Adhere to the "three-drive" final harvest, innovation-driven new growth curve in the external environment becomes more complex, the pharmaceutical industry reform continues to deepen the environment, the company adheres to the "three-drive, innovative growth" development strategy, and strive to implement the "full innovation, full marketing, saturated production, cost reduction, create a blue sea" 20-word operation and management policy. Over the years, the company's "three-drive" strategy with "large infusion + antibiotics + new drug research and development" as the core has achieved results after changes in industries such as collection and mining, with a substantial recovery of infusion business and the successful landing of Chuanning Biology. Korenbotai is about to go to sea. In the first half of 2023, the company's performance was obvious, and revenue increased by 17.64% compared with the same period last year.

Large infusion: the market pattern is gradually stable, consolidating the leading position

After years of development in the field of infusion, the market pattern is gradually stable. In the first half of 2023, the company actively sought sales increment from product structure upgrading, new product promotion, medical terminal development and market access.

Adhering to the concept of safe infusion, the company continues to promote the process of safe closed infusion instead of semi-closed infusion, the proportion of closed infusion sales increased by 3.7% compared with the same period last year, reaching 52.4%, and the sales structure of infusion products has been further optimized; to promote the market promotion of newly approved infusion products and improve sales quality Strengthen the internal incentive mechanism, through equity incentives and other measures to increase the development of the medical terminal market; adhere to access first, actively participate in national and local collection, with the promotion of "should be collected as much as possible", price compression will hit bottom.

Non-infusion: increase investment in research and development and actively deal with difficult risks

In the first half of 2023, based on saturated production and starting with scientific research and innovation, Yili Chuanning focused on raw materials for health products, bio-pesticides, high value-added natural products, high-end cosmetic raw materials, biodegradable materials and other fields. in the first half of the year, business income reached 2.417 billion yuan, an increase of 21.84 percent over the same period last year, and net profit reached 391 million yuan, an increase of 64.82 percent. Through scientific production system re-evaluation, Guang****n adjusts the production structure in time, fully matches the existing capacity design and personnel, and improves the utilization rate of production capacity; the continuous improvement of product quality and accurate development broadens the downstream product market. Guang****n insists on taking quality as the cornerstone, reduces costs and increases efficiency through automatic and intelligent upgrading of production equipment, gradually upgrades the product structure, and further promotes its influence in the high-quality market. Turn losses into profits through the linkage of production and marketing. In the field of non-infusion drugs, the company actively deals with difficult risks by increasing market investment, improving market coverage, adjusting product structure and continuously promoting new approved varieties.

Imitation of new drugs: plus high-end imitation, the next-generation ADC leading innovative drug subsidiary Columbine has been split and listed separately, and officially landed on the Hong Kong Stock Exchange in July 2023. The company has won the large pipeline cooperation of the multinational drug company Mosadong several times, the head pipeline TROP 2 ADC has been promoted to clinical phase 3, and the listing of its triple negative breast cancer indications is about to be declared. Overseas combined with PD-1 's first-line treatment of non-small cell lung cancer phase 2 clinical, by the partner Merck & Co Inc is steadily in progress.

In different new drug sector companies according to the actual operating conditions to choose differentiated development strategies, have handed over a good answer, in the first half of 2023, the company's R & D investment reached 1.0813863 billion yuan, an increase of 28.25% over the same period last year. The research and development of generic and innovative drugs are relatively smooth, and the R & D investment has gradually entered the harvest period, which is expected to enhance the new driving force for the company's performance growth and enhance its competitiveness.

Investment suggestion

We expect the company's operating income from 2023 to 2025 to be 21.125 billion yuan, 22.96 billion yuan and 24.85 billion yuan respectively, an increase of 11.7%, 8.7% and 8.2% respectively over the same period last year. The net profit returned to the company is 2.571 billion yuan, 3.251 billion yuan and 3.80 billion yuan, respectively, and the year-on-year growth rate is 50.5%, 26.4% and 16.9%, corresponding to 16X/13X/11X. We covered for the first time, giving a "buy" rating.

Risk hint

The risk of industry policy change; the risk that the progress of research and development is not as expected; the risk of approval access is not as expected; the risk of rising costs