏州)有限公Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Institute of Materia Medica, Chinese A中国医学科学院药物研究Nervous system Chem 1.1 芬乐胺 IND Approval Institute of Materia Medica, Chinese A中国医学科学院药物研究Infectious Disease Chem 1.1 百可利 IND Approval Institute of Materia Medica, Shangha 中国科学院上海生命科学Antirheumatic and Antiinflammatory Chem 1.1 Arteether Amine Maleate 马来酸蒿乙醚胺 IND submitted Institute of Materia Medica, Shangha 中国科学院上海生命科学Gastroenterology Chem 1.1 异噻氟定 IND submitted Institute of Materia Medica, Shangha 中国科学院上海生命科学Genital system Chem 1.1 TPN171H TPN171H IND submitted Institute of Materia Medica, Shangha 中国科学院上海生命科学Oncology Chem 1.1 Delitinib 德立替尼 IND Approval Institute of Materia Medica, Shangha 中国科学院上海生命科学Oncology Chem 1.1 希明替康 IND Approval Institute of Materia Medica, Shangha 中国科学院上海生命科学Oncology Chem 1.1 喜诺替康 IND Approval Institute of Microbiology and epidemi 中国人民解放军军事医学Nervous system Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 NDA submitted Jiangsu Carefree Medical Co. Ltd. 江苏柯菲平医药有限公司Nervous system Chem 1.1 Ginkgolide 银杏内酯 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Circulatory system Chem 1.1 培化西海马肽 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Endocrinology Chem 1.1 诺利糖肽 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Endocrinology Chem 1.1 贝格列汀 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Infectious Disease Chem 1.1 HS-10220 HS-10220 IND submitted Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Infectious Disease Chem 1.1 吗啉硝唑 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Oncology Chem 1.1 HS-10182 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Oncology Chem 1.1 Flumatinib 氟马替尼 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Oncology Chem 1.1 氟卓替尼 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Oncology Chem 1.1 卡呋色替 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Oncology Chem 1.1 西帕替尼 IND Approval Jiangsu Hansoh Pharmaceutical Co. 江苏豪森药业股份有限公Oncology Chem 1.1 海那替尼 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Antirheumatic and Antiinflammatory Chem 1.1 SHR-0302 IND submitted Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Antirheumatic and Antiinflammatory Chem 1.1 Imrecoxib 艾瑞昔布 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Blood system drugs Chem 1.1 海曲泊帕乙醇胺 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Endocrinology Chem 1.1 Fasiglifam 呋格列泛 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Endocrinology Chem 1.1 脯氨酸恒格列净 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Nervous system Chem 1.1 SHR7390 IND submitted Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Therapeutic Bio 2 SHR-A1201 IND submitted Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Surgery and others Chem 1.1 甲苯磺酸瑞马唑仑 IND Approval

77 209 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - J to K Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 SHR6390 SHR6390 IND submitted Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 环咪德吉 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 SHR3680 IND submitted Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 HAO472 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 乌咪德吉 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 吡咯替尼 IND Approval Jiangsu Hengrui Medicine Co. Ltd. 江苏恒瑞医药股份有限公Oncology Chem 1.1 Apatinib 阿帕替尼 NDA Approval Jiangsu Nhwa Pharmaceutical Co. Lt江苏恩华药业股份有限公Endocrinology Chem 1.1 DP-VPA DP-VPA IND submitted Jiangsu Nhwa Saide Pharmaceutical 江苏恩华赛德药业有限责Nervous system Chem 1.1 Iptakalim 埃他卡林 IND Approval Jiangsu Pacific Meinuoke Co. Ltd. 江苏太平洋美诺克生物药Oncology Therapeutic Bio 1 美妥珠单抗 IND Approval Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Nervous system Chem 1.2 2-莰醇 IND Approval Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Oncology Chem 1.1 Tofacitinib 托法替布 IND Approval Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Oncology Chem 1.1 麦他替尼氨丁三醇 IND Approval Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Oncology Chem 1.1 对甲苯磺酸噻尔非尼 IND Approval Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Oncology Chem 1.1 西莫替尼 IND Approval Jiangsu Simcere Pharmaceutical R& 江苏先声药物研究有限公Oncology Therapeutic Bio 1 人源化抗VEGF单克隆抗体 IND Approval Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Bone disease Therapeutic Bio 2 RANKL Antibody 抗RANKL单克隆抗体 IND submitted Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Gastroenterology Therapeutic Bio 1 Human Recombinant Glucagon Like Peptide 重组人胰高血糖素样肽-1类似物融 IND submitted Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Oncology Therapeutic Bio 1 人源化抗VEGF单克隆抗体 IND Approval Jiangsu T-mab Biopharma Co. Ltd. 江苏泰康生物医药有限公Oncology Therapeutic Bio 1 Recombinant Human Serum Albumin,Granul 重组人血清白蛋白,粒细胞刺激因子IND Approval Jiangsu Vcare Pharmatech Co.,Ltd. 江苏威凯尔医药科技有限Blood system drugs Chem 1.1 Vicagrel 维卡格雷 IND submitted Jiangsu Zhonghe Pharmaceutical Te 江苏众合医药科技有限公Antirheumatic and Antiinflammatory Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Jiangxi Boya Biological Pharmacy Co江西博雅生物制药股份有Antirheumatic and Antiinflammatory Therapeutic Bio 1 Human Immunoglobulin 人免疫球蛋白 IND submitted Jiannenglong Medical Technology (S健能隆医药技术（上海）Antirheumatic and Antiinflammatory Therapeutic Bio 1 Recombinant Human Interleukin 22-Fc Fusio重组人白介素22-Fc融合蛋白 IND submitted Jiannenglong Medical Technology (S健能隆医药技术（上海）Oncology Therapeutic Bio 1 Granulocyte Colony-Stimulating Factor 重组人粒细胞集落刺激因子 IND Approval Jiannenglong Medical Technology (S健能隆医药技术（上海）Oncology Therapeutic Bio 1 rhG-CSF-Fc 重组人粒细胞集落刺激因子-Fc融合IND Approval Jiaochen Biopharmaceutical Technol 交晨生物医药技术（上海Antirheumatic and Antiinflammatory Therapeutic Bio 1 Recombinant Human Interleukin-1 Receptor 重组人白细胞介素-1受体拮抗剂 IND submitted Jilin Kanghui Biotechnology Co. Ltd. 吉林康慧生物科技有限公Endocrinology Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Jinlin Huakang Pharmaceutical Co. L吉林华康药业股份有限公Circulatory system Chem 1.1 Pseudo Ginsenoside GQ 伪人参皂苷GQ IND Approval Jiuzhang Biochemical Engineering Sc四川九章生物化工科技发Infectious Disease Chem 1.2 Chlorogenic Acid 绿原酸 IND Approval Kangning Jierui (Jilin) Biotechnology 康宁杰瑞（吉林）生物科Genital system Therapeutic Bio 1 Follitropin α 重组人促卵泡激素 IND submitted Kerun Biopharmaceutical R&D Co. Lt重庆科润生物医药研发有Endocrinology Therapeutic Bio 1 Carboxypeptidase G2 重组羧肽酶G2 IND submitted

78 210 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - L to R Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Lanzhou Institute of Biological Produc兰州生物制品研究所 Endocrinology Therapeutic Bio 1 重组人睫状神经营养因子 IND Approval Lianyugang Runzhong Pharmaceutic连云港润众制药有限公司Oncology Chem 1.1 舒布替尼 IND Approval Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Endocrinology Chem 1.1 诺利糖肽 IND Approval Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Infectious Disease Chem 1.1 HS-10220 HS-10220 IND submitted Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Infectious Disease Chem 1.1 吗啉硝唑 NDA Approval Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Oncology Chem 1.1 HS-10182 IND Approval Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Oncology Chem 1.1 Flumatinib 氟马替尼 IND Approval Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Oncology Chem 1.1 氟卓替尼 IND Approval Lianyungang Hongchuang Pharmace连云港宏创医药有限公司Oncology Chem 1.1 卡呋色替 IND Approval Liaoning Lantian Pharmaceutical Co. 辽宁蓝天制药有限公司 Oncology Chem 1.1 Buthionine Sulfoxinine 丁磺氨酸 IND Approval Liaoning Yisheng Bio-pharmaceutica 辽宁依生生物制药有限公Infectious Disease Therapeutic Bio 1 Rabies Vaccine 人用狂犬病疫苗 IND submitted Livzon Group Livzon Pharmaceutical 丽珠集团丽珠制药厂 Nervous system Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 NDA Approval MicuRx (Shanghai) Pharmaceuticals 盟科医药技术（上海）有Infectious Disease Chem 1.1 MRX-I IND Approval Nanjing Changao Pharmaceutical Sc 南京长澳医药科技有限公Endocrinology Chem 1.1 澳格列汀 IND submitted Nanjing Hailing TCM Manufacturing P南京海陵中药制药工艺技Infectious Disease Chem 1.1 Levornidazole 左奥硝唑 IND Approval Nanjing Sanhome Pharmaceutical Co南京圣和药业有限公司 Infectious Disease Chem 1.3 Levornidazole 左奥硝唑 NDA submitted Nanjing Sanhome Pharmaceutical Co南京圣和药业有限公司 Oncology Chem 1.1 C118P IND submitted Nanjing Youke Pharmaceutical Co. L 南京优科制药有限公司 Nervous system Chem 1.3 Oxiracetam 奥拉西坦 IND Approval National Institutes of Pharmaceutical 中国医药研究开发中心有Oncology Chem 1.1 Paclitaxel 紫杉醇 IND submitted NCPC New Drug R&D Co. Ltd. 华北制药集团新药研究开Circulatory system Chem 1.3 Doxazosin 多沙唑嗪 IND Approval Otsuka Pharmaceutical 大冢制药株式会社 Circulatory system Chem 1.1 Tolvaptan 托伐普坦 NDA submitted PegBio Co. Ltd. 派格生物医药（苏州）有Endocrinology Chem 1.1 Extenatide PEG 聚乙二醇化艾塞那肽 IND Approval PharmaEngine, Inc. 智擎生技制药股份有限公Oncology Chem 1.1 Irinotecan 伊立替康 IND Approval Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Antirheumatic and Antiinflammatory Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Bone disease Therapeutic Bio 2 RANKL Antibody 抗RANKL单克隆抗体 IND submitted Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Gastroenterology Therapeutic Bio 1 Human Albumin,Interferon α2a 重组人血清白蛋白-干扰素α2a融合 IND Approval Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Oncology Therapeutic Bio 2 Epidermal Growth Factor Receptor Monoclon抗人表皮生长因子受体单克隆抗体IND submitted Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Oncology Chem 1.1 赛拉替尼 IND Approval Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Oncology Therapeutic Bio 2 Recombinant Anti-EGFR Human Mouse Chim重组抗EGFR人鼠嵌合单克隆抗体 IND submitted Qilu Pharmaceutical Co. Ltd. 齐鲁制药有限公司 Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Approval Qinglong High Tech Co.,Ltd. 青龙高科技股份有限公司Oncology Chem 1.1 Sinoporphyrin Sodium 华卟啉钠 IND submitted Roche Pharmaceuticals 罗氏制药 Oncology Therapeutic Bio 1 Bevacizumab 贝伐珠单抗 IND Approval

79 211 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - S Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Sanofi 赛诺菲 Oncology Therapeutic Bio 1 Aflibercept 阿柏西普 IND Approval Shaanxi Maike Aote Technology Co. 陕西麦科奥特科技有限公Blood system drugs Chem 1.1 普瑞巴肽 IND submitted Shaanxi Synthetic Pharmaceutical Co陕西合成药业有限公司 Infectious Disease Chem 1.1 Levornidazole 左奥硝唑 IND submitted Shandong Henli Pharmaceutical Tec 山东亨利医药科技有限责Endocrinology Chem 1.1 阿莫奎尼 IND submitted Shandong Luoxin Pharmacy Stock C 山东罗欣药业股份有限公Nervous system Chem 1.2 Ginkgolide 银杏内酯 IND submitted Shandong Luye Pharmaceutical Co. 山东绿叶制药有限公司 Endocrinology Chem 1.1 艾格列汀 IND Approval Shandong Luye Pharmaceutical Co. 山东绿叶制药有限公司 Nervous system Chem 1.1 安舒法辛 IND Approval Shandong New Time Pharmaceutica 山东新时代药业有限公司Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 IND submitted Shandong Tefaman Pharmaceutical 山东特珐曼药业有限公司Genital system Chem 1.1 TPN171H TPN171H IND submitted Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Circulatory system Chem 1.1 Tylerdipine 泰乐地平 IND Approval Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Endocrinology Chem 1.1 加格列净片 IND submitted Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Endocrinology Chem 1.1 加格列净 IND submitted Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Endocrinology Chem 1.1 依格列汀 IND Approval Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Gastroenterology Chem 1.1 安纳拉唑 IND Approval Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Infectious Disease Chem 1.1 百纳培南 IND Approval Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Infectious Disease Chem 1.1 哌诺沙星 IND Failed Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Infectious Disease Chem 1.1 艾帕培南 IND Approval Shandong Xuanzhu Medical Technol 山东轩竹医药科技有限公Oncology Chem 1.1 Pirotinib 哌罗替尼 IND submitted Shandong Yikang Pharmaceutical Co山东益康药业有限公司 Circulatory system Chem 1.1 Nitrendipine 尼群地平 IND Approval Shanghai Aoqi Pharmaceutical Techn上海奥奇医药科技有限公Blood system drugs Chem 1.1 艾诺赛特 IND Approval Shanghai Benemae Pharmaceutical 上海仁会生物制药股份有Endocrinology Therapeutic Bio 1 重组人胰高血糖素类多肽 IND Approval Shanghai Biomabs Pharmaceutical C上海百迈博制药有限公司Endocrinology Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 NDA submitted Shanghai CP Guojian Pharmaceutica上海中信国健药业股份有Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND Approval Shanghai CP Guojian Pharmaceutica上海中信国健药业股份有Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 NDA submitted Shanghai CP Guojian Pharmaceutica上海中信国健药业股份有Oncology Therapeutic Bio 2 Recombinant CD25 Humanised Monoclonal 重组抗CD25人源化单克隆抗体 NDA Approval Shanghai Ecust Biomedicine Co. Ltd 上海华理生物医药有限公Oncology Chem 1.1 康布斯汀 IND Approval Shanghai Fudan-Zhangjiang Bio-Pha上海复旦张江生物医药股Dermatology and ENT/Optholamology Chem 1.1 海姆泊芬 NDA Approval Shanghai Gebaide Biological Techno上海歌佰德生物技术有限Oncology Therapeutic Bio 1 重组人凋亡素2配体 NDA submitted Shanghai Genomics, Inc. 上海睿星基因技术有限公Respiratory system and antiallergic Chem 1.1 Pirfenidone 吡非尼酮 NDA Approval Shanghai Haikang Pharmaceutical Te上海海抗中医药科技发展Oncology Therapeutic Bio 2 碘[131I]爱克妥昔单抗 IND Approval Shanghai Hengrui Pharmaceuticals C上海恒瑞医药有限公司 Antirheumatic and Antiinflammatory Therapeutic Bio 1 SHR-1314 SHR-1314 IND submitted Shanghai Hengrui Pharmaceuticals C上海恒瑞医药有限公司 Oncology Therapeutic Bio 2 Bevacizumab 贝伐珠单抗 IND submitted Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Antirheumatic and Antiinflammatory Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted

80 212 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - S Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Oncology Therapeutic Bio 2 人源化抗VEGF单克隆抗体 IND submitted Shanghai Henlius Biotech Co. Ltd. 上海复宏汉霖生物技术有Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Shanghai Hepu Biotechnology Co. Lt上海贺普生物科技有限公Gastroenterology Chem 1.1 贺普拉肽 IND Approval Shanghai Kexin biotech Co., Ltd 上海科新生物技术股份有Antirheumatic and Antiinflammatory Therapeutic Bio 1 Recombinant Human Immunoglobulin ε and γ重组人免疫球蛋白ε和γ的Fc融合蛋 IND submitted Shanghai Pharmaceuticals Holding C上海医药集团股份有限公Antirheumatic and Antiinflammatory Therapeutic Bio 2 Recombinant Anti-CD20 Monoclonal Antibod重组抗CD20单克隆抗体 IND submitted Shanghai Tasly Pharmaceutical Co. L上海天士力药业有限公司Blood system drugs Therapeutic Bio 1 Recombinant Human Pro-Urokinase (rhpro-U重组人尿激酶原 IND submitted Shanghai Yasheng Pharmaceutical T上海亚盛医药科技有限公Oncology Chem 1.1 AT-406 IND Approval Shanghai Zerunanke Biopharmaceut 上海泽润安珂生物制药有Infectious Disease Therapeutic Bio 1 Recombinant Human Papillomavirus Type 16重组人乳头瘤病毒16型E7融合蛋白IND submitted Shanxi Zhendong Pharmaceutical Co山西振东制药股份有限公Oncology Chem 1.1 拉洛他赛 IND submitted Shenyang Pharmaceutical University 沈阳药科大学 Oncology Chem 1.1 Mitoxantrone 米托蒽醌 IND submitted Shenzhen Chipscreen Biosciences C深圳微芯生物科技有限责Oncology Chem 1.1 西奥罗尼 IND Approval Shenzhen Chipscreen Biosciences C深圳微芯生物科技有限责Oncology Chem 1.1 Chidamide 西达本胺 NDA Approval Shenzhen Main Luck Pharmaceutica 深圳万乐药业有限公司 Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Shenzhen Main Luck Pharmaceutica 深圳万乐药业有限公司 Oncology Chem 1.1 多拉达唑 IND Approval Shenzhen Sciprogen Bio-Pharmaceu深圳赛保尔生物药业有限Blood system drugs Therapeutic Bio 1 Erythropoietin 重组人红细胞生成素 IND submitted Shenzhen Xinpeng Biotechnology Co深圳新鹏生物工程有限公Oncology Therapeutic Bio 1 Tumor Necrosis Factor 重组人肿瘤坏死因子 IND Approval Shijiazhuang Pharma Group Zhongq 石药集团中奇制药技术（Endocrinology Chem 1.1 DBPR108 IND submitted Shijiazhuang Pharma Group Zhongq 石药集团中奇制药技术（Oncology Chem 1.1 SKLB1028 IND submitted Sichuan Direction Pharmaceutical Co四川方向药业有限责任公Infectious Disease Chem 1.1 Cefetamet 头孢他美 IND Approval Sichuan Haisco Pharmaceutlcal Co. 四川海思科制药有限公司Analgesics and anesthetics Chem 1.1 HSK3486 HSK3486 IND submitted Sichuan Kelun Pharmaceutical Co. L 四川科伦药业股份有限公Infectious Disease Chem 1.1 Cefditoren Pivoxil 头孢妥仑匹酯 IND submitted Simcere Pharmaceutical Group 先声药业 Antirheumatic and Antiinflammatory Chem 1.1 Iguratimod 艾拉莫德 NDA Approval Sinbioway Medicine 未名生物医药有限公司 Nervous system Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 IND Approval Sinoasis Pharmaceuticals, Inc 百奥泰生物科技（广州）Antirheumatic and Antiinflammatory Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Sinoasis Pharmaceuticals, Inc 百奥泰生物科技（广州）Oncology Therapeutic Bio 2 人源化抗VEGF单克隆抗体 IND submitted Sinocelltech Ltd. 神州细胞工程有限公司 Infectious Disease Therapeutic Bio 1 Recombinant Humanized H7N9 Monoclonal 重组人源化抗H7N9单克隆抗体 IND submitted Sinocelltech Ltd. 神州细胞工程有限公司 Oncology Therapeutic Bio 1 Epidermal Growth Factor Receptor Monoclon抗人表皮生长因子受体单克隆抗体IND Approval Sinocelltech Ltd. 神州细胞工程有限公司 Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval SinoMab Bioscience (Shenzhen) Lim深圳赛乐敏生物科技有限Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Staidson (Beijing) Pharmaceutical Co舒泰神（北京）药业有限Nervous system Therapeutic Bio 1 Nerve Growth Factor 神经生长因子 IND submitted Sun Yat-Sen University 中山大学 Oncology Chem 1.2 Naringin 柚皮苷 IND Approval Suzhou Chang Zheng-Cinkate Pharm苏州长征-欣凯制药有限公Antirheumatic and Antiinflammatory Chem 1.1 泰瑞米特 IND Approval Suzhou Erye Pharmaceutical Co. Ltd苏州二叶制药有限公司 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Suzhou Kintor Pharmaceutical Inc. 苏州开拓药业有限公司 Oncology Chem 1.1 普克鲁胺 IND submitted

81 213 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - S to Y Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Suzhou Stainwei Biotech Inc. 苏州思坦维生物技术有限Oncology Therapeutic Bio 1 人源化抗VEGF单克隆抗体 IND submitted Suzhou Zejing Biological Pharmaceu 苏州泽璟生物制药有限公Oncology Chem 1.1 多纳非尼 IND Approval TaiGen Biotechnology Co. Ltd. 太景生物科技股份有限公Blood system drugs Chem 1.1 Burixafor 布利沙福 IND submitted The 302nd Hospital of PLA 解放军302医院 Gastroenterology Chem 1.1 免疫7肽 IND Failed Tianjin ChaseSun Pharmaceutical Co天津红日药业股份有限公Infectious Disease Chem 1.1 Para Toluene Sulfonate 对甲苯磺酰胺 NDA submitted Tianjin Jiankai Technology Co. Ltd. 天津键凯科技有限公司 Oncology Chem 1.1 Irinotecan 伊立替康 IND submitted Tianjin Linda Bioscientific Co. Ltd. 天津林达生物科技有限公Gastroenterology Therapeutic Bio 1 Human Albumin,Interferon α2a 重组人血清白蛋白-干扰素α2a融合 IND Approval Tianjin SinoBiotech Ltd. 天津溥瀛生物技术有限公Oncology Therapeutic Bio 1 Recombinant Human Serum Albumin,Granul 重组人血清白蛋白,粒细胞刺激因子IND Approval Tianjin Tasly Group Co. Ltd. 天津天士力集团有限公司Oncology Chem 1.1 Temozolomide 替莫唑胺 IND Approval Tianjin Xinchen Taifeier Pharmaceuti 天津昕晨泰飞尔医药科技Respiratory system and antiallergic Chem 1.1 布洛胺 IND submitted TIPR Pharmaceutical Responsible Co天津药物研究院药业有限Antirheumatic and Antiinflammatory Chem 1.1 知非沙班 IND submitted TIPR Pharmaceutical Responsible Co天津药物研究院药业有限Circulatory system Chem 1.1 他司曲洛 IND Approval TIPR Pharmaceutical Responsible Co天津药物研究院药业有限Gastroenterology Chem 1.1 Elvucitabine 艾夫他滨 IND Failed Tonglian Group Co Ltd. 同联集团有限公司 Infectious Disease Chem 1.1 可利霉素 NDA submitted Tonrol Bio-Pharmaceutical Co. Ltd. 同路生物制药有限公司 Infectious Disease Therapeutic Bio 1 肠道病毒71型人免疫球蛋白(PH4) IND submitted Virological Institute, Chinese Center F中国疾病预防控制中心病Respiratory system and antiallergic Therapeutic Bio 1 重组腺病毒艾滋病gag疫苗(Ad5-HIV IND Approval Virological Institute, Chinese Center F中国疾病预防控制中心病Oncology Therapeutic Bio 1 重组腺病毒5型EB病毒潜伏膜抗原2IND Approval Wuhan Institute of Biological Product 武汉生物制品研究所 Antirheumatic and Antiinflammatory Therapeutic Bio 2 Human Anti-TNFα Monoclonal Antibody 人源抗-TNFα单克隆抗体 IND submitted Wuhan Yicheng Biotechnology Co. L 武汉益承生物科技有限公Dermatology and ENT/Optholamology Therapeutic Bio 1 益复肽 IND Approval Wuxi Hebang Bioscientific Co. Ltd. 无锡和邦生物科技有限公Endocrinology Therapeutic Bio 1 促胰岛素分泌肽融合蛋白 IND Failed Xiajiang Hemei Pharmaceutical Co. L峡江和美药业有限公司 Oncology Chem 1.1 Hemay022 Hemay022 IND Approval Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Blood system drugs Therapeutic Bio 1 Y型PEG化重组人促红素 IND Approval Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Endocrinology Therapeutic Bio 1 yPEG–rhGH Y型PEG化重组人生长激素 IND Approval Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Infectious Disease Therapeutic Bio 1 Interferon α-2b PEG 聚乙二醇干扰素α-2b NDA submitted Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Infectious Disease Therapeutic Bio 1 Interferon α-2a PEG 聚乙二醇干扰素α-2a IND Approval Xiamen Amoytop Biotech Co. Ltd. 厦门特宝生物工程股份有Oncology Therapeutic Bio 1 Pegylated Recombinant Huamn Granulocyte PEG化重组人粒细胞刺激因子 IND Approval Xiamen Innovax Biotech Co. Ltd. 厦门万泰沧海生物技术有Infectious Disease Therapeutic Bio 1 抗H5N1禽流感鼠单抗 IND submitted Xiamen Zhaoyang Bioengineering Co厦门朝阳生物工程有限公Analgesics and anesthetics Chem 1.2 Tetrodotoxin 河豚毒素 IND Approval Xi'an Xintong Pharmaceutical Co. Ltd西安新通药物研究有限公Infectious Disease Chem 1.1 Remofovir 帕拉德福韦 IND Approval Xi'an Xintong Pharmaceutical Co. Ltd西安新通药物研究有限公Oncology Chem 1.1 MB07133 IND Approval Xiweiai Pharmaceutical Technology (西威埃医药技术（上海）Endocrinology Chem 1.1 CVI-LM001 CVI-LM001 IND submitted Yangtze River Pharmaceutical Group扬子江药业集团有限公司Antirheumatic and Antiinflammatory Chem 1.1 Iguratimod 艾拉莫德 NDA submitted

82 214 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - Y to Z Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Yangtze River Pharmaceutical Group扬子江药业集团有限公司Infectious Disease Chem 1.1 Cefetamet 头孢他美 IND submitted Yangtze River Pharmaceutical Group扬子江药业集团北京海燕Blood system drugs Therapeutic Bio 1 Batroxobin 巴曲酶 IND submitted Yangtze River Pharmaceutical Group扬子江药业集团北京海燕Endocrinology Therapeutic Bio 1 rExendin-4 重组促胰岛素分泌素 IND submitted Yangtze River Pharmaceutical Group扬子江药业集团江苏海慈Antirheumatic and Antiinflammatory Chem 1.1 Iguratimod 艾拉莫德 NDA submitted Yangtze River Pharmaceutical Group扬子江药业集团江苏海慈Infectious Disease Chem 1.1 Cefetamet 头孢他美 IND submitted Yantai Rongchang Bioengineering Co烟台荣昌生物工程有限公Antirheumatic and Antiinflammatory Therapeutic Bio 1 Recombinant Human B-lymphocyte stimulati 重组人B淋巴细胞刺激因子受体-抗 IND Approval Yantai Rongchang Bioengineering Co烟台荣昌生物工程有限公ONcology Therapeutic Bio 1 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Yichang Humanwell Pharmaceutical 宜昌人福药业有限责任公Analgesics and anesthetics Chem 1.1 Propofol 丙泊酚 IND Approval Yichang Humanwell Pharmaceutical 宜昌人福药业有限责任公Surgery and others Chem 1.1 苯磺酸瑞马唑仑 IND submitted Yichang Humanwell Pharmaceutical 宜昌人福药业有限责任公Surgery and others Chem 1.1 注射用苯磺酸瑞马唑仑 IND submitted Yingu Pharmaceutical Co. Ltd. 银谷制药有限责任公司 Respiratory system and antiallergic Chem 1.1 苯环喹溴铵 NDA submitted Yiyuan Biological 杭州一元生物技术有限公Endocrinology Therapeutic Bio 1 Recombinant Human Glucokinase Adenoviru重组人葡萄糖激酶腺病毒 IND submitted Youcare Pharmaceutical Group Co. L悦康药业集团有限公司 Gastroenterology Chem 1.1 Adefovir Dipivoxil 阿德福韦酯 NDA Approval Zensun (Shanghai) Sci & Tech Co. L 上海泽生科技开发有限公Circulatory system Therapeutic Bio 1 重组人纽兰格林 NDA Approval Zhejiang Apeloa Natural Medicine Co浙江普洛康裕天然药物有Nervous system Chem 1.1 索法地尔 IND Approval Zhejiang Betta Pharmaceutical Co. L 浙江贝达药业有限公司 Oncology Chem 1.1 BPI-9016M IND submitted Zhejiang Betta Pharmaceutical Co. L 浙江贝达药业有限公司 Oncology Chem 1.1 Icotinib 埃克替尼 NDA Approval Zhejiang Deqing Anping Bio-Pharmac浙江德清安平生物制药有Genital system Therapeutic Bio 1 Interferon α2b,Human Albumin 干扰素α2b,人白蛋白 IND Failed Zhejiang Hailisheng Pharmaceutical 浙江海力生制药有限公司Gastroenterology Chem 1.1 Smectite 蒙脱石 IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Oncology Chem 1.1 海博非明 IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Oncology Chem 1.1 PEG-SN38 IND submitted Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Oncology Therapeutic Bio 1 Tumor Necrosis Factor 重组人肿瘤坏死因子 IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Oncology Therapeutic Bio 2 Rituximab 利妥昔单抗 IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Oncology Chem 1.2 Epothilone B 埃博霉素B IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Antirheumatic and Antiinflammatory Therapeutic Bio 2 Recombinant CD25 Humanised Monoclonal 重组抗CD25人源化单克隆抗体 IND submitted Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Antirheumatic and Antiinflammatory Chem 1.2 Ginsenoside CK 人参皂苷C-K IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Endocrinology Chem 1.1 海泽麦布 IND Approval Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Endocrinology Therapeutic Bio 2 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND submitted Zhejiang Hisun Pharmaceutical Co. L浙江海正药业股份有限公Oncology Therapeutic Bio 2 Recombinant Humanized Anti-HER2 Monocl 重组人HER2单克隆抗体 IND submitted Zhejiang Huahai Pharmaceutical Co. 浙江华海药业股份有限公Nervous system Chem 1.1 Hydroxyl pp Pyrazole Ketones 羟哌吡酮 IND submitted Zhejiang Huayang Pharmaceutical C 浙江华阳药业有限公司 Endocrinology Therapeutic Bio 1 Recombinant Exenatide-Human Serum Albu 重组艾塞那肽-人血清白蛋白融合蛋IND submitted Zhejiang Jianfeng Pharmaceutical Co浙江尖峰药业有限公司 Analgesics and anesthetics Chem 1.1 Ketoprofen 酮洛芬 IND Failed

83 215 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Company Name - Y to Z Developer (English) Developer (Chinese) Indication group Category Class Candidate name (English) Candidate name (Chinese) Status Zhejiang Medicine Co. Ltd. Xinchang 浙江医药股份有限公司新Infectious Disease Chem 1.1 Nemonoxacin 奈诺沙星 NDA submitted Zhejiang Pukang Biotechnology Co. L浙江普康生物技术股份有Infectious Disease Therapeutic Bio 1 Recombinant Human Papillomavirus (Type 1 重组16型人乳头瘤病毒疫苗 IND Approval Zhejiang Pukang Biotechnology Co. L浙江普康生物技术股份有Infectious Disease Therapeutic Bio 1 Human Papillomavirus Type 16 Recombinan 人乳头瘤病毒16型重组腺病毒载体IND submitted Zhejiang Puluo Pharmaceutical Tech 浙江普洛医药科技有限公Nervous system Chem 1.1 索法地尔 IND Approval Zhejiang Xianju Pharmaceutical Co. L浙江仙琚制药股份有限公Genital system Chem 1.1 Cymipristone 赛米司酮 NDA submitted Zhejiang Xianju Pharmaceutical Co. L浙江仙琚制药股份有限公Oncology Chem 1.1 奥美克松钠 IND submitted Zhejiang Yongning Pharmaceutical C浙江永宁药业股份有限公Infectious Disease Chem 1.1 舒他美 IND Approval Zhejiang Yongning Pharmaceutical C浙江永宁药业股份有限公Infectious Disease Chem 1.1 Cefdinir 头孢地尼 IND Failed ZhengZhou University 郑州大学 Infectious Disease Chem 1.1 阿兹夫定 IND Approval Zhuhai Livzon Monoclonal Antibodies珠海市丽珠单抗生物技术Endocrinology Therapeutic Bio 1 Tumor Necrosis Factor α Monoclonal Antibod肿瘤坏死因子α单克隆抗体 IND Approval Zonk Drug R&D Limited 广东中科药物研究有限公Analgesics and anesthetics Chem 1.1 苯胺洛芬 IND Approval 上海再新医药科技有限公Oncology Chem 1.1 CM118片 IND submitted 上海再新医药科技有限公Oncology Chem 1.1 CM118 IND submitted 杭州爱德程医药科技有限Oncology Chem 1.1 AL8326 AL8326 IND submitted

84 216 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Disclosure Section The information and opinions in Morgan Stanley Research were prepared or are disseminated by Morgan Stanley Asia Limited (which accepts the responsibility for its contents) and/or Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research), and/or Morgan Stanley Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited (A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents), and/or Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, which accepts responsibility for its contents), and/or Morgan Stanley India Company Private Limited, and/or PT Morgan Stanley Asia Indonesia and their affiliates (collectively, "Morgan Stanley"). For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY, 10036 USA. For valuation methodology and risks associated with any price targets referenced in this research report, please contact the Client Support Team as follows: US/Canada +1 800 303-2495; Hong Kong +852 2848-5999; Latin America +1 718 754-5444 (U.S.); London +44 (0)20-7425-8169; Singapore +65 6834-6860; Sydney +61 (0)2-9770-1505; Tokyo +81 (0)3-6836-9000. Alternatively you may contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY 10036 USA. Analyst Certification The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Bin Li. Unless otherwise stated, the individuals listed on the cover page of this report are research analysts. Global Research Conflict Management Policy Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at www.morganstanley.com/institutional/research/conflictpolicies. Important US Regulatory Disclosures on Subject Companies As of December 31, 2014, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: CSPC Pharmaceutical Group, Shanghai Pharmaceutical, Sihuan Pharmaceutical Holdings Group Ltd, Sinopharm Group. Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of China Biologic Products, CSPC Pharmaceutical Group, Lijun International, PW Medtech, Sihuan Pharmaceutical Holdings Group Ltd, Sinopharm Group. Within the last 12 months, Morgan Stanley has received compensation for investment banking services from China Biologic Products. In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Beijing Tongrentang, Biosensors International, China Biologic Products, China Medical System, China Traditional Chinese Medicine, Concord Medical Services Holdings Ltd, CSPC Pharmaceutical Group, Fosun Pharmaceutical, Guangzhou Pharma, Jintian Pharma Group, Lee's Pharmaceutical, Lijun International, Mindray, PW Medtech, Shandong Weigao, Shanghai Pharmaceutical, Sihuan Pharmaceutical Holdings Group Ltd, Sino Biopharmaceutical, Sinopharm Group, Sinovac Biotech Ltd., Tasly Pharmaceutical Group Co. Ltd, The United Laboratories, Tongrentang Technologies, WuXi Pharmatech. Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from China Nepstar Chain Drugstore Inc., Concord Medical Services Holdings Ltd, Fosun Pharmaceutical, Mindray, The United Laboratories, WuXi Pharmatech. Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: Beijing Tongrentang, Biosensors International, China Biologic Products, China Medical System, China Traditional Chinese Medicine, Concord Medical Services Holdings Ltd, CSPC Pharmaceutical Group, Fosun Pharmaceutical, Guangzhou Pharma, Jintian Pharma Group, Lee's Pharmaceutical, Lijun International, Mindray, PW Medtech, Shandong Weigao, Shanghai Pharmaceutical, Sihuan Pharmaceutical Holdings Group Ltd, Sino Biopharmaceutical, Sinopharm Group, Sinovac Biotech Ltd., Tasly Pharmaceutical Group Co. Ltd, The United Laboratories, Tongrentang Technologies, WuXi Pharmatech. Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide services or has a client relationship with the following company: China Nepstar Chain Drugstore Inc., Concord Medical Services Holdings Ltd, Fosun Pharmaceutical, Mindray, PW Medtech, The United Laboratories, WuXi Pharmatech. An employee, director or consultant of Morgan Stanley is a director of Sihuan Pharmaceutical Holdings Group Ltd. This person is not a research analyst or a member of a research analyst's household. Morgan Stanley & Co. LLC makes a market in the securities of China Biologic Products, Mindray, Sinovac Biotech Ltd., WuXi Pharmatech. The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making, providing liquidity and specialized trading, risk arbitrage and other proprietary trading, fund management, commercial banking, extension of credit, investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report. Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions. STOCK RATINGS Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations. Global Stock Ratings Distribution (as of December 31, 2014) For disclosure purposes only (in accordance with NASD and NYSE requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, Not-Rated and Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended

85 217 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

relative weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

Coverage Universe Investment Banking Clients (IBC) % of % of % of Rating Stock Rating Category Count Total Count Total IBC Category Overweight/Buy 1156 35% 328 42% 28% Equal-weight/Hold 1439 44% 354 45% 25% Not-Rated/Hold 107 3% 17 2% 16% Underweight/Sell 589 18% 84 11% 14% Total 3,291 783

86 218 MORGAN STANLEY RESEARCH January 30, 2015 China Healthcare

Morgan Stanley Research. Employees of Morgan Stanley not involved in the preparation of Morgan Stanley Research may have investments in securities/instruments or derivatives of securities/instruments of companies mentioned and may trade them in ways different from those discussed in Morgan Stanley Research. Derivatives may be issued by Morgan Stanley or associated persons. With the exception of information regarding Morgan Stanley, Morgan Stanley Research is based on public information. Morgan Stanley makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan Stanley Research change apart from when we intend to discontinue equity research coverage of a subject company. Facts and views presented in Morgan Stanley Research have not been reviewed by, and may not reflect information known to, professionals in other Morgan Stanley business areas, including investment banking personnel. Morgan Stanley Research personnel may participate in company events such as site visits and are generally prohibited from accepting payment by the company of associated expenses unless pre-approved by authorized members of Research management. Morgan Stanley may make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report. To our readers in Taiwan: Information on securities/instruments that trade in Taiwan is distributed by Morgan Stanley Taiwan Limited ("MSTL"). Such information is for your reference only. The reader should independently evaluate the investment risks and is solely responsible for their investment decisions. Morgan Stanley Research may not be distributed to the public media or quoted or used by the public media without the express written consent of Morgan Stanley. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation or a solicitation to trade in such securities/instruments. MSTL may not execute transactions for clients in these securities/instruments. To our readers in Hong Kong: Information is distributed in Hong Kong by and on behalf of, and is attributable to, Morgan Stanley Asia Limited as part of its regulated activities in Hong Kong. If you have any queries concerning Morgan Stanley Research, please contact our Hong Kong sales representatives. Certain information in Morgan Stanley Research was sourced by employees of the Shanghai Representative Office of Morgan Stanley Asia Limited for the use of Morgan Stanley Asia Limited. Morgan Stanley is not incorporated under PRC law and the research in relation to this report is conducted outside the PRC. Morgan Stanley Research does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. PRC investors shall have the relevant qualifications to invest in such securities and shall be responsible for obtaining all relevant approvals, licenses, verifications and/or registrations from the relevant governmental authorities themselves. Morgan Stanley Research is disseminated in Brazil by Morgan Stanley C.T.V.M. S.A.; in Japan by Morgan Stanley MUFG Securities Co., Ltd. and, for Commodities related research reports only, Morgan Stanley Capital Group Japan Co., Ltd; in Hong Kong by Morgan Stanley Asia Limited (which accepts responsibility for its contents) and by Bank Morgan Stanley AG, Hong Kong Branch; in Singapore by Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research) and by Bank Morgan Stanley AG, Singapore Branch (Registration number T11FC0207F); in Australia to "wholesale clients" within the meaning of the Australian Corporations Act by Morgan Stanley Australia Limited A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents; in Australia to "wholesale clients" and "retail clients" within the meaning of the Australian Corporations Act by Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license No. 240813, which accepts responsibility for its contents; in Korea by Morgan Stanley & Co International plc, Seoul Branch; in India by Morgan Stanley India Company Private Limited; in Indonesia by PT Morgan Stanley Asia Indonesia; in Canada by Morgan Stanley Canada Limited, which has approved of and takes responsibility for its contents in Canada; in Germany by Morgan Stanley Bank AG, Frankfurt am Main and Morgan Stanley Private Wealth Management Limited, Niederlassung Deutschland, regulated by Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin); in Spain by Morgan Stanley, S.V., S.A., a Morgan Stanley group company, which is supervised by the Spanish Securities Markets Commission (CNMV) and states that Morgan Stanley Research has been written and distributed in accordance with the rules of conduct applicable to financial research as established under Spanish regulations; in the US by Morgan Stanley & Co. LLC, which accepts responsibility for its contents. Morgan Stanley & Co. International plc, authorized by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority, disseminates in the UK research that it has prepared, and approves solely for the purposes of section 21 of the Financial Services and Markets Act 2000, research which has been prepared by any of its affiliates. Morgan Stanley Private Wealth Management Limited, authorized and regulated by the Financial Conduct Authority, also disseminates Morgan Stanley Research in the UK. Private UK investors should obtain the advice of their Morgan Stanley & Co. International plc or Morgan Stanley Private Wealth Management representative about the investments concerned. RMB Morgan Stanley (Proprietary) Limited is a member of the JSE Limited and regulated by the Financial Services Board in South Africa. RMB Morgan Stanley (Proprietary) Limited is a joint venture owned equally by Morgan Stanley International Holdings Inc. and RMB Investment Advisory (Proprietary) Limited, which is wholly owned by FirstRand Limited. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services Authority (the DFSA), and is directed at Professional Clients only, as defined by the DFSA. The financial products or financial services to which this research relates will only be made available to a customer who we are satisfied meets the regulatory criteria to be a Professional Client. The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre Regulatory Authority (the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the QFCRA. As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment advisory service is provided exclusively to persons based on their risk and income preferences by the authorized firms. Comments and recommendations stated here are general in nature. These opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring about outcomes that fit your expectations. The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or representations relating to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages relating to such data. The Global Industry Classification Standard (GICS) was developed by and is the exclusive property of MSCI and S&P. Morgan Stanley Research or portions of it may not be reprinted, sold or redistributed without the written consent of Morgan Stanley. Morgan Stanley Research, or any portion thereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley.

87 219 MORGAN STANLEY RESEARCH

The Americas Europe Japan Asia/Pacific 1585 Broadway 20 Bank Street, Canary Wharf 1-9-7 Otemachi, Chiyoda-ku 1 Austin Road West New York, NY 10036-8293 London E14 4AD Tokyo 100-8104 Kowloon United States United Kingdom Japan Hong Kong Tel: +1 (1) 212 761 4000 Tel: +44 (0) 20 7 425 8000 Tel: +81 (0) 3 6836 5000 Tel: +852 2848 5200

Tongrentang Technologies E (04/11/2014) HK$9.7 (1666.HK) WuXi Pharmatech (WX.N) O (09/15/2008) US$40.71 Industry Coverage:China Healthcare Yunnan Baiyao Group (000538.SZ) O (04/11/2014) Rmb62.94

Company (Ticker) Rating (as of)Price* (01/29/2015) Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.

Yolanda Hu China Biologic Products (CBPO.O) O (07/08/2014) US$67.91 Bin Li Beijing Tongrentang (600085.SS) U (11/03/2014) Rmb22.58 Beijing Tongrentang Chinese O (01/14/2015) HK$10.14 Medicine (8138.HK) Biosensors International (BIOS.SI) U (04/11/2014) S$.65 CSPC Pharmaceutical Group O (08/15/2012) HK$6.55 (1093.HK) China Medical System (0867.HK) O (01/27/2014) HK$13.38 China Nepstar Chain Drugstore U (08/22/2013) US$1.45 Inc. (NPD.N) China Shineway Pharmaceutical U- (08/22/2013) HK$12.16 (2877.HK) China Traditional Chinese O (12/09/2014) HK$5.08 Medicine (0570.HK) Concord Medical Services U (04/11/2014) US$6.97 Holdings Ltd (CCM.N) Consun Pharma (1681.HK) O (05/07/2014) HK$6.08 Fosun Pharmaceutical O- (12/12/2014) Rmb22.36 (600196.SS) Fosun Pharmaceutical (2196.HK) O (12/12/2014) HK$28.05 Guangzhou Pharma (0874.HK) O (09/25/2013) HK$27.6 Guangzhou Pharma (600332.SS) E (05/14/2012) Rmb29.96 Jiangsu Hengrui (600276.SS) E (08/22/2013) Rmb40.72 Jintian Pharma Group (2211.HK) O (01/16/2014) HK$2.44 Lee's Pharmaceutical (0950.HK) O (01/27/2011) HK$11.7 Lijun International (2005.HK) O (10/20/2014) HK$3.63 MicroPort Scientific Corp. U (08/22/2013) HK$3.36 (0853.HK) Mindray (MR.N) U (12/12/2014) US$27.61 PW Medtech (1358.HK) O- (12/12/2013) HK$3.39 Shandong Weigao (1066.HK) O (11/14/2013) HK$6.09 Shanghai Pharmaceutical E (06/05/2012) HK$16.8 (2607.HK) Shanghai Pharmaceutical E (06/05/2012) Rmb16.62 (601607.SS) Sihuan Pharmaceutical Holdings O (12/08/2010) HK$5.01 Group Ltd (0460.HK) Sino Biopharmaceutical (1177.HK) O (05/14/2010) HK$7.77 Sinopharm Group (1099.HK) O (01/05/2010) HK$28.35 Sinovac Biotech Ltd. (SVA.O) O (03/20/2014) US$4.78 Tasly Pharmaceutical Group Co. O- (11/28/2012) Rmb44.3 Ltd (600535.SS) The United Laboratories (3933.HK) E (04/04/2014) HK$3.83

220