Introduction to this report:
The company's proprietary medicine sector is growing steadily, and the expansion of retail channels has successfully driven NBP's growth. Research and development results are abundant, and various products are expected to be marketed in 24 years. Innovation and transformation ushered in a harvest period, maintaining the company's holdings growth rating.
Summary:
Maintain the “Overweight” rating. 23Q1-3 achieved revenue of 23.865 billion yuan, up 1.6% year on year; adjusted net profit was 4.715 billion yuan, up 2.0% year on year. The overall gross margin was 70.4%, down 2.3 pcts from the previous year, mainly due to changes in product structure and changes in the price of Vitamin C.
Considering that products were affected by collection, revenue for the years 23, 24, and 25 was lowered to 319.41, 357.93, or 40.425 billion yuan (previously 331.52, 371.65, and 42,098 billion yuan), maintaining an increase in holdings rating.
The pharmaceutical sector is internally segmented, oncology and cardiovascular products continue to be under pressure, and respiratory products are growing rapidly.
Proprietary drug revenue grew steadily (+3.9%). Enbp benefited from retail market expansion, and revenue continued to grow. Neurological and anti-infective products increased 15.2% and 18.8% year-on-year respectively; influenced by Kaili and Hyunning's collection, revenue in the anti-tumor products and cardiovascular sector decreased by 21.2% and 15.5% year-on-year respectively; driven by the epidemic at the beginning of the year and fall influenza, respiratory disease products accounted for a relatively small revenue, but increased 163.5% year on year; API revenue was 2,875 billion yuan (-8.2%), of which vitamin C revenue was 1,513 billion yuan (-) 23.5%), due to the fact that the price of vitamin C is still low, leading to a decline in sales. Antibiotics were driven by sales growth to achieve revenue of 1,362 billion yuan (+17.9%); functional food and health care business revenue was 1,652 billion yuan (-5.6%). Although sales of caffeine increased, its price declined.
In 2024, a variety of products will go on sale, and revenue is expected to return to double-digit growth. 23Q1-3's R&D expenses are $3,678 billion (+25.9%), accounting for about 19% of the proprietary drug business. About 60 drugs have entered the clinical or application stage, 7 drugs have submitted marketing applications, and 17 are in the clinical registration stage or are about to be submitted for marketing. In September 2023, irinotecan liposome treatment for metastatic pancreatic cancer and nalusobizumab for giant cell tumors of bone were approved for marketing. Mingfule (acute ischemic stroke), omazumab (urticaria), amphotericin B liposomes (deep fungal infection), and SYSA1802 (≥2L cervical cancer) are expected to be approved for listing in 2024 to contribute to increased performance, and revenue is expected to return to double-digit growth in 2024. Research and development is progressing smoothly. Both the field of self-immunity and ADC drugs are in place. The psoriatic drug usinumab, and DP303C (HER2 ADC) to treat HER2-positive 1L breast cancer are all expected to be approved for marketing in 2025.
Catalysts: The amount of core products released exceeded expectations, and clinical data on drugs under development exceeded expectations.
Risk warning: Product development fell short of expectations, industry policy risks, and price reductions in procurement exceeded expectations.