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In its publication “Aging in Asia and the Pacific” the United Nations’ Economic and Social Commission for Asia and the Pacific (ESCAP) states “The Asia-Pacific region is undergoing profound and rapid population changes. All countries in Asia and the Pacific are in the process of ageing at an unprecedented pace…” The paper goes on to state that two key factors – declining fertility rates and increasing life expectancies - are the main drivers behind this trend.

Overall, Asian populations are expected to age at a faster pace than any other region in coming decades, with the elderly population projected to reach nearly 923 million by 2050, according to the Asian Development Bank.

As Governments around the region increase their healthcare programmes, hospitals, healthcare facilities and pharmaceuticals look to benefit. And given the rise of healthcare costs globally, there is an increased acceptance of generic drugs presenting an opportunity to Chinese and Indian pharmaceutical companies.

Macrovue’s investment committee have analysed three companies likely to benefit from an aging Asian economy

Beijing Tong Ren Tang (3613: Hong Kong)

On 1 February 2018, an application was made by the company to the stock exchange for the listing of, and permission to deal in, 837,100,000 shares on issue on the Main Board of the Hong Kong stock exchange by way of the Transfer of Listing pursuant to Chapter 9A of the Main Board Listing Rules.

The approval-in-principle for the Transfer of Listing was granted by the Listing Committee on 11 May 2018 for the shares to be listed on the Main Board and to be de-listed from GEM. The Board believes that the Transfer of Listing will enhance the trading liquidity of the Shares and promote the Group’s corporate image to public investors.

The Board also considers “that the listing of the Shares on the Main Board will be beneficial to the Group’s future growth, financial flexibility and further business expansion, and allow the Company to gain a wider recognition among the public, institutional and retail investors”. The Transfer of Listing will not involve the issue of any new shares by the Company.

Headquartered in Hong Kong, Beijing Tong Ren Tang Chinese Medicine is a distributor engaged in both the retail and wholesale channels of traditional Chinese medicine products in Hong Kong, Macau, and other overseas markets operating under the “Tong Ren Tang” brand.

Tong Ren Tang was founded in 1669 by Dr. Yue Xianyang, a famous Court Physician and for 188 years, Tong Ren Tang was a main supplier of traditional medicines to the royal pharmacy of the Imperial Court of the Qing Dynasty.

Beijing Tong Ren Tang has returned +70% (AUD) in the year to 30 September 2018.

Hutchison China Meditech (HCM: NASDAQ)

Hutchison China MediTech (or “Chi-Med”) announced on 5 September 2018 that Fruquintinib capsules have been granted approval for drug registration by the National Medical Products Administration of China (“NMPA”, formerly the China Food and Drug Administration) for the treatment of metastatic colorectal cancer patients, who have failed at least two prior systemic antineoplastic therapies with or without prior use of anti-vascular endothelial growth factor (“VEGF”) or anti-epidermal growth factor receptor (“EGFR”) therapies.

Colorectal cancer is the second most common cancer type in China, with about 380,000 new cases per year. There were approximately 1.5 million new CRC cases globally in 2015 which are expected to increase to approximately 1.7 million new cases per year by 2020, according to Frost & Sullivan.
Fruquintinib is a highly selective and potent small molecule oral inhibitor of vascular endothelial growth factor receptors (“VEGFR”) and designed to be a global best-in-class VEGFR inhibitor for many other types of solid tumours. Fruquintinib capsules will be marketed in China under the brand name Elunate.

The approval is based on results from the Phase III FRESCO trial, which were presented at the American Society of Clinical Oncology 2017 Meeting and published in the JAMA (Journal of the American Medical Association) in 2018. Analysts see this as a “milestone event” and upcoming results on trials for lung and gastric cancer in 4Q 2018 and 2019 may further unlock Elunate’s value.

Hutchison China Meditech has returned +25.16% (AUD) in the year to 30 September 2018.

Kyowa Hakko Kirin (4151: Tokyo)

Mylan N.V. a global generic and specialty pharmaceuticals company and Kyowa Kirin Biologics Co., Ltd. announced that the European Commission (EC) has granted marketing authorisation for Hulio, a biosimilar to AbbVie's Humira (adalimumab) for all indications. Humira is the best-selling prescription drug in the world (2017 sales US$18.49 Bn) and is used for the treatment of numerous autoimmune diseases and moderate to severe active rheumatoid arthritis.

The authorization follows a positive opinion by the Committee for Medicinal Products for Human Use (CHMP), which concluded that the development program including analytical, functional, clinical and immunogenicity data demonstrated adequate biosimilarity with the reference product, Humira.

The EC approval of Hulio applies to all 28 European Union (EU) member countries and European Economic Area (EEA) member states of Norway, Iceland and Liechtenstein. Kirin’s partner Mylan plans to launch Hulio across various markets in Europe on or after 16 October. Mylan and Kyowa Kirin Biologics set up a partnership earlier this year.

Fujifilm Kyowa Kirin Biologics has a nonexclusive royalty bearing license with AbbVie (Mylan has a sublicense) for the use and sale of Hulio in European countries.

Kyowa Hakko Kirin has returned +20.8% (AUD) in the year to 30 September 2018.

You can invest in these companies directly through Macrovue’s Asian Healthcare Vue.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual and does not constitute financial advice. Consider the appropriateness of the information in regards to your circumstances. Past performance is not a reliable indicator of previous performance.

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