Focus on innovative drugs and high-barrier formulations, and promote the company's development with a diversified business layout
The company, owned by Health Yuan Holdings, has made continuous breakthroughs in the fields of APIs, chemicals, traditional Chinese medicine, biopharmaceuticals, in vitro diagnostic reagents, etc., and continues to focus on the main innovative pharmaceutical industry and complex formulations with high barriers. The products are distributed in the fields of digestive, cardiovascular, reproductive, endocrine, and mental/neurological diseases. Benefiting from the growth in volume of major products such as leuprorelin and iprazole in the digestive and reproductive fields, the company's business performance has improved rapidly in recent years. In the short term, major varieties are rapidly growing with health insurance policies and excellent product competitiveness, giving full play to their clinical value by expanding new indications; in the medium to long term, the company's R&D investment continues to increase, and the new varieties under development continue to advance, and the new increases brought about by new varieties are expected to benefit more patients. We are optimistic about the long-term development of the company. We expect the company's net profit to be 20.19/23.05/2,672 billion yuan in 2023-2025, corresponding EPS of 2.16/2.46/2.86 yuan. The PE corresponding to the current stock price is 15.8/13.8/11.9 times, respectively, covered for the first time, giving it a “buy” rating.
Major products, iprazole and leuprorelin, drive growth in digestive and genital tracts
As the company's exclusive product, the innovative drug iprazole has achieved rapid release in recent years. According to PDB data, domestic sales of iprazole reached 603 million yuan in 2022. Based on the product's own advantages and the application of new indications of injectable iprazole sodium, the size of the iprazole market is expected to increase further. The company's product leuprorelin uses high-barrier microsphere formulations as carriers and has outstanding performance in the competitive pattern of similar product markets. According to PDB data, the company sold a total of 426 million yuan of Liubenrelin microspheres in 2022, with a market share of 32.23%. As the main force of GnRH agonist drugs, the company's leuprorelin sales is expected to increase further. The microsphere products “triprorelin acetate microspheres” and “injectable ariprazole microspheres” are also expected to contribute new results to the company in the future.
Biological products under development are advancing at an accelerated pace, and the traditional Chinese medicine and API sectors have stabilized revenue
Anvitai, a tocilizumab injection from Lizhu Biotech, was approved for marketing in China in January 2023. Patent protection for the original tocilizumab injection product has expired, and biosimilar drugs need to be gradually released. Currently, the company's recombinant anti-human IL-17A/F humanized monoclonal antibody injections and the biosimilar drug simeglutide have entered phase III clinical trials, which are expected to contribute revenue later. In addition, the company's revenue in the Chinese medicine and APIs sector is growing steadily and steadily. The diversified layout helps the company broaden its growth space and achieve revenue growth.
Risk warning: risk of changes in industry policy, risk of new drug development, risk of raw material supply and price fluctuations, etc.