Growth drivers are rotated and handed over, and pediatrics has become the mainstay
Established in 1994 and launched in 2013, Jicheon Pharmaceutical focuses on the production and sale of pharmaceuticals in pediatric, oral, respiratory, digestive, obstetrics and gynecology, and other fields. Currently, the company's product structure is being continuously optimized. Pediatrics, represented by children's tempurative granules, has taken over the development baton in the two traditional areas of respiratory and digestion represented by butylane anti-inflammatory oral solution and rabeprazole sodium enteric capsules. The pediatric business sector has a lot of room for growth in the future, and the continuous and efficient introduction of BD projects is expected to contribute additional volume to the company's medium- to long-term development. We expect the company's net profit to be 30.22/34.11/38.39 billion yuan, EPS is 3.28/3.70/4.16 yuan, and the current stock price is 13.4/11.9/10.6 times, giving a “buy” rating for the first time.
Product structure optimization, steady growth in the basic market, and accelerated release of advantageous single products. The company's first-line core products are putilane anti-inflammatory oral solution, rabeprazole sodium enteric capsules, and pediatric tempeh clean-up granules. They are the basic model for the company's business development, and the overall growth rate is steady. Among them, the exclusive variety of children's tempurative granules ranked first in the market share of proprietary Chinese medicines for pediatric colds in public hospitals across the country in 2022, with a prominent position as the leading variety; compounding the adjustment and expansion of the product regulations for children, the introduction of sucrose-free granules and syrup formulations is expected to improve children's medication compliance and product prices, and achieve a sharp rise in volume and price, further opening up the performance growth ceiling.
In addition, second-line products mainly include protein iron succinate oral solution, stomach-strengthening oral solution, and Huanglong cough relief granules. They cover different treatment fields, which can further enrich the product structure, and are expected to contribute additional volume to the company in the medium to long term.
Strengthen the introduction of new products and research and development efforts, and empower sustainable development companies to adopt a sales model centered on professional academic promotion and channel distribution to continuously deepen the construction of academic platforms. Currently, it has covered more than 30 provinces and cities across the country. A wide-ranging and highly specialized academic network has greatly enhanced the company's ability to quickly bring products to market. The company has leading commercial sales experience, especially in pediatrics and other advantageous departments, so it successfully promoted a strategic cooperation with Tianjing Biotech in the development, production and commercialization of long-lasting recombinant human growth hormone (itane growth hormone) products in November 2021. In addition, the company released an equity incentive plan in 2022, which requires no less than 4 BD products per year in the medium to 2024. We believe that in the medium to long term, the efficient introduction of high-quality BD projects is expected to open up a second growth curve for the company, deepen sales advantages, and empower the company's healthy and sustainable development.
Risk warning: Market competition has intensified, product sales have fallen short of expectations, and the speed of BD introduction has fallen short of expectations.