Introduction to this report:
2024Q1's revenue in the proprietary medicine sector has exceeded expectations, the volume of new varieties combined with the retail side of traditional varieties, and several R&D pipelines have entered the harvesting stage one after another, maintaining an “increase in weight” rating.
Summary:
Maintain an “Overweight” rating. The company announced that 24Q1 achieved revenue of 8.982 billion yuan, an increase of 11.5% year on year; adjusted net profit of 1,724 billion yuan, an increase of 11.6% year on year. The overall gross margin was 72.3% (+3.8pct), mainly driven by an increase in the share of the proprietary pharmaceutical business. Optimistic that innovative drugs will continue to be released in the future, maintain the 2024-2026 revenue forecast of 350.29/396.13/44.835 billion yuan (+10%/+13%), and maintain the “increase” rating.
The volume of new products was combined with the retail side of traditional varieties, and the revenue of the proprietary medicine sector exceeded expectations. Revenue from proprietary medicines was 7.561 billion yuan (+17.7%), of which revenue from neurological products was 2,707 billion yuan (+27.4%). After the Ming Fu Le cerebral infarction indications were approved, this portion of revenue was transferred to the neurological sector, and I am optimistic that Ming Fu Le will continue to expand in the future. Enbip's injection market and capsule retail market are rapidly being released. In the future, it is expected that the continued release of Enbip DOT will be extended; revenue from anti-tumor products of 1,611 billion yuan (+11.6%), rapid release of mitoxantrone liposomes and irinotecan liposomes after marketing; revenue from anti-infective products was 1,350 million yuan (+9.8%), and sales of azithromycin increased due to mycoplasma infections; revenue from cardiovascular products was 720 million yuan (+22.3%), and retail sales of xanthrax and clopidogrel accelerated. API revenue is 935 million yuan (-8.0%). Although VC demand has declined to achieve revenue of 486 million yuan (-11.8%), VC prices have steadily rebounded, and it is expected that market share will be further increased by relying on cost advantages.
The R&D pipeline is progressing smoothly to support the company's rapid development, and many major innovative products are expected to be read out in 24 years. Omalizumab (urticaria), amphotericin B liposomes (deep fungal infections), and SYSA1802 (≥2L cervical cancer, PD-1) are expected to be approved for marketing in 2024, contributing to increased performance; albumin paclitaxel III phase enrollment completed (March 2024), the self-immune drug usinumab, and the ADC drug DP303C (HER2) are all expected to be approved for marketing in 2025.
24H2 The following varieties are expected to read data: ① Oncology field: SYS6023-brain tumor, KN026-stomach cancer, JMT1010-colorectal cancer. ② Non-oncology fields: CM310-asthma, SYHX-1901 psoriasis, and ALMB0168 osteosarcoma. Multiple core products will support rapid future development.
Catalysts: The volume of core products exceeded expectations, and clinical data of drugs under development exceeded expectations.
Risk warning: Product development falls short of expectations, industry policy risks, and procurement price reductions exceed expectations.