The domestic market for oncology treatment is broad. According to Frost & Sullivan data, the number of new cancer cases in China continues to rise, and is expected to reach 5 million by 2024 and 5.7 million by 2030. China's oncology drug market is growing strongly, and its growth rate far exceeds the growth rate of new cancer cases in China. Oncology is the fastest growing major treatment area in the Chinese pharmaceutical market. The compound annual growth rate is expected to be 15.0% in 2019-2024; it is expected that by 2024, oncology will become the largest treatment field in China, with a market size of 367.2 billion yuan; and 659.8 billion yuan in 2030.
Sales and net profit continued to increase. The company's revenue rose from 1,499 million yuan in 2018 to 2.75 billion yuan in 2022; net profit to mother rose from 535 million yuan in 2018 to 855 million yuan in 2022. Ridaxian can improve patients' immunity, improve patients' quality of life, and improve remission rate and survival rate. Cases of new cancer and severe cases in China continue to increase, and Ridaxian's sales revenue is expected to increase year by year.
The company's multiple pipelines are under development. Nasetumab, which is indicated for treating recurrent or refractory high-risk neuroblastoma, was commercialized in China in July 2023, providing patients with new immunotherapy methods.
In addition, the company also has a number of products under development, such as RrX-001, a small molecule drug used to treat third-line small cell lung cancer, and Vaborem for the treatment of severe infections. It is expected that new products will continue to be approved and commercialized in the future.
Innovative GTP sales model. The “GTP Model” aims to open up the in-hospital and out-of-hospital markets and increase drug accessibility. This model has been implemented since pharmacies begin providing value-added services (such as drug delivery and disease education activities) to improve customer experience and enhance customer loyalty.
Investment advice: We expect the company's 2023-2025 revenue of 31.24/36.02/4.163 billion yuan, net profit of 921/10.40/1,174 million yuan, continuous release of products such as Ridaxen and other products, rich R&D pipelines, reference relative valuations, to give Saisheng Pharmaceutical 2.5 times PS in 2024, corresponding to the company's target price of HK$15.89, covered for the first time, giving it an “gain” rating.
Risk warning: Risk of sales of Ridaxian falling short of expectations; risk of falling short of expectations in R&D and marketing; risk of losing talent in R&D and sales; risk of price reduction caused by policies and regulations, etc.