Incident: The company released its 2023 annual report, achieving operating income of 3.08 billion yuan (+10.7%), net profit attributable to shareholders of the parent company of 1.37 billion yuan (-25.4%), and net profit of 1.17 billion yuan (+38.9%) attributable to shareholders of listed companies after deducting non-recurring profit and loss.
Insulin analogs achieved sales growth of more than 60% in 2023, and profit margins increased steadily. The company's performance continued to grow steadily in 2023. The sales volume of the full range of insulin products was 83.2212 million units, up 12.84% year on year. In particular, sales of insulin analogues increased by more than 60% in 2023. According to Pharmaceutical Rubik's Cube data, in 2023, the company's insulin market share exceeded 40%, ranking first in the industry; the company's insulin glycine market share grew rapidly to nearly 10%. The gross profit margin was 80.1% (+2.3pp); net profit margin after deduction was 38% (+7.7pp), and the profit margin increased steadily. The cost ratio is well controlled, with a R&D expense ratio of 3.4% (-1.9pp), a sales expense ratio of 29.7% (-3.9pp), and a management expense ratio of 4.4% (-2.1pp).
Strategic cooperation with Jianyou Co., Ltd. to enter the US insulin market. According to the agreement, Tonghua Dongbao and Jianyou Co., Ltd. will jointly develop and manufacture the above three insulin cooperative products in accordance with the US FDA drug registration requirements. At the same time, Jianyou Co., Ltd. will obtain exclusive commercial rights in the US market after the product is marketed. The company's EU registration phase III clinical trials for insulin have all been completed in 2022, and the marketing application has been officially accepted. Preparation and application for insulin analogs are progressing steadily in many developing countries, and it is expected that insulin going overseas will start contributing to increased performance in 2024. In addition, the company Insulin Glycine has carried out registration data preparation and application work in several developing countries, and has also completed preliminary preparations for Mendon Insulin registration applications in developing countries.
Liraglutide injection was approved for listing in December 2023. The company will join hands with Kexon Pharmaceuticals to jointly explore 17 overseas emerging markets.
The company's innovation pipeline reserves are rich, injecting strong impetus into the company's continued growth in the future. The research project includes 3 first-class new drugs in the field of diabetes treatment, 2 new first-class drugs in the field of gout/hyperuricemia, etc. The URAT1 inhibitor completed the key phase IIa clinical trial in January 2024, and THDBH110 (small molecule GLP-1) completed the first phase of clinical enrollment in December 2023, and injectable THDBH120 (GLP-1/GIP) was approved for sugar reduction and weight loss IND in December 2023 and February 2024, respectively.
Summary report on phase 1 clinical completion of URAT1/XO dual-target inhibitors.
Profit forecast and investment advice: The company is a leading domestic insulin company. The disturbances in collection have basically been cleared, new products are being launched one after another, and the internationalization strategy is progressing steadily. We expect net profit without return to mother for 2024-2026 to be $1.40 billion, and $1.61 billion, maintaining a “buy” rating.
Risk warning: industry policy risk, risk of R&D falling short of expectations, risk of product commercialization falling short of expectations, etc.