Recently, CITIC Securities released its latest research report on Fosun Pharma (600196.SH, 02196), which shows that with the negative impact of Covid-19-related business cleared, Fosun Pharma's operation has a clear turning point, and its quarterly profit has returned to pre-pandemic levels. With business focus, profit margins are expected to gradually improve. Referring to comparable company valuations, Fosun Pharma is given a 2024 P/E ratio of 27 times, corresponding to a target price of 32 yuan, and maintains a 'buy' rating.

As a leading global pharmaceutical and healthcare industry group in China, Fosun Pharma has established a significant presence through innovation and internationalization over the past 30 years. As an innovative drugmaker that began its journey of internationalization early in China, Fosun Pharma has continuously solidified its global operation capabilities after more than ten years of hard work.

The report indicated that Fosun Pharma's net income attributable to shareholders and non-recurring net profit for the first quarter of 2024 have both returned to pre-pandemic 2019 levels, and with the focus on the business and gradual divestiture of non-core assets, profit margins are expected to improve. On the other hand, following Fosun Pharma's announcement of a plan to privatize its subsidiary Henlius (2696.HK) in June, the company has further focused on the pharmaceutical business and innovative drugs.

In 2023, Fosun Pharma's overall revenue was RMB 41.4 billion, excluding Covid-19-related products, with a year-on-year increase of approximately 12.43%. The revenue of key innovative products such as Hanshuang, Hanquyou, Sukexin, etc., maintained rapid growth. The company's innovative products focus on core treatment areas such as tumors (solid tumors, hematologic malignancies), self-immunity, central nervous system, and chronic diseases (liver disease/metabolic/kidney disease) and focuses on four core technological platforms of small molecules, antibodies/ADC, RNA, and cell therapy.

In recent years, Fosun Pharma's independent research and development of innovative products have accelerated overseas expansion, especially in the mainstream markets of Europe and the United States. In April 2024, the injection of Trastuzumab Biosimilar (HQP135, domestically known as Hanquyou) was approved by the US FDA, and is used for the adjuvant treatment of HER2-positive breast cancer, the treatment of HER2-positive metastatic breast cancer, and the treatment of HER2-positive metastatic gastroesophageal junction adenocarcinoma or gastric cancer. It became the first domestically-produced biosimilar drug approved in China, the European Union, and the United States. As of now, Hanquyou has been approved for marketing in more than 40 countries and regions worldwide, becoming the domestically produced biosimilar with the most countries and regions approved for marketing, providing local patients with more dosage form options and flexible combination therapy programs, helping to promote the high-quality development of global tumor diagnosis and treatment.

In addition, Fosun Pharma's independent research and development of Sulinmonab injection (PD-1 inhibitor, domestically known as Hanshuang) for the treatment of advanced small-cell lung cancer (ES-SCLC) was approved by the Indonesian Food and Drug Administration (BPOM) in December 2023 and completed the first batch of overseas shipments in the first quarter of 2024, becoming the first domestically produced PD-1 monoclonal antibody approved for marketing in Southeast Asian countries. Its application for marketing authorization (MAA) in the European Union has also been accepted by the European Medicines Agency (EMA) in March 2023, and the bridging trial launched in the United States is being carried out in an orderly manner. Fosun Pharma continues to deepen the differentiated and multidimensional layout of Hanshuang in the fields of lung cancer, digestive system tumors, etc., in order to push for more benefits for patients.

According to the WiseMoney App, Fosun Pharma, as a leading healthcare enterprise in China, focuses on pharmaceutical business and international layout, and continues to increase investment in innovation, with multiple products entering key clinical trial phases.

In April 2024, the international multicenter phase III clinical study of HLX14 (recombinant anti-RANKL fully human monoclonal antibody injection), a biosimilar of Denosumab independently developed by Fosun Pharma for the treatment of osteoporosis in postmenopausal women at high risk of fracture, had reached the primary research endpoint. In May, HLX14's application (MAA) for European marketing authorization has been accepted by the European Medicines Agency (EMA).

In addition, the marketing applications for multiple research products, including DaxibotulinumtoxinA type A botulinum toxin (project code: RT002), tenapanor hydrochloride tablets (project code: Tenapanor), and injection filler product Profhilo (i.e. injection sodium hyaluronate solution) in China have been accepted by the National Medical Products Administration.

With the company's forward-looking layout for many years, the internationalization of the pharmaceutical business, and the expected harvest period for innovative drugs and biosimilar pipelines, the company will bring strong growth momentum.