The global ophthalmology market is growing rapidly, and the domestic myopia and dry eye market demand is strong. According to data from Frost & Sullivan, the global scale of ophthalmic drugs is expected to reach 73.4 billion US dollars in 2030, and the Chinese ophthalmic drug market is expected to reach 16.9 billion US dollars. The Chinese market still has huge potential for growth. The number of patients with myopia and dry eye is large, and demand is strong. In 2020, the number of myopia patients under 20 in China was close to 200 million, and the number of patients with dry eye disease in China was about 239 million, and the number of patients increased year by year.
Cyclosporine eye drops are covered by medical insurance to achieve rapid dosage. Sinqi Eye Pharmaceutical's 0.05% cyclosporine eye drops were approved for the first time in China in 2020.6. Most of the main competitors are in the application and clinical trial stages; Xinqi uses exclusive Ailic-Tech innovative technology and has higher bioavailability. Cyclosporine eye drops have been included in the national health insurance catalogue and implementation began in 2022, and is expected to achieve rapid release.
Low-concentration atropine drops are expected to be marketed for the first time, and the market prospects are promising. According to data from the World Consensus Statement on Pediatric Ophthalmology and Strabismus Myopia, atropine is the most effective intervention method to control the deepening of myopia, and is the only anticholinergic drug recommended in appropriate technical guidelines for the prevention and control of myopia in children and adolescents. The company's low-concentration atropine is currently in the priority review stage, and R&D progress is leading.
The company has relatively complete marketing channels and a stable customer base. The company has focused on ophthalmic drug segmentation for decades, established cooperative relationships with distributors at all levels, and its product sales network covers provincial, municipal and county medical institutions across the country. In the first half of 2023, the company had 55 ophthalmic drug approval numbers. Of these, 34 products were included in the medical insurance catalogue and 6 products were included in the national essential drug catalogue.
Investment advice: The company has focused on the ophthalmic drug segment for decades. Cyclosporine eye drops are included in medical insurance, atropine development progress is leading, and the first-mover advantage is obvious. We expect the company's net profit from 2023-2025 to be 311/5.68/837 million yuan, an increase of 46.9%/82.8%/47.3% year-on-year, corresponding to EPS of 2.50/4.56/6.72 yuan. Referring to relative valuation, we gave Xingqi Eye Pharmaceutical 40 times PE in 2024, corresponding to the company's target price of 181.76 yuan, covering the first time, and giving it an “increase in holdings” rating.
Risk warning: risk of industry policy and drug price reduction; risk of increased competition; risk of slowing performance growth and failure to meet expectations; risk of R&D projects not meeting expectations; risk of rising costs; risk of quality control, etc.