Purchase of adalimumab approved in the US, and new biosimilar drugs were introduced

The company announced on June 27 that it intends to use 40 million US dollars to purchase from COHERUS all ownership of the US FDA approval documents for the “Yusimry” drug and all patents, non-patented technology and related assets covered by the drug. We are optimistic about the company's high growth in overseas formulations and the biopharmaceutical layout, and maintain the 2024-26E net profit forecast of 927/13.04/1,661 million yuan, corresponding EPS of 0.57/0.81/1.03 yuan. We gave the company 30.62x PE in 2024 (20% premium compared to comparable companies, mainly due to the relatively small revenue share of the company's API pressure business), corresponding to a target price of 17.57 yuan (previous value of 15.63 yuan) to maintain the “purchase”.

Transaction details: Shumile biosimilar, reasonable transaction price

Yusimry is a biosimilar of AbbVie's flagship product Humira (commonly known as adalimumab). Humira's market monopoly period ended at 1M23. Humira's global net revenue in 2022/2023 was US$21,23/14.404 billion US dollars (-32% yoy in 2023), of which US net sales were US$186.19/12.160 billion (-34% yoy in 2023), respectively, and the original pharmaceutical company created market space. Yusimry obtained approval from the US FDA at 12M21, and 7M23 was marketed in the US.

According to the financial report of COHERUS, it has invested a total of about 116 million US dollars in this drug in the past five years, and the transaction price is relatively favorable. Since Yusimry has been approved for listing, it may be converted into the company's revenue and profit in the short term, and considering the considerable market space for adalimumab, we expect the company may be able to quickly cover costs after the transaction.

Biopharmaceutical business: both internally and externally, a new growth curve is poised to begin

In 2023, the company established and perfected a biosimilar consistency research and development platform, and promoted a total of four biosimilar research and development work. We expect biosimilars to gradually grow into the company's growth focus. In addition, the company has also reached a cooperation with Tonghua Dongbao on three insulin injections in the US market: glycine, mentong, and laipong. We expect related products to be approved for marketing in 2026. Using this as a catalyst, the company is expected to promote the internationalization of more domestically produced biosimilar drugs in the future, further opening up the growth ceiling.

Jianyou Co., Ltd.: Driven by overseas formulations, steady recovery of domestic formulations, gradual clearance of APIs 1) We are optimistic that the company's overseas formulations will continue to lead the company's overall growth rate: Meitheal achieved revenue of 1,630 billion yuan (+38% yoy) in 2023, and commercialization capacity continued to be verified; by the end of 2023, there were 97 overseas approvals. We expect the number of newly approved products will continue to grow this year, with newly approved products or key products including peptides and complex formulations. 2) In terms of domestic formulations, the company's natroparin and enoxaparin injections won the bid in the eighth batch. We expect the year-on-year pressure collection will be digested in the first half of the year. 3) The subsequent impact of APIs on the company's overall impact is limited. In 2023, it accounted for 25% of revenue, and we expect it to drop to less than 20% in 2024.

Risk Warning: Risk Warning: Prices of heparin APIs fall uncontrolled; overseas sales fall short of expectations; exchange risk.