Tiger Pharmaceuticals: Clinical CRO Leader

Strong people are strong: The implementation of medical reform policies has brought about the reshaping of the pharmaceutical industry, and the rapid rise of CRO/CMO companies has made up for the problems caused by growing R&D demand and lack of R&D capabilities. According to Nosge's prospectus, the domestic clinical CRO industry market is expected to exceed 10 billion US dollars in 2023, and the industry space is huge. From its establishment in 2004 to 2023, the company provided services for 61% of the R&D of marketed Class I drugs in China. According to the annual report of Tiger Pharmaceuticals, citing Frost & Sullivan, the company has continuously ranked first in the market share of clinical outsourcing services in China for many years, and is also the only company to enter the top ten clinical trials in the world.

Short-term performance: In 2023, the company added 7.85 billion new contracts on the business development side, down 18.8% year on year, mainly due to factors such as cancellation of orders by some customers and a sharp drop in handling fees for new orders; as of the end of 2023, the total amount of contracts to be executed was 14.08 billion yuan, an increase of 2.1% year on year; in 2023, the company served the research and development of 22 new Class 1 drugs already marketed in China, and the R&D of 6 innovative medical devices already marketed in China.

Medium- to long-term performance: In 2023, the company increased investment in emerging businesses and technologies and the construction of an ecosystem to meet customer demand for the company's emerging services, continuously expand multinational pharmaceutical companies and large domestic pharmaceutical customers, enhance business and operational capabilities in the US and Europe through acquisitions and mergers and acquisitions, further increase global market share, and achieve long-term performance growth and development.

Investment advice and risk tips

Investment advice: Tiger Pharmaceuticals is in a highly prosperous CRO industry. The company continues to improve the layout and extension of the industrial chain to build an international multi-center clinical platform, and is expected to continue to maintain high growth. We expect EPS in 2024-2026 to be 2.64, 3.05, and 3.57 yuan respectively. Referring to comparable company estimates, we will give it 25-30 times PE in 2024, with a reasonable value range of 66.00-79.20 yuan, maintaining a “superior to market” rating.

Risk warning: Industry competition intensifies; pharmaceutical companies' R&D demand declines; business expansion falls short of expectations; investment returns are affected by market fluctuations.