Ping An's view: All regions have basically completed tenders, and marketing reforms are expected to promote the continued recovery of the main business: in 2017, the company's sales revenue fell 2.15% year on year, mainly due to price reductions and strategic abandonment of tenders for Shenxiao glucose injections and sodium hyaluronate injections. The company promptly carried out marketing reforms and integrated sales teams. In the first quarter of 2018, when sales prices continued to be under pressure, it achieved an 8.4% increase in revenue, showing signs of recovery. With the basic completion of tenders in various regions, the prices of the company's two main products are expected to remain stable in 2018, and it is expected that the company's revenue will continue to grow at a good rate throughout the year. Looking at product lines, Shenxiao glucose injections and sodium hyaluronate injections are expected to remain stable, olivine products are expected to continue to grow at a rate of around 30%, proprietary Chinese medicines such as Xinnao Ning are expected to reach a 50% growth rate, and Jinrui Pharmaceutical and Huiju API companies will also maintain impressive growth due to the addition of new varieties. The industrial chain layout is perfect, and internationally integrated generic drug companies are ready to go: The company is positioned to follow the path of generic drug industrialization in line with the international community. Since the beginning of listing, it has continuously improved the entire generic drug industry chain platform through acquisitions. The links currently laid out include: API production and sales, generic drug production and sales, high-end formulation research and development, and overseas generic drug industrialization platforms. The subsidiary Jinrui Pharmaceutical mainly develops and produces generic drugs in China. Since 2016, it has obtained 19 clinical approvals, and four injectable consistency evaluations are ongoing. These preliminary tasks are all expected to drive the rapid growth of the company's business in the future. In the field of high-end formulation research and development, the company has set up a research and development platform for liposomes and emulsions. Currently, 5 drugs are being studied, including antineoplastic drugs and cardiovascular drugs. Among them, the fastest progressing JZB28 anti-tumor drug is about to enter phase III clinical trials. Sungen Pharma, an overseas generic drug industrialization platform, holds 51% of the company's shares and invites well-known Chinese scientists Liu Hongbin and Huang He as partners. The two founders and team members hold 49% of the shares in total, and the team members are highly motivated. There are currently about 30 technical team members. In 2018, Sungen will complete 6-8 ANDA declarations and process and formulation studies for 4-6 products, which are currently progressing smoothly. With the launch and sale of ANDA products, Sungen is expected to be profitable in 2019-2020. Major biopharmaceutical products are being researched to support the company's long-term development: the company's recombinant anti-EGFR human mouse chimeric monoclonal antibody injection is expected to begin phase 3 clinical trials in June 2018. Its target product, Epitol, has the highest sales peak worldwide of 1.8 billion US dollars, and domestic sales are expected to be about 800 million yuan. Currently, the company's R&D progress is in the top three, and it has a certain first-mover advantage. The company has a new bioclass 1 drug in clinical phase 1 for the treatment of moderate to severe asthma. Its target product is omazumab (Zhuole), with global sales reaching 2.5 billion US dollars in 2017. Currently, no similar products have been declared in China, and the competition pattern for this variety is good. The company has a biosimilar drug that has received clinical approval. Its target product is a new active substance. It was launched in April 2005 and is still an exclusive variety. Its sales in 2016 were 540 million yuan. The only other company applying is Suzhou Landing. The progress is currently being reviewed, and the competition pattern for this variety is good. In addition, the company's long-term osteoarthritis variety, HA1, has also launched a clinical phase. It is expected to replace conventional sodium hyaluronate injections in the future and gain more share in the national market size of 800 million. Give a “recommended” rating: The company's performance declined in 2017 due to changes in the industry environment. At the end of 2017, timely reforms were carried out, the marketing team was adjusted, and the company's development plan was sorted out. Revenue growth picked up in the first quarter of 2018, and performance is expected to return to a growth trajectory throughout the year. The company's layout in the field of generic drugs has been improved, and investment in innovative drugs has been increased. Medium- to long-term development is sustainable. It is estimated that the company's EPS for 2018-2020 will be 0.23/0.29/0.37 yuan, and the corresponding PE will be 25/20/16 times, respectively, covering the first time, giving it a “recommended” rating. Risk warning 1. Policy risk: Pharmaceutical industry policies are frequent. Policies such as drug price reduction, two-ticket system, and zero bonus all have an impact on the company's business in the short term. 2. The risk that the product will not win the bid: The company's products are basically prescription drugs and need to be sold in hospitals. If important varieties are not sold in certain provinces, it may have an impact on sales revenue. 3. Research and development progress falls short of expectations: There is a possibility that drug development will fail in the entire process. The company has many ongoing research projects, and some important varieties have entered the clinical stage. Failure may have a negative impact.