A leading company in peptide R&D and production, focusing on the peptide industry for more than 20 years. The company focuses on the field of peptide medicine and is one of the most powerful peptide R&D and production enterprises in China.

The main products and services include self-developed peptide APIs and formulation products, innovative peptide drug research and customized production services (CDMO), and businesses related to the small molecule drug levosimendan.

The company has been deeply involved in the field of peptides for 20 years, and has advanced peptide drug development technology and large-scale production capacity.

Patent cliff+GLP1, peptide industry ushered in development opportunities

Patent cliff: Currently, imported drugs still account for a significant proportion of the domestic peptide drug market. In recent years, many peptide drug patents have expired, including many blockbuster products with global sales reaching billions of dollars. The domestic generic drug industry will usher in development opportunities.

GLP1: GLP-1 is produced by intestinal cells and is used to stimulate insulin secretion and inhibit glucagon secretion. Glucagon-like peptide 1 (GLP-1) receptor agonists are enterostimulants.

With the support of both T2DM and weight loss mega-markets, the market size of GLP-1 drugs will continue to grow and drive the development of the entire peptide industry chain.

The pharmaceutical products and CDMO projects are rich in reserves, and the formulation business is rich in reserves of active ingredients and CDMO, and the business growth momentum is strong. The company selects varieties with large market capacity, growth potential, and high technical threshold. As of 2023, the company has 17 self-developed polypeptide raw materials. In the domestic market, the company obtained production approvals or activation records for 13 types of polypeptide APIs. Among them, enfuvirotide and cabecitracin are the first domestic imitation varieties; in foreign markets, 9 varieties, including liraglutide, have obtained US DMF registration. Of these, 9 varieties are activated and can be quoted and declared by formulation manufacturers. On the CDMO side, the company has provided more than 40 innovative peptide pharmaceutical CDMO services for new drug research and development companies and scientific research institutions. Of these, 1 variety has been approved for commercialization, 2 have entered the production stage, and 19 have entered the clinical trial stage.

The formulation business is expected to increase market share through rapid volume collection. The company's octreotide acetate injections were included in the 7th batch of centralized national drug procurement. The procurement cycle was 3 years, and implementation began in various parts of the country in November 2022. Atosiban acetate injections and injectable somatostatin were included in the eighth batch of centralized procurement of national drugs. The procurement cycle was 2.5 years, and implementation began in July 2023.

Investment advice

In 2024-2026, we expect the company to achieve operating income of 599 million yuan, 783 million yuan, 882 million yuan (+37.6%/+30.8%/+12.6%); net profit to mother of 121 million yuan, 150 million yuan, and 183 million yuan (+71.4%/+24.0%/+22.3% year over year). Covered for the first time, a “gain” rating was given.

Risk warning

Production capacity release falls short of expected risk, R&D progress falls short of expected risk, market competition increases risk, environmental policy risk, exchange profit and loss risk, etc.