Innovation drives leading pharmaceuticals, and the transformation results are remarkable. The company is a leading innovation-driven pharmaceutical company in China. It has been deeply involved in the Chinese pharmaceutical market for over 25 years and has strong R&D and commercialization capabilities. The company focuses on the five key treatment areas of anti-tumor, central, anti-infection, metabolism, and self-immunity, and has established a number of innovative R&D platforms such as ADC, double antibody, and siRNA. Currently, 7 new drugs have been approved for marketing, more than 30 new drug projects are in the clinical research stage, and the company has achieved remarkable results in innovation and transformation.
The share of innovative drug revenue continues to rise, and approval of new products/new indications will contribute to the increase. In the first half of 2023, the company's innovative drug revenue was approximately $2.79 billion, accounting for 61.8% (18.0% in 2020). Pemoxatide was approved domestically in June '23, and Ibrexafungerp's listing application was accepted by the NMPA in July '23. The expansion of multiple indications for amitinib and inelizumab, and HS-10365 (RET) are in the registered clinical stage. Contributions such as HS-10365 (RET) are in the registered clinical stage. It is expected that over the next 3 years, contributions will increase with the approval of these new products/new indications, which will accelerate the growth of the company's performance.
Several core pipelines have entered the POC stage, and innovation and internationalization have reached a new level. Since this year, a number of globally competitive new drug pipelines such as HS-20094 (GLP-1/GIP), HS-20093 (B7-H3 ADC), HS-20089 (B7-H4 ADC), and HS-10374 (TYK2) have entered the POC stage, and it is expected that clinical registration will begin one after another in 24-25. Meanwhile, the company reached an external licensing agreement with GSK in October '23, and the company's R&D innovation and internationalization entered a new stage.
Profit forecasts and investment advice. The commercialization of innovative drug types continues to unleash market potential. The core research pipeline has shown clinical treatment capabilities with global competitiveness one after another. Innovation and internationalization are accelerating. We are optimistic that the company's development will reach a new level. We expect the company's EPS for the year 23-25 to be HK$0.46, 0.52, and HK$0.60 per share, respectively. Using the risk-adjusted DCF method, we obtained the company's reasonable value of HK$22.35 per share, maintaining the “buy” rating.
Risk warning. Risks where research and development of new drugs fails or does not advance as expected, risks of innovative drugs not being released as expected after marketing, risk of termination of external licensing, risk of increased market competition, etc.