The company has been deeply involved in the insulin field for many years, and second-generation insulin has the highest market share. The company is a leading domestic insulin company. The production process of human insulin is at the leading level in terms of fermentation, expression, yield, purity, and testing. Currently, the insulin products on the market include human insulin injections, insulin glargine injections, Mendon insulin injections, Mendon insulin 30 injections, and insulin 50 injections. The company's market share has continued to increase in recent years. According to the company's announcement, the company's insulin market share increased to 40.50% in 2022, surpassing Novo Nordisk and ranking first in the country. The company's insulin market share further increased to 44.6% in the first half of 2023.
There is still room for improvement in rigid insulin demand, and the implementation of collection will accelerate the domestic substitution process. According to indirect estimates from Novo Nordisk's business data, the domestic insulin market size in 2022 is about 18.8 billion yuan; currently, the main share of the domestic insulin market is occupied by foreign companies such as Novo Nordisk. The company's market share in 2022 is about 10%, ranking first among domestic companies. Due to its drug characteristics, insulin has strong user stickiness, and the market share of leading foreign investors Novo Nordisk remained stable for many years before collection; after the collection was implemented, domestic-funded companies obtained a higher purchase volume distribution ratio with relatively high bid wins, and achieved a significant increase in market share in the face of an overall decline in market capacity. Domestic substitution is expected to accelerate in the future, driven by factors such as further improvement of domestic companies' product lines and product upgrades in the grass-roots market.
The impact of harvesting is gradually clear, and innovation in multiple fields and overseas commercialization are expected to drive long-term growth.
Since the second half of 2022, the company's performance has continued to improve quarterly, and the impact of special insulin collection has basically been clear. In terms of research and development, the company's liraglutide injections have now been approved for marketing, and are expected to achieve revenue of 180 million yuan and 288 million yuan respectively in 2024-2025; the speeding effects of proline insulin and risproline insulin (premixed) are already in phase III clinical trials, and the diabetes product line is gradually being completed. Furthermore, the company has expanded its R&D pipeline to other metabolic diseases such as gout and hyperuricemia. If the products under development are successfully launched, it is expected that they will quickly contribute to performance growth through channel advantages. The company has continued to promote overseas commercialization in recent years. It has successively signed commercial cooperation agreements with Kexon Pharmaceuticals and Jianyou Co., Ltd. on liraglutide injections and third-generation insulin series products. It is expected to further explore potential market space in the future.
Profit forecasting and investment advice
The company is expected to achieve net profit of 9.84, 11.39, and 1,285 billion yuan in 2023-2025, with year-on-year growth rates of -37.8%, 15.8%, and 12.8%. The first coverage gives the company 20 times PE valuation in 24 years, with a target market value of 22.8 billion yuan and a target price of 11.42 yuan, giving it a “buy” rating.
Risk warning
The risk of sales and promotion of new products falling short of expectations, risk of sales renewal and price reduction exceeding expectations, risk of R&D progress falling short of expectations, risk of lifting the ban on restricted shares, and risk of equity pledges.