Main points of investment
Event: Heiscox released its annual report for 2021, with operating income of 2.773 billion yuan, down 16.71% from the same period last year, net profit of 345 million yuan, down 45.8% from the same period last year, and non-net profit of 35.2051 million yuan, down 75.91% from the same period last year.
Among them, the company's fourth-quarter operating income was 862 million yuan, down 9.68% from the same period last year, up 35.74% month-on-month, deducting 50 million of non-net profit, an increase of 191.48% over the same period last year.
Comments: the fourth quarter inflection point verification, the continuous release of cyclopropofol: the decline in the company's main business income is mainly affected by the national health insurance price reduction, centralized procurement and other factors, we believe that the impact has basically subsided, as the fundamentals of innovative drug products will continue to improve. Look at the products:
1) Dorasetron mesylate injection was greatly affected by the price reduction negotiated by the state. Tumor antiemetic products decreased by 85.6% to 146 million yuan from 1.018 billion in 2020, which had a great impact on income. The market share of the products began to climb from Q3 and Q4, and sales picked up.
2) other varieties maintained stable or rapid growth, their central vascular products increased from 4 million to 41.05 million, and parenteral nutrition income increased by about 89 million.
3) the anesthetic product cyclophenol released rapidly. Cyclopropofol, a class 1 intravenous anesthetic developed independently, was approved to market in December 2020, and newly approved "general anesthesia induction" and "sedation in bronchoscopy" during the reporting period. 2021H1 7.57 million yuan, annual sales of 60.15 million, accelerated release trend is obvious, 21 years through negotiations to enter the national health insurance, we expect to continue to accelerate the release in 22 years. The sales expenses decreased, and the expense rate remained basically stable: in 2021, the company's sales expenses were 976 million yuan, down 23% from the same period last year, and the sales expense rate was 35.2%, down 2.9 pct; the management expenses were 352 million yuan, up 11% from the same period last year, and the management expense rate was 12.7%, up 3.2 pct from the same period last year; R & D expenses were 434 million yuan, up 7% from the same period last year, and the R & D expenditure rate was 15.7%, which increased 3.5pct over the same period last year. The company's overall gross profit margin was 66%, lower 2.1pct than the same period last year.
Continuous R & D investment, innovative varieties drive a new round of growth: the company has entered the clinical stage of eight category 1 innovative drug products, of which 1) Cyclopropofol was approved for "sedation and anesthesia during non-tracheal intubation surgery / operation" and "general anesthesia induction and maintenance". Indications "sedation during intensive care" and "sedation and anesthesia during gynecological outpatient surgery" were declared as NDA in December 2021 and January 2022 respectively. It is expected to be approved this year, and the American phase Ⅲ clinical enrollment of general anesthesia induction indications is progressing smoothly. 2) analgesic and antipruritic drugs (HSK21542), neuralgia drugs (HSK16149), and long-acting hypoglycemic drugs (HSK7653) are all in phase III; 7653 of them are expected to complete phase III and declare by the end of the year, and 21542 are expected to complete phase III trials. At the same time, this year, the company plans to complete 3-4 innovative drug applications for IND; internationalization. The company has conducted two phase III trials of cyclopropofol anesthesia induction (IGA) in the United States, and HSK29116 has obtained the IND approval of FDA in April 2022.
Profit forecast and investment advice: the company faded under the influence of medical insurance price reduction, the progress of innovative drugs was smooth, the release of cyclopropofol was rapid, and the sales expectation of innovative drug pipeline was raised. The company's operating income from 2022 to 2024 is expected to be 3.47 billion yuan (3.47 billion yuan before adjustment), 4.53 billion yuan (4.1 billion yuan before adjustment) and 5.55 billion yuan, respectively, an increase of 25%, 30.4% and 22.6% respectively over the same period last year.
The performance inflection point was determined and upgraded to the "buy" rating.
Risk hints: the risk of drug research and development, the risk that the market capacity is lower than expected, the risk of drug price reduction, and so on.