CORRECTED-LIVE MARKETS-Chinese biotechs riding the 'DeepSeek sentiment' wave, Macquarie analysts say

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CHINESE BIOTECHS RIDING THE 'DEEPSEEK SENTIMENT' WAVE, MACQUARIE ANALYSTS SAY

A sharp rally in Hong Kong and Chinese listed healthcare stocks so far this year, inadvertently fueled by the "DeepSeek sentiment" has boosted shares of many thinly-traded biotechs in the region, according to analysts at brokerage Macquarie Equity Research.

Bayer became the latest large pharma player on Wednesday to sign a licensing deal with China's Puhe BioPharma, following in the footsteps of peers Merck MRK.N, Eli Lilly LLY.N, Novo Nordisk NOVOb.CO and AstraZeneca AZN.L who have all teamed with biotechs in the region.

Five licensing deals have been announced so far this year with China-based biotech companies across therapeutics areas like obesity, heart disease and cancer.

The deals provide pharma majors access to new drugs for a cheaper investment, at least four brokerages said this week.

Akeso and partner Summit Therapeutics' SMMT.O cancer drug candidate, invonescimab, has also helped usher in a wave of licensing of similar assets and China drugs in general, Macquarie analysts said. Data from the drug shook US investors and hampered Merck shares in May last year.

At least 11 licensing agreements have been announced since then, according to Reuters calculations.

China already makes up nearly 30% of global drug development, according to data from Citeline. Investments in biotech stocks helps create and capture more value for shareholders and the companies, Macquarie analysts said.

Sentiment toward Chinese biotechs is in sharp contrast to US biotechs, that continue to be hurt by funding crunches and a pause on interest rate cuts.

Macquarie analysts say biotechs also enjoy an edge over China-based contract drug manufacturers (CDMO) that are facing a "perfect storm" of troubles, as global biotech funding deteriorates rapidly.

Proposed US tariffs on pharma products have compelled global companies to in-source drug development and to stay on the sidelines, they said.

(Sneha S K)

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