The pharmaceutical industry anchors innovation, and the East China pharmaceutical business covers the entire pharmaceutical industry chain, focusing on the three major sectors of endocrinology, oncology, and self-defense. In recent years, it has steadily promoted innovation and transformation, and established an innovative research and development ecosystem with East China as the core. The company lays out in the three major fields of oncology, endocrinology, and self-defense through independent development, external introduction, and project cooperation. In the first three quarters of 2023, the company's pharmaceutical industry revenue was 8.994 billion yuan, up 9.48% year on year, after deducting non-net profit of 1,835 billion yuan, up 13.41% year on year; direct R&D investment reached 1,022 billion yuan, up 17.29% year on year.
Metabolism: Lilupin was the first to be approved for obesity/overweight indications, seizing the first-mover advantage. The company laid out an innovative pipeline around GLP-1R targets in the endocrine field. ① The company's product Lilupin was approved and marketed by the NMPA in March 2023, then approved for obesity or overweight in July, becoming the first GLP-1 diet drug approved in China; ② Phase III clinical research work on simeglutide injection has begun, and the enrollment of subjects has been completed; ③ The company's differentiated products such as dual-target/multi-target and oral small molecules targeting GLP-1R targets have entered clinical trials one after another, and the Jiangdong production base provides production capacity guarantees.
The oncology field lays out a high-barrier ADC platform, and the FIC somituximab injection was soon approved in the field of oncology. The company focused on ADC and cooperated with emerging technology companies in the ADC field at home and abroad. ① The company's domestic marketing application for the introduction of ImmunoGen's ovarian cancer ADC drug somituximab injection has been accepted; ② the ADC drug clinical trial of the subsidiary Heidelbelg is progressing steadily; ③ the company is actively seeking commercial cooperation and successively obtained marketing rights for Keji Pharmaceutical's CAR-T product Zevokiolense injection and Yingpai Pharmaceutical's PARP1/2 inhibitor senapali in mainland China, further enriching the pipeline of innovative products in the field of oncology.
The field of self-immunity covers multiple indications, and the introduction of varieties and existing products complement the field of self-protection. The company actively introduces the world's leading innovative technologies and products, while continuously improving its own innovative research and development capabilities. ① HDM3001: Developed in collaboration with Quanxin Biotech, the domestic BLA application for plaque psoriasis has been submitted; ② Arcalyst: Introduced from Kiniksa, the domestic BLA for cyclic syndromes associated with cold pyrine has been included in priority review; ③ HDM3002: A dual-antibody variety introduced from Provention, the systemic lupus erythematosus indication has entered phase II clinical trials. In the field of topical formulations, the company introduced a new rofloxate topical preparation (cream ZORYVE? and foaming agent ARQ-154) and Wynzora cream further enrich the innovative product pipeline. In the field of pharmaceutical device combinations, the “Glomerular Filtration Rate Dynamic Monitoring System” jointly developed by the company and MediBeacon is already under review.
Profit forecast: We expect the company's revenue for 2023-2025 to be 411.84/459.09/50485 billion yuan, respectively, and net profit to mother of 28.92/35.24/3,986 billion yuan, respectively. We selected five companies, Hengrui Pharmaceuticals, Fosun Pharmaceuticals, Aimeike, Kaisai Biotech, and Shanghai Pharmaceuticals, as comparable companies, and gave the company 25 times PE in 2024, corresponding to a target price of 50.22 yuan, maintaining a “buy” rating.
Risk warning: Industry policy and market operation risks, risk of developing BD pipelines falling short of expectations, risk that clinical and registration progress in research pipelines falls short of expectations, and overseas business faces uncertainty in international relations and exchange rate risks.