Brief performance review

On October 28, 2024, the company released its three-quarter report. The revenue/return/net profit after deduction for the first three quarters of 2024 was 209.629/4.054/3.686 billion yuan respectively, up 6.14%/6.78%/11.56% year-on-year. 3Q24 single quarter revenue/return/net profit after deduction of non-return to mother was 70.22/1.11/0.98 billion yuan respectively, up 8.16%/-6.29%/-11.20% year-on-year. The performance was in line with expectations.

Management analysis

Build an open source innovation ecosystem, gather resources such as “industry-university-research-medical capital”, and promote the transformation of innovative achievements. (1) The company's revenue for the first three quarters of 2024 was nearly 209.6 billion yuan, up 6.14% year on year.

Among them, the pharmaceutical industry's revenue was 18.284 billion yuan, down 12.10% year on year; pharmaceutical commercial revenue was 191.345 billion yuan, up 8.28% year on year. (2) The pharmaceutical industry has 60 clinical pipelines and 46 innovative drugs; of these, 3 are phase 2 clinical trials in the US. ① On August 8, 2024, the official website of the Shanghai Pudong Government announced that the Shanghai Frontier Park, co-founded by Shanghai Pharmaceutical and top universities and top scientific research institutions, was officially released. On August 20 and September 10/26/27, the company signed various cooperation agreements with Sartorius, Shanghai Kangjiansheng Cell Technology Co., Ltd., Bayer Co.Lab, and Shanghai Institute of Biomedical Technology, respectively. ② The company promoted evidence-based medical research on six major Chinese medicines, including Yangxin tablets, blood stasis capsules, coronary sinning tablets, babaodan, gastric rejuvenation, and ginkgo biloba, and the number of cases enrolled further increased.

New business models were explored in the field of innovative pharmaceuticals, and CSO (sales outsourcing service) contracts increased 176.3% year over year. (1) From January to September 2024, the company successfully introduced 13 imported products; the company's CSO contract promotion business achieved sales revenue of about 6.1 billion yuan, an increase of 176.3% over the previous year; the company's device health business sold about 32.6 billion yuan, an increase of 11.9% over the previous year. (2) In October 2024, Shanghai Pharmaceutical Holdings and Takeda China held an exchange meeting and new product signing ceremony at the Shanghai Pharmaceutical Cloud Health and Pharmacy Comprehensive Flagship Store. The founding goal of Yiyao Pharmacy is to build the largest pharmacy network with integrated operation in the country, making it the first choice for innovative drugs to be launched in the country. The new products signed this time are Takeda's innovative drugs “Cofactor Stop” and “Vein Stop” (recombinant vascular hemophilia factor injectable vorniprotin α) marketed in China.

Profit Forecasts, Valuations, and Ratings

We maintain our revenue forecast. We expect the company to achieve revenue of 276.2/303.9/338.8 billion yuan in 2024/25/26, up 6%/10%/12% year on year; net profit to mother of 5/6.1/7.3 billion yuan, up 34%/21%/20% year on year. Maintain a “buy” rating.

Risk warning

There are risks such as the promotion of innovative drugs and large varieties of traditional Chinese medicine falling short of expectations, and that strategic cooperation falls short of expectations.