3SBio (SSRX) is up 36% for the past 52 weeks. The stock should continue to rally because the company is well positioned for future growth and it is the clear leader among chinese biotech stocks. Like SciClone (SCLN), 3SBio’s revenue comes from marketing and manufacturing its products in China. The company states the following on its website.

Given our portfolio of market leading principal EPO products with the broadest indications available in the Chinese market, active R&D efforts capable of developing new drugs like TPIAO, and our deep pipeline of product candidates, we believe we are now one of the leading biopharmaceutical companies in China.”

3SBio’s dominance in the Chinese market is why this stock is an attractive investment. 3SBio is a leading player in the Chinese biopharmaceutical market, but the company is still somewhat small. It’s market capitalization is  294.68 million and they only have 800 employees. The company’s small size puts it in a good position for growth. China has over 1.3 billion people and a rapidly growing economy. Chinese growth is still much higher than U.S. growth. The increase in incomes that has been seen in China over the past few decades will also benefit a company like 3SBio. The aging Chinese population will strongly benefit 3SBio and the Chinese workforce actually decreased recently.

3SBio has a diversified portfolio of products on the market and a deep pipeline of products that are being developed. The company’s principal products are EPIAO and TPIAO. EPIAO is an injectable recombinant human erythropoietin and TPIAO is  recombinant human thrombopoietin. EPIAO is approved for three different uses. The company’s legacy products Intefen and Inleusin.

The company’s revenues have grown substantially over the past few years as shown in the chart below.  The stock’s P/E ratio at 17 is also much lower than the industry average. The stock also has PEG ratio of .86, which could mean that the stock is currently undervalued.

The stock is an attractive investment because of its dominance in the Chinese market and its strong fundamentals. The company will grow in the future because of China’s large aging population and it’s deep pipeline of products. Its dominant products, EPIAO and TPAIO, are both market leaders and they are rapidly growing.