Incidents:

On October 30, 2023, Ganli Pharmaceutical released its three-quarter report for 2023: Q3 in 2023, the company achieved revenue of 676 million yuan, an increase of 68.10% over the previous year; realized net profit of 132 million yuan, and achieved net profit of 122 million yuan after deducting non-return to the mother.

Key points of investment:

The product range is complete, and the R&D strength is strong. The company has a complete insulin R&D pipeline, and has five insulin analogue products and one human insulin product. The products cover the three functional segments of insulin: long-lasting, quick-acting, and pre-mixed. In addition to second-generation and third-generation insulins that are already on the market and mature in the market, fourth-generation insulin and more advanced drugs and therapies related to diabetes treatment are being actively deployed and promoted. As of 2023H1, R&D projects that have entered the clinical stage include the novel premixed double insulin compound GZR101, the fourth-generation insulin analogue GZR4, and the long-acting glucagon-like peptide-1 (GLP-1) receptor agonist drug GZR18.

Actively deploying overseas markets, with great potential for future growth. The company's marketing applications for three biosimilar drugs, Glycerin, Lysoprol, and Menthol Insulin Injection have been officially accepted by the US FDA and have entered the substantive review stage. These three insulin injections are the first Chinese-produced insulin declared in the US. They are also important milestones in the internationalization of Ganli. Furthermore, in August 2023, the marketing application for the company's biosimilar drug for glycine insulin injection was officially accepted by the European EMA and entered the scientific evaluation stage.

Earnings forecasts and investment ratings. We expect the company's operating income for 2023-2025 to be 24.50, 32.21, and 4.123 billion yuan, and net profit of 3.08, 5.96, and 1,081 billion yuan, corresponding PE of 87.44x, 45.14x, and 24.89x. Since it is the leading insulin company in China, its market position is relatively stable. It was covered for the first time, and it was given a “buy” rating.

Risk warning. There is a risk of price reduction in collection, new product release falling short of expectations, R&D progress falling short of expectations, sales in the European and American markets falling short of expectations, and risk of industry policy changes.