九洲药业(603456):转型小分子CDMO 老牌特色原料药企发展再起航

Jiuzhou Pharmaceutical (603456): Transforming Small Molecule CDMO's Established Specialty Pharmaceutical Company to Develop Again

開源證券 ·  05/30  · Researches

Based on the traditional specialty pharmaceutical business, the CDMO business entered a period of rapid development and went through 25 years of development. The company successfully transitioned from the early specialty API production, marketing and research model to the field of patented drug development and production services (CDMO), and its R&D quality and service capabilities were unanimously recognized by customers at home and abroad. In recent years, the company's CDMO business has entered a period of rapid development, and its revenue share has continued to rise. In the short term, the company's traditional specialty pharmaceutical product sales business contributed steadily to revenue, and its core products sold well in many countries; the CDMO business was deeply tied to large customers and large single products, and performance flexibility was gradually unleashed. Looking at the medium to long term, the CDMO project hierarchy has been formed, and early-stage projects with abundant reserves will continue to advance to the later stages, driving continuous improvement in performance. At the same time, the company has built a one-stop service platform for small molecule formulations from CMC R&D to commercial production, and several pharmaceutical projects have entered the listing application stage, which is expected to further open up room for growth. We are optimistic about the company's long-term development. We expect the company's net profit to be 12.45/16.74/2,173 billion yuan in 2023-2025, EPS is 1.38/1.86/2.42 yuan, and the current stock price corresponding to PE is 21.6/16.0/12.4 times. It is covered for the first time, giving it a “buy” rating.

It successfully entered Novartis's major product API supply chain system, continuously increased its pharmaceutical CDMO production capacity, and focused on building the “Rebel” brand. With the wholly-owned acquisition of Novartis's Suzhou plant in 2019, it successfully entered the API supply chain systems of various blockbuster pharmaceuticals such as Novartis Entresto and Kisqali, and performance elasticity was gradually unleashed. As the influence of domestic and foreign brands continues to increase, the company's total number of CDMO projects and the number of commercialized projects have increased rapidly. The projects cover several major treatment fields such as central nervous system, anti-tumor drugs, and antiviral drugs. At the same time, through the “self-build+merger and acquisition” method, the company has completed the construction of a one-stop service platform for CDMO for small molecule formulations. Various pharmaceutical products have entered the listing application stage, and the pharmaceutical business is developing rapidly, which is expected to further open up room for growth.

The API sales business is progressing steadily, and the core products are selling well in many countries

The company is rich in raw materials and contributes steadily to overall performance revenue; leading products such as carbamazepine, ketoprofen, and gliclazide are selling well in many countries, and their market share is at the forefront. Currently, anti-infective and central nervous system products account for a relatively large share of revenue, which is currently the basic market of the company's specialty API business; hypoglycemic and non-steroidal products are growing relatively fast, which is expected to provide new impetus for the future development of the specialty API business.

Risk warning: domestic policy changes, declining market demand for pharmaceutical production outsourcing services, loss of core members, worsening industry competition pattern, etc.

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