2023 Three Quarterly Report
In the first three quarters of 2023, the company achieved operating income of 17.014 billion yuan, an increase of 6.70% over the previous year; net profit attributable to shareholders of listed companies of 3,474 billion yuan, an increase of 9.47% over the previous year; and net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses of 3.360 billion yuan, an increase of 10.13% over the previous year. In the third quarter of 2023, the company achieved operating income of 5.845 billion yuan, up 2.249% year on year; net profit attributable to shareholders of listed companies was 1,166 billion yuan, up 10.57% year on year; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 1,117 billion yuan, up 7.149% year on year.
Investment in innovation continues to increase, and the research pipeline is progressing smoothly
The company continued to increase R&D investment. In the first three quarters of 2023, R&D expenses were 3.725 billion yuan, up 6.52% year on year, with a cost rate of 21.90% (-0.03pct); of these, Q3 R&D expenses for the single quarter were 1,394 billion yuan, up 6.16% year on year, and the cost rate was 23.85% (+0.88pct). In a single quarter of Q3, the company had 1 drug approved for listing. It was a type 2 new drug, dexmedetomidine hydrochloride nasal spray, which added pediatric indications after approval of adult indications in February 2023. Currently, no other dexmedetomidine nasal sprays are on the market at home or abroad; in addition, the company has 4 innovative drug NDAs accepted, namely the JAK1 inhibitor SHR0302 to treat ankylosing spondylitis. Fluzopa is used for maintenance treatment after platinum-containing chemotherapy, such as advanced ovarian cancer, permanent grade and diazepam Regliptin in combination to treat type 2 diabetes and the imported product linplice to treat R/RPTCL; Another BLA has been officially accepted by the FDA, and 18 drugs have been approved clinically. With the smooth progress of the company's R&D pipeline, the company's product pipeline is expected to be further enriched, driving the company's performance growth.
The project went overseas smoothly, and the internationalization strategy progressed steadily
In August 2023, the company authorized the TSLP monoclonal antibody SHR-1905 to OneBio, Inc., and the company will receive a cumulative R&D and sales milestone of no more than US$1,025 million; on October 8, the company authorized the exclusive right to develop and commercialize the anti-HER1/HER2/HER4 target drug pyrrotinib maleate in India to Dr. Reddy's in India, and the company will receive a down payment of 3 million US dollars. The company will receive a sales milestone payment of up to US$152.5 million and a sales commission that reaches a double-digit ratio of actual annual net sales; On October 17, the company granted a paid license to American Elevar Therapeutics for global development rights of humanized PD-1 monoclonal antibody carelizumab combination therapy for liver cancer treatment indications in Greater China and South Korea. The company hopes to receive a cumulative sales milestone of 600 million US dollars and subsequent additional payments, as well as a sales commission of 20.5% of actual annual net sales. In terms of international clinical trials of innovative drugs, the company's first international multi-center phase III clinical study (carrilizumab plus apatinib for advanced liver cancer) has reached the end of the main study. The median overall survival (OS) of patients after treatment has reached 22.1 months, which is currently the plan to obtain the longest median overall survival period in first-line treatment for advanced hepatocellular carcinoma. Currently, carelizumab's BLA has been officially accepted by the US FDA.
investment advice;
We expect the company's EPS for 2023-2025 to be 0.73 yuan, 0.88 yuan, and 1.02 yuan, respectively, and the corresponding dynamic price-earnings ratios are 65.38 times, 54.30 times, and 47.13 times, respectively. As the leading innovative pharmaceutical company in China, Hengrui Pharmaceutical has a reasonable and comprehensive research and development process. It is expected that the product pipeline will continue to be rich and maintain its purchasing rating.
Risk warning: Drug development falls short of expectations, policy risks, and product sales fall short of expectations