China Pharma: Marketing book

We think China's under-penetrated insomnia market is approaching a structural inflection point, on the rollout of orexin receptor antagonists (ORAs). We forecast the ORA segment to scale from cRmb0.1-0.2bn in 2025 to Rmb8.9bn by 2035 (49% CAGR), reaching 32% of the total sleep therapeutic market. Among our coverage, we believe Simcere and Hansoh are the best positioned to capture this shift. Our above-consensus peak sales forecast reflects our more constructive view. We change top pick to Simcere. Roughly 10-15% Chinese adults suffer from clinically significant insomnia disorder, with a treatment rate of only ~6% (vs. 60%+ in the US/Japan). We expect the treatment rate in China to increase from 6% in 2022 to 8% in 2035, driven by: 1) rapid development of sleep monitoring or support technology, 2) ramp-up of ORA class innovative drugs;