Incidents:
The company announced results for the first three quarters of 2023. Operating income was RMB 23.865 billion, up 1.6% year on year; profit attributable to shareholders was RMB 4.495 billion, up 0.6% year on year; and EPS was RMB 37.84 points.
Comments and opinions:
Performance continues to grow
The company's performance grew steadily. In terms of sector, the proprietary pharmaceutical sector achieved revenue of 19.338 billion yuan, an increase of 3.9% over the previous year. Among them, neurological diseases, anti-tumor, anti-infection, cardiovascular disease, respiratory diseases, and digestive and metabolic fields increased 15.2%, -21.2%, 18.8%, -15.5%, 163.5% and 17.4%, respectively. The decline in oncological products was mainly due to falling prices after Caili was collected; the raw product sector achieved revenue of 2,875 billion yuan, a year-on-year decrease of 8.2% due to sluggish vitamin C prices.
Against the backdrop of the downturn in the pharmaceutical industry, especially the cold winter of the pharmaceutical industry in the third quarter, the company achieved growth in performance, thanks to the company's continuous new product line, a strong commercialization team, and a management team with strong efficiency and execution.
Investment in new drug research and development has been increased, and R&D results have been outstanding:
The R&D expenses in the first three quarters of 2023 were 3.678 billion yuan, an increase of 25.9% over the previous year, accounting for about 19% of the company's proprietary drug business revenue. Currently, the company has more than 60 items in the clinical research or application stage. Of these, 7 innovative drug candidates have submitted marketing applications within the period, and 17 are in the clinical registration stage or are about to submit marketing applications. The company has built an international R&D team, focusing on the discovery of biomedicine in the fields of small molecule targeting, nano, monoclonal antibodies, double antibodies, antibody coupling, mRNA vaccines, small nucleic acid drugs, targeted coupling modified polypeptide/proteins, and immunity.
Innovative drug development is progressing smoothly, and new drugs are expected to continue to be marketed:
In September '23, irinotecan hydrochloride liposome injection was approved for marketing in combination with 5-fluorouracil (5-FU) and folic acid (LV) to treat patients with metastatic pancreatic cancer that has progressed after treatment with gemcitabine. In June '23, the marketing application for bartolizumab (HBM9161) for the treatment of systemic myasthenia gravis was accepted. Since the beginning of 2023, it has received clinical trial approval for 15 new drug first indications under development and 13 new indications. The company has 2 GLP-1 drugs for clinical trials and is expected to be approved for marketing starting in 2026. The company's ADC variety, CPO 301, has also been approved for clinical trials in the US and Canada.
Our point of view:
The company is actively deploying innovative drugs and increasing R&D investment. R&D expenses are expected to reach 20% of revenue from proprietary drugs. A number of new drugs will be marketed every year. Currently, 7 innovative drugs have been submitted for marketing. Performance growth continued for more than 10 years. This year, due to collection and pharmaceutical policies, this year's performance was low. As new products continued to be launched, double-digit growth resumed in 2024. Currently PE is 12 times, and the value is seriously underestimated. Active attention is recommended.