Introduction to this report:
The product has made a new breakthrough in overseas sales, and the production line has passed the EU GMP inspection; the full line of collected products won the bid, which is expected to increase profits; GLP-1 data will soon be disclosed, and the R&D pipeline continues to advance. Maintain an “Overweight” rating.
Key points of investment:
Maintain an “Overweight” rating. Considering changes in share capital brought about by the company's restricted stock incentive plan, the 2024-2026 EPS forecast was adjusted to 1.17/2.01/2.62 yuan (originally 1.19/2.04/2.65 yuan), the target price was maintained at 60.03 yuan (corresponding to the 2025 target PE 29X), and the holding increase rating was maintained.
The product has made a new breakthrough overseas, and the production line has passed the EU GMP inspection. The company's insulin glargine, insulin lysine, and insulin are in the marketing review stage in the US and Europe; recently, the company received a notice from the European Medicines Agency (EMA) that the relevant production facilities meet the requirements of EU GMP regulations, and already have commercial production conditions for gantrin/lidon/medon insulin injections and pre-filled injection pens. The company's partner Sandoz, which is responsible for overseas commercial operations, is a leading global generic drug and biosimilar company (European market share TOP1), which is expected to help products break through in developed markets. 2024Q1 Eli Lilly Insulin and Novo Nordisk's overall insulin business revenue were +25% and +23%, respectively. With terminal prices in the US market being reduced and the market system was reshaped, pharmaceutical company-side revenue showed a good growth trend, and the market prospects were broad.
The price increase for the entire line of collected products won the bid, which is expected to increase profits. The results of the proposed succession procurement for the insulin project were announced in April. The total price increase for the company's 6 products was selected at the same time. The price of the core product insulin was 65.30 yuan/stick, and the price of the three products selected for Group A was increased by 34.1%. The three products, Mendon Premixed (30R), Menthong Mealtime, and Second Generation Pre-Blend, raised prices by 5.5%, 29.6%, and 44.8% respectively while selecting Group A. It is expected that the price will rise sharply in the new round of collection, leading to increased performance.
GLP-1 data will be disclosed soon, and the R&D pipeline continues to advance. The GLP-1 receptor agonist GZR18 independently developed by the company has completed two phase IB/IIa clinical trials for adult type 2 diabetes and adult weight management, and has reached the main end point and all secondary data endpoints respectively. Research results show that GZR18 has excellent hypoglycemic and weight loss effects, and the efficacy is comparable to similar single-target or multi-target GLP-1 receptor agonists (non-head-to-head). The relevant data is expected to be announced at the American Diabetes Association (ADA) and the European Association for the Study of Diabetes (EASD) in September. Phase IIb clinical data is expected to be further disclosed at the end of the year. Since then, many self-developed products have been promoted clinically. The fourth-generation ultra-long-acting insulin GZR4 and the novel premixed double insulin compound GZR101 are currently in phase II clinical phase. The relevant pipelines will be presented at the American Biotechnology Conference (BIO 2024) in June.
Risk warning. R&D progress falls short of expectations, product sales and promotion falls short of expectations, European and American drug reviews fall short of expectations, and the risk of price reduction in procurement.