Huahai Pharmaceutical is a leading pharmaceutical manufacturing enterprise in China, with collaborative development of APIs and formulations, international+domestic two-wheel drive. Huahai Pharmaceutical is deeply involved in domestic and foreign markets. Since the US market ban was lifted in 2021, overseas markets have recovered relatively quickly, and it is expected to usher in new developments with the expansion of APIs, formulation varieties and markets.
Huahai Pharmaceutical: A leading pharmaceutical manufacturing enterprise with a global layout. Huahai Pharmaceutical is deeply involved in the pharmaceutical manufacturing industry, and has accumulated unique experience and advantages in R&D, production and sales through joint promotion of APIs, generic drugs and innovative drugs. In terms of market expansion, the company is a pioneer in domestic pharmaceutical companies going overseas. The sales of APIs covered 106 countries and regions around the world, and achieved large-scale formulation sales in the US market earlier.
APIs: The stock is large and stable, and new varieties are expected to contribute to the new volume. 1) Large stocks: The company continues to promote technological reform and continuously strengthen product competitiveness. Large varieties with anti-hypertensive and central nervous system advantages are expected to grow steadily. 2) New varieties: The company has deployed multiple varieties with 22-27 patents that are about to expire, and the potential market is large. In recent years, the company's registration in the global standardized market has accelerated. Currently, it has registered 80+ varieties in the US and 50+ varieties registered in Europe. It is expected to open up more incremental space to go overseas in the future.
Formulations: Foreign formulations are expected to reach a profit inflection point, and domestic formulation collection and release volume+diversified sales channels will open up more markets. 1) Foreign formulations: After the FDA ban was lifted, sartan preparations recovered well in the US market, and the amount of non-sartan preparations was obvious. The number of ANDA approved by the company has accelerated in recent years. In the future, with the support of good sales channels, with the release of new and old varieties, foreign formulations are expected to reach a profit inflection point. 2) Domestic formulations: The number of formulations has increased rapidly, the adverse factors of price reductions for some collected products have gradually been clarified, and new products continue to embrace collection dividends. The company expects the number of domestic formulations to reach 134 in 2024 (99 in 2023). The company is also promoting a sales channel fission strategy, building a diversified sales structure, and comprehensively promoting market sinking. Domestic formulations are expected to open up more markets.
Innovative drugs: focus on the future and actively lay out. The company actively lays out biopharmaceuticals, new small-molecule drugs, etc., and is developing innovative drugs covering monoclonal antibodies, double antibodies, fusion proteins and ADC. In terms of biopharmaceuticals, there are currently more than 20 research projects, of which 12 have entered the clinical stage (1 phase III clinical, 4 phase II clinical, 7 phase I clinical). In terms of innovative small-molecule drugs, the company focuses on cardiovascular, neuropsychiatric, oncology, immune metabolism and other fields. In July 2023, the company transferred the rights of the thrombin inhibitor HHT-120 in Greater China to Livzon Pharmaceuticals for a total amount of 86 million yuan.
Profit forecast and investment rating: We expect the company's net profit to be 9.24/11.12/1,380 million yuan in 23-25, a year-on-year growth rate of -21%/20%/24%, corresponding PE 22/18/15 times. Covered for the first time, giving it a “Highly Recommended” rating.
Risk warning: New product development registration, safety and environmental protection, changes in the trade environment, risk of litigation, etc.