Continuing to deepen the field of specialty APIs, the product matrix is rich, and the first pharmaceutical product has been approved. The company was founded in 1998 and listed on the main board of the Shanghai Stock Exchange in 2020, and has been deeply involved in the field of specialty APIs for more than 20 years. The company has a rich product matrix, covering six major treatment fields, and is actively deploying pharmaceutical fields such as peptides and oligonucleotides. At the same time, we are actively promoting the integrated development strategy of “API+Formulation”. In June 2023, the company's first pharmaceutical product, drogesterone tablets, was approved for marketing. The company has four major production bases, namely Badu Plant, Cangshan Plant, Lianao Biotech Factory, and Yangzhou Orient Plant. Among them, projects are under construction in Cangshan Plant and Yangzhou Orient Plant.
Expand the field of polypeptides and oligonucleotide drugs and open up growth ceilings. The peptide drug market has broad prospects, and the global market size is expected to reach 96 billion US dollars in 2025. The global oligonucleotide drug market is expected to grow rapidly, with a compound annual growth rate of 32.2% in 2020-2025. In the field of peptides, in March 2022, the company plans to invest 279 million yuan to build a new production line of simetaglutide API with an annual output of 300kg and its supporting facilities. At the same time, the company has a variety of peptide drug research projects in progress, and the trial of simeglutide has been completed. In the field of oligonucleotides, in July 2021, the company established Shanghai Orient Biotech to focus on oligonucleotide drug development.
There are many potential products, and there is plenty of room for growth. Abiraterone acetate generic drugs are still in the centralized marketing stage. The compound sales rate of generic drug abiraterone acetate in the US from 2019 to 2022 was 27.07%. The growth rate is expected to remain above 20% throughout 2023, and the company's APIs are expected to continue to be released. The global competition pattern for didrogesterone APIs is good. The gross margin of the company's products increased from 12.86% in 2020 to 84.89% in 2022. Future sales are expected to gradually expand from emerging markets to regulated markets. Global demand for pregabalin APIs is still growing rapidly. Global consumption in 2022 was 19.8% year on year. The company's pregabalin API production capacity is quite saturated. It plans to build a new project with an annual output of 300 tons of pregabalin. The significant expansion of production capacity is expected to lead to an increase in market share.
Actively promoting the integration of “APIs and pharmaceuticals”, the pharmaceutical business has begun to contribute revenue. As of the end of June 2023, the company has laid out a total of 8 pharmaceutical products. Among them, didrogesterone tablets have been marketed, and 3 pharmaceutical products, estradiol tablets/estradiol didrogesterone tablets composite packaging, enzalutamide tablets, and simegler skin injections, are in the pilot phase. The company's didrogesterone tablets (10mg) were approved for listing in June 2023, and are the first domestic generic product. By the end of September 2023, the company had completed the Internet distribution of didrogesterone tablets in Zhejiang, Jiangxi, Jiangsu, Fujian and other provinces and cities. The Internet access speed was relatively fast, and sales had already started, and the company's formulation business began to contribute revenue.
The ability to set up projects is outstanding, and there are sufficient reserves for ongoing research projects. Since its establishment, the company has continued to develop and deploy specialty APIs with complex layouts, high barriers, and a good competitive pattern. The gross margin of the main products is high. Compared with the same industry, in the first three quarters of 2020 to 2023, the company's gross margin has always been higher than the average gross profit margin of the industry. With the overall gross margin of the industry declining, the company's gross margin has maintained a steady upward trend.
As of the end of June 2023, the company has 29 products in the R&D stage. The products under development cover small molecule APIs, polypeptides, and oligonucleotide APIs and formulations, which are expected to continue to contribute new incremental revenue to the company.
Profit forecasting
We forecast that the company's revenue for 2023/24/25 will be 13.13/16.99/2193 billion yuan, and net profit will be 3.11/4.05/533 million yuan. Corresponding to the current PE, 33/25/19X, coverage for the first time, the “buy” rating was given.
Risk warning
Risk of increased market competition; risk of exchange rate fluctuations; risk of product development failure.