On Monday, biomedical stocks collectively surged, and Hong Kong A Pharmaceuticals rebounded sharply.

By the close, the Hong Kong stock Yao Ming Biotech had surged by more than 7%, Pharma Ming Kangde rose by more than 4%, followed by Zhaoyan Pharmaceutical and Kanglong Chemical; A-share Tiger Pharmaceuticals rose more than 4%, and Pharmaceutical Kangde rose more than 2%.

At the end of January this year, an American proposal on biosafety triggered a “huge shock” in the pharmaceutical industry, and concepts such as biomedicine and CRO represented by the Pharmacovigilance system were on the “roller coaster” of the limit several times.

Among them, the biomedical sector has fallen by more than 37% since January 26; the stock price of Hong Kong Yao Ming Biotech has fallen short, with a cumulative decline of more than 53%, and the cumulative decline of Pharmaceutical Kangde has exceeded 48%.

But now, there are some new variables about the US Biosafety Act — the sponsor who led the Biosafety Act suddenly announced on Friday that he will resign next month.

According to market analysis, as a central figure in the bill, this lawmaker's early departure may slow implementation of the Biosafety Act.

New variables

On March 22, local time, Representative Mike Gallagher (Mike Gallagher), the initiator of the “Biosafety Act”, chairman of the “US-China Strategic Competition Special Committee” of the US House of Representatives, announced his resignation on a personal social networking platform.

According to reports, the term of office of members of the US House of Representatives is two years, and the most recent congressional election was in November 2022.

In other words, Mike Gallagher's current term was supposed to end in November 2024, and his resignation this time was 7 months earlier than the normal change of office. His early departure may bring new variables to the bill.

On January 25 of this year, Mike Gallagher and others proposed the Biosafety Act, which would restrict US federally funded medical service providers from using equipment or services from foreign rival biotechnology companies. Among them, the companies named include Yao Ming and Huadaxi companies.

Subsequently, the Department of Pharmaceutical Sciences also issued a number of clarifications on the matter, stating that the relevant draft law is still in its early stages and has not yet been enacted into force; it also reiterated that it does not pose a risk to the national security of the United States or other countries.

Previously, the Biden administration also signed an executive order, but unlike the previous “Biosafety Law,” Biden's executive order does not target specific companies; it instructs the administration to protect the privacy of American citizens while minimizing interference with commercial activities.

Analysts believe that Biden's executive order indicates that it will restrict the activities of US genomics companies rather than contract research companies such as Pharmacovigilance.

However, at the beginning of March, the US Senate version of the Biosafety Act (number: S.3558) was passed with overwhelming approval votes.

Currently, the Biosafety Bill is currently in a “pending” state, that is, it has been submitted to the corresponding legislature.

What other factors boosted it?

The rebound in pharmacology also had an impact on performance. Yao Ming Kangde's revenue last year broke the 40 billion yuan mark for the first time.

Results show that Yao Ming Kangde's revenue in 2023 reached RMB 40.341 billion, up 2.51% year on year; net profit to mother was RMB 9.607 billion, up 9% year on year.

Among them, after excluding COVID-19 commercialization projects, the company's revenue increased by more than 20% year on year; the growth rate of the core business chemical business sector after excluding COVID-19 dividends reached more than 30%, while the growth rate of process R&D and production was more than 50%.

Yao Ming Kangde also expects revenue of 38.3 billion yuan to 40.5 billion yuan in 2024. If COVID-19 commercialization projects are excluded, the growth rate is 2.7% to 8.6%.

In an earnings conference call, Li Ge, chairman and CEO of Yao Ming Kangde, once again reiterated that the company has not been sanctioned, nor does it pose a national security risk to any country.

He pointed out that since the draft bill still requires further review and changes, the company will continue to communicate with relevant parties, explore possible solutions, and continue to demand due process based on open, transparent, factual considerations.

Furthermore, in the context of the AI wave sweeping the world, “AI+ medicine” has become a new highlight.

Earlier, at the opening of Nvidia's 2024 GPU Technology Conference, Hwang In-hoon said that “AI+ medicine” is expected to become the next growth point. As important participants in pharmaceutical R&D and production services, pharmaceutical companies may benefit from this trend.

China Merchants Securities previously stated that the global “AI+ Healthcare” market is over 5 billion US dollars and will continue to grow rapidly.

According to the Global Watch Report, the compound annual growth rate of the “AI+ Healthcare” market is expected to exceed 29% and reach 70 billion US dollars in 2032. Judging from the market structure, drug discovery and medical imaging are the two most important fields of AI application, accounting for more than 50% in total.

According to the latest research report of Zhongtai Securities, with the increasing maturity of artificial intelligence technology and the gradual improvement of related industry standards and registration review systems, the practical application of AI in the pharmaceutical field is gradually moving from scenario exploration to commercial transformation. The emergence of revolutionary technologies such as GPT is expected to further accelerate the implementation of AI+ pharmaceutical/medical results. It is expected that in the future, it is expected to take the lead in achieving breakthroughs in drug design and development and auxiliary pathological diagnosis.