On the evening of April 17, Hengrui Pharmaceutical released its 2023 annual report. In 2023, Hengrui Pharmaceutical achieved operating income of 22.82 billion yuan, up 7.26% year on year, net profit attributable to shareholders of listed companies of 4.302 billion yuan, up 10.14% year on year, deducted non-net profit attributable to shareholders of listed companies of 4.141 billion yuan, up 21.46% year on year, net operating cash flow of 7.644 billion yuan, a sharp increase of 504.12% year on year.
According to the report's analysis, as Hengrui Pharmaceutical's innovative achievements continue to be approved, the clinical value of innovative drugs is highlighted, driving revenue growth. In 2023, the company's innovative drug revenue reached 10.637 billion yuan (tax included, not including foreign licensing revenue). Despite being affected by factors such as changes in the external environment, product price reductions, and entry difficulties, it still achieved a 22.1% increase over the same period last year.
In order to guarantee innovative output, Hengrui continued to increase innovation efforts and maintain a high level of R&D investment. During the reporting period, the company invested a total of 6.150 billion yuan in R&D, which strongly supported the company's project R&D and innovative development. At the same time, the company continued to improve operation management to improve quality and efficiency, and the sales expense ratio decreased by 1.34% compared to the same period last year. It is worth noting that the report mentioned that the company is continuing to strengthen the commercialization system, strategically lay out the retail market in depth, expand channels such as DTP pharmacies, and accelerate the coverage of innovative drug sales channels.
The company also announced an annual dividend plan, distributing a cash dividend of 2.00 yuan (tax included) to all shareholders for every 10 shares, plus a total repurchase dividend of more than 2.1 billion yuan.
According to an analysis by Changjiang Securities, the pain of the company's transformation is over, the impact of collection is nearing its end, the pressure to reduce medical insurance prices has been released one after another, innovative products continue to be implemented, driving performance into an upward channel, and there are many major products under development to provide long-term growth impetus, and future growth can be expected.
Innovation drives revenue growth and accelerates the implementation of R&D results
Hengrui Pharmaceutical adheres to innovation leadership and maintains high R&D investment. The report shows that in 2023, a total R&D investment of 6.150 billion yuan will provide a strong guarantee for the company's continuous innovation output.
Supported by high-intensity R&D investment, Hengrui's R&D achievements have been realized at an accelerated pace. During the reporting period, Hengrui had 3 Class 1 innovative drugs (adbelimab, reguglitin phosphate, orteconazole) and 4 Class 2 new drugs (dexmedetomidine hydrochloride nasal spray, abiraterone acetate nanocrystals, irinotecan hydrochloride liposomes, and hengagliptin metformin sustained-release tablets) were approved for marketing in China. Up to now, the company has approved 16 Class 1 innovative drugs and 4 Class 2 new drugs; 5 new indications were approved for marketing during the reporting period, and carrizulimab 9 monoclonal Individual indications and the 3rd indication of apatinib were approved for marketing. The two are used in combination for first-line treatment of advanced liver cancer. Pyrrolitinib maleate is the 3rd Indications and the second indication of darsilil hydroxyesulfonate were approved for marketing respectively, further expanding its application in the field of breast cancer. The second indication for dexmedetomidine hydrochloride nasal spray was approved for marketing in children before general anesthesia surgery; a total of 14 marketing applications were accepted by the NMPA during the reporting period, including declarations for new drugs such as ricarximab and amaxitinib, and new indications such as fluzopalil combined with apatinib, involving cancer, diabetes, immunity, ophthalmology, analgesia, etc.; In terms of maintenance, by the end of 2023, the company had applied for a total of invention patents There are 2,389 PCT patents, 545 valid domestic authorized invention patents, and 667 foreign authorized patents in Europe, America, Japan, etc.
The company is progressing rapidly in the research pipeline. During the reporting period, 12 clinical trials advanced to phase III, 35 clinical trials advanced to phase II, and 30 clinical trials to phase I. The company has more than 90 independently innovative products under clinical development, and nearly 300 clinical trials are being carried out at home and abroad. Since 2023, a total of 7 CDE breakthrough treatment types have been certified, and approval is expected to accelerate in the future. Among them, the company's HER2 ADC star product, SHR-A1811 alone, has 5; the company's first small nucleic acid drug HRS-5635 injection was approved for clinical use in chronic hepatitis B, and no similar products have been approved for marketing at home or abroad; the company's first pair of precision radiotherapy products in the field of nuclear medicine has been approved for clinical trials. Currently, the company has 4 nuclear drugs approved for clinical trials.
Achieving these innovative results is inseparable from the increasingly complete innovation system that the company has built over the years. First, after years of development, the company has formed a large-scale, specialized and capable R&D team of more than 5,000 people, and has successively set up R&D centers in Lianyungang, Shanghai, Suzhou, Chengdu, Xiamen, Jinan, Guangzhou, Beijing, the United States and Europe to meet the discovery and development needs of multiple disease pipelines for new molecular entities; secondly, the company is guided by “unmet clinical needs”, with “new, fast, and special” as the main purpose, adhering to a “differentiated” competitive strategy, continuously focusing on moving targets forward and strengthening source innovation. The company has a rich R&D pipeline in the field of oncology, and has also carried out extensive layouts in the fields of autoimmune diseases, metabolic diseases, cardiovascular diseases, infectious diseases, respiratory diseases, hematologic diseases, pain management, neurological diseases, ophthalmology, nephrology, etc.; third, the company has also established a number of internationally leading new technology platforms with independent intellectual property rights, such as proteolytic-targeted chimerics (PROTAC), molecular gels, antibody drug conjugates (ADC), bi/polyspecific antibodies, AI molecular design, gamma-delta-T, drug resistance, in vivo pharmacology, molecular dynamics Information, etc. It is also continuously optimized and developed to provide a strong basic guarantee for innovative research and development and internationalization. Among them, 11 novel and differentiated ADC molecules have been successfully clinically approved. The HER2 ADC product SHR-A1811 and TROP2 ADC product SHR-A1921 quickly entered the clinical phase III research stage; 2 PROTAC molecules are already in the clinical research stage; the PD-L1/TGFbeta fusion protein drug SHR-1701 has rapidly advanced multiple clinical phase III studies, and the new generation of TIGIT/PVRIG double antibodies have successfully carried out clinical research, and more than 10 first-in-class/best In-class bi/multispecific antibodies are under investigation.
Internationalization is progressing steadily, and the total amount of foreign authorized transactions exceeds US$4 billion
Hengrui Pharmaceutical continues to steadily advance its internationalization strategy, insists on equal emphasis on independent research and development and open cooperation, and strengthens international cooperation on the basis of endogenous development.
Foreign cooperation has yielded fruitful results. According to the announcement, Hengrui is actively exploring exchanges and cooperation with multinational pharmaceutical companies from a global perspective and seeking cooperation opportunities with leading global pharmaceutical companies. In 2023, Hengrui pressed the BD acceleration button and reached 5 licensing agreements with a total transaction amount exceeding US$4 billion, involving innovative drugs including the PARP1 inhibitor HRS-1167, Claudin-18.2 ADC drug -A1904, the EZH2 inhibitor SHR2554, TSLP monoclonal SHR-1905, TKI pyrrolitinib, and the PD-1 inhibitor carrilizumab Indications for combined treatment of hepatocellular carcinoma. Among them, the company exclusively licensed the innovative anti-cancer drugs HRS-1167 and SHR-A1904 to Merck in Germany, and the total transaction amount can exceed 1.4 billion euros. This is also the first time Hengrui has cooperated with a major global pharmaceutical company. At present, Hengrui has authorized 10 innovative drugs overseas.
International clinical trials are progressing steadily. The company's first international multi-center phase III clinical study -- the international multi-center phase III study of carrilizumab combined with apatinib for advanced liver cancer has reached the main research end, and the US application and marketing have been officially accepted by the FDA; currently, the company has 4 self-developed ADC innovative drugs SHR-A2009, SHR-A1912, SHR-A1921, and SHR-A2102 have successively obtained US FDA fast-track qualification, which is expected to accelerate clinical trials and marketing registration; the innovative drug Edralbrutinib tablets are used for treatment The indication for neuromyelitis optica (NMOSD) spectrum disease (NMOSD) has been certified as an orphan drug by the US FDA. At the same time, the company's various projects have obtained clinical trial qualifications in the US, Europe, Asia Pacific and other countries and regions, and 6 innovative cancer products such as ADC and PVRIG-TIGIT dual antibodies have all been simultaneously developed at home and abroad, and clinical trials of the anti-Aβ-monoclonal antibody SHR-1707 for the treatment of Alzheimer's disease are progressing smoothly in Australia. In the future, the company will expand overseas R&D boundaries and enrich the pipeline of innovative products through various models such as self-research, cooperation, and licensing.
At the same time, the company's innovative strength continues to win international recognition. During the reporting period, the company's 119 important research results were successively published in top global journals such as The Lancet (Lancet), BMJ (British Medical Journal), Nature Medicine (Nature Medicine), and JAMA Oncology (Journal of the American Medical Association, Oncology), etc., with a cumulative impact factor of nearly 1,400. Among them, the main paper of the company's carrilizumab (Erica) combined with apatinib (Aitan) (“Double Ai”) on bisorafenib in the treatment of advanced unresectable hepatocellular carcinoma (CARES-310 study) was published online in the top international medical journal “The Lancet” (The Lancet, IF: 168.9). The results showed that the median overall survival (MoS) reached 22.1 months [1], the longest treatment plan for critical OS [2]]. At the same time, the company's academic achievements of more than 100 innovative drugs appeared at internationally renowned academic conferences such as the American Society of Clinical Oncology (ASCO) Annual Meeting, European Society of Medical Oncology (ESMO) Conference, American Association for Cancer Research (AACR) Annual Meeting, and American Hematology (ASH) Annual Conference.
Continuously optimize operation management and improve talent team building
Faced with various uncertain market factors, Hengrui comprehensively promoted resource integration, consolidated the medical and marketing dual-engine driving mechanism, continuously optimized the organizational structure, strengthened the team strength of medical and market specialized talents, further reduced frontline sales personnel, and promoted operational efficiency. The company's 2023 sales expense ratio decreased by 1.34% compared to the same period last year.
The company's executive team continues to add fresh blood. At the same time as the annual report was released, Hengrui announced the appointment of Lu Yun as the company's deputy general manager. Lu Yun is an executive nurtured and raised within Hengrui. He has been working for Hengrui for 15 years and has been deeply involved in the CMC R&D field for many years.
Talent is fundamental for enterprise innovation and development. Hengrui Pharmaceutical continues to adhere to the concept of “talent is the first resource” and “contributor-based”, continuously introduces high-level talents from home and abroad, and establishes a “paratrooper program”, etc., and by enriching leading talents from an international perspective and raising the “ceiling” of the entire innovative talent team, the company introduced more than 600 core talents in 2023, of which more than 150 have doctoral degrees; through the construction of the Ruiying Plan, Star Youth, Star Program, etc., to systematically cultivate and develop internal talent potential; continuously improve the talent incentive mechanism and launch employee shareholding plans, etc., since 2023/5 Since the launch of the new stock repurchase plan in January, Hengrui has repurchased approximately 14.35 million shares for employee stock ownership plans, with a total amount of more than 600 million yuan.
Actively fulfill social responsibilities and promote sustainable development
As a leading enterprise in the domestic pharmaceutical field, Hengrui Pharmaceutical has been actively fulfilling its social responsibilities for many years, striving to make development results better benefit people's livelihood and give back to society.
This year, 19 products of Hengrui Pharmaceutical were adjusted through the new version of the national health insurance catalogue, including a variety of innovative drugs and new indications. A total of 103 products have entered the national medical insurance catalogue, of which 13 innovative drugs have already been marketed, further improving the accessibility and affordability of medication for patients.
Hengrui is also actively participating in social charity. In 2023, Hengrui launched the “Healthy China Tour · Back to the Long March” charity project with public welfare support. The event was successfully held in Longyan, Fujian and Ganzhou, Jiangxi; 2 million yuan was donated and donated through the China Rural Development Foundation for earthquake relief in Jishishan County, Linxia Prefecture, Gansu Province.
At the same time as the release of the annual report, Hengrui also disclosed the 2023 Environmental, Social and Governance (ESG) Report, showing the company's practices and achievements in implementing sustainable development. With outstanding performance in benefiting patients' health, green and sustainable development, employee welfare, and social responsibility, Hengrui Pharmaceutical's MSCI ESG rating has continued to be upgraded to “A” level year after year, and is at the leading level in the Chinese pharmaceutical industry.
Led by an innovative and international two-wheel drive development strategy, Hengrui Pharmaceutical's transformation and development results have been highly recognized. Recently, Citeline, an internationally renowned consulting agency, released the “2024 Pharmaceutical Research and Development Annual Review” and selected the world's TOP25 pharmaceutical companies. Hengrui Pharmaceutical entered the list for the third time to compete with the world's largest multinational pharmaceutical companies, and jumped to 8th place, setting a new high for Chinese pharmaceutical companies.
References:
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[2]. Non-head-to-head comparison