Event: In the first half of 2023, the company achieved operating income of RMB 3,379 million, an increase of 25.2% over the previous year; realized net profit of RMB 2,275 million, a significant increase of RMB 64 million over the same period in 2022.
Innovative drugs continue to contribute revenue: In the first half of 2023, innovative drug revenue was about RMB 2,413 billion, accounting for 71.4% of revenue, an increase of about 36.6% over RMB 1,767 billion in the same period in 2022. Looking at different treatment fields, the neurological sector has revenue of about 1,055 million yuan, accounting for 31.2% of revenue; the oncology sector has revenue of about 783 million yuan, accounting for 23.2% of revenue; the autoimmunity sector has revenue of about 659 million yuan, accounting for 19.5% of revenue; and revenue from other fields is 882 million yuan, accounting for 26.1% of revenue. Among them, Xianbing achieved revenue of 1,025 billion dollars, which is basically the same as last year. It mainly stems from the need to absorb the impact of medical insurance price cuts.
Strengthen marketing and promotion, and have strong commercialization capabilities: As of June 30, 2023, the company's four major marketing divisions, neuroscience, anti-tumor, self-reliance and integration, retail, and other marketing support departments had about 4,700 personnel, spread across 32 provinces, cities and autonomous regions in China. The products covered more than 2,800 tertiary hospitals, about 17,000 other hospitals and medical institutions, and more than 200 large national or regional pharmacy chains.
Research and development is progressing smoothly, and the innovative drug pipeline continues to be expanded: In the first half of 2023, the number of innovative drugs that have already entered the commercialization stage was expanded to six (Endo, Edsin, Xianbixin, Envida, Cosela, and Xianoxin), and the NDA for a new drug to be added to the market was accepted.
Investment advice: Innovative pharmaceutical products continue to be marketed, bringing steady growth impetus. We expect the company to achieve operating income of 73.92/8897/10.334 billion yuan in 2023-2025, and net profit of 30.55/16.53/1,887 billion yuan. The corresponding PE was 6.55/12.10/10.66 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: The time to digest the price cuts will exceed expectations; the launch of new products falls short of expectations; there is a risk of loss of core R&D personnel.