The Zhitong Finance App learned that Huatai Securities released a research report stating that on April 23, the national insulin collection contract was renewed and opened. The current collection volume was about 60% of the country's total demand, and the overall price was reduced by about 3.8%, and the bid period was until the end of '27. The rules for this collection were gentle, and it was stipulated that 92% of the products were selected. Among them, Ganli Pharmaceutical, Hefei Tianmai, and Yifan Biotech rose across the board, while Tonghua Dongbao dropped moderately and all were selected in Class A. The current collection renewal price favors leading domestic companies, and the gross margin of leading domestic insulin companies is expected to remain above 80%; while prices of some domestic companies are rising, their share has also increased to a certain extent, and they are optimistic about leading domestic companies that are deeply involved in the insulin industry.
The main views of Huatai Securities are as follows:
Price: Price strategy differentiation, overall preservation of reasonable profit margins
The overall price of insulin collection dropped by about 3.8%, with an average drop of about 2.4% for the second generation and about 5.2% for the third generation. The pricing strategies of different companies are clearly differentiated: 1) Domestic manufacturers: Most domestic companies are offering Class A price lines. Among them, Ganli Pharmaceutical increased prices significantly (an average price increase of 31% for 6 products), while Hefei Tianmai and Yifan Biotech increased their prices on average by 9% and 14% respectively; 2) Importers: Of all Novo Nordisk, Eli Lilly, and Sanofi products, with the exception of Sanofi's insulin, they were all selected or not selected in Class C, with a large number of transfers. Huatai Securities believes that domestic manufacturers still have large profit margins after the collection contract is renewed, which can support marketing, after-sales, and future R&D investment.
Volume: The pattern has not changed much, leading domestic substitutions are accelerating
A total of 240 million units were reported for this collection, and there were many Class A winners (proportion of Class A winners: 71% renewal vs. 40% of previous collection). The overall pattern did not change much before and after collection, but the share of domestic manufacturers increased (share of second-generation insulin sales: 84% of sales of second-generation insulin versus 66% of the previous collection, accounting for third-generation insulin sales: 55% of current collection renewal vs. 38% of previous collection), leading domestic replacement was accelerated (Tonghua Dongbao: second-generation share) 35% → 46%, the third-generation share 1% → 9%; Ganli Pharmaceutical: the second-generation share remains unchanged, 21% → 27% of the third generation), the share of small domestic manufacturers changed little, and the share of imports declined (Novo Nordisk: 26% → 13% for the second generation, 42% → 30% for the third generation; Eli Lilly: 8% → 3% for the second generation, 19% → 2% for the third generation)
Insulin industry: The price drop is moderate, the off-standard market is expected to contribute to the increase, and I am optimistic about leading domestic products
Huatai Securities believes that part of the current collection volume pattern has not changed much, and the price increase or decrease of domestic manufacturers is moderate. At the same time, considering the large incremental market, this collection favors domestic leaders: 1) The gross margin of leading domestic companies is expected to remain above 80%: Tonghua Dongbao (600867.SH) second-generation insulin reduced the average price of 11%, and the gross profit margin of insulin in '23; Ganli Pharmaceutical (603087.SH) increased the price of third-generation insulin by 28%, gross profit margin for insulin in '22, Huatai Securities estimated to renew the collection After that, the gross margin of insulin can be maintained above 80%.
2) The non-collection market is expected to contribute to the increase: This collection accounts for about 60% of the country's usage, and there are still 40% of the off-hospital and non-collection markets. At the same time, the insulin industry is still growing; moreover, demand for insulin is relatively rigid, and requires doctor-patient education, after-sales service, etc., so Huatai Securities is optimistic about domestic leaders with industry reputation, sales capacity, and pipeline thickness.
Risk warning: risk of incremental market development falling short of expectations; risk of continued price reduction.