Jiangsu Hengrui Medicine Co.Ltd(600276) (600276)
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On December 3, 2021, the state medical security administration announced the adjustment results of the national medical insurance drug catalogue in 2021. Jiangsu Hengrui Medicine Co.Ltd(600276) 7 products were successfully negotiated, and PD-1 maintained the original indication.
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PD-1 maintains the original indication and is expected to use the original price. The main indications of carrelizumab, Hengrui PD-1 product, have entered the medical insurance through the national negotiation last year, including three indications of second-line hepatocellular carcinoma, first-line non-small cell lung cancer and first-line esophageal cancer, and Hodgkin’s lymphoma. The two new indications for nasopharyngeal carcinoma this year have not entered the medical insurance, and the period of the medical insurance agreement has not changed. It is expected to continue to use the indication scope and medical insurance price negotiated last year until the end of 2022.
All 8 listed innovative drugs are included in the medical insurance catalogue. The three innovative drug products of Hengrui approved to be listed from 2019 to 2021, fluzopparil, haitripopa and rimazole, all entered the medical insurance catalogue through this year’s medical insurance negotiation. Apatinib was newly approved as an indication for second-line hepatocellular carcinoma this year and was also included in the medical insurance catalogue through negotiation. Other approved innovative drug products, pyrrolidinib and tiopefitin, were successfully renewed. In addition, carrelizumab, which used last year’s medical insurance, so far, all 8 innovative drugs listed by Hengrui have entered the medical insurance. In addition, azilsartan, China’s first generic drug, also entered the medical insurance directory through negotiations.
Innovative drugs will be in full volume and effectively promote revenue growth. The revenue share of Hengrui innovative drug products has increased from about 34% in 2020 to about 40% in the first half of 2021. With the newly listed products included in medical insurance, it is expected that the innovative drug products will usher in a full-scale volume, which will effectively promote the revenue growth of Hengrui.
Profit adjustment and investment suggestions
We maintain the company’s profit forecast of 6.390/73.91/8.116 billion yuan from 2021 to 2023, corresponding to 48 / 42 / 38 PE from 2021 to 2023, maintaining the “buy” rating.
Risk statement
The negotiation price of medical insurance is lower than the expected risk, the volume after the price reduction of medical insurance is lower than the expected risk, the market competition intensifies the risk, the R & D of innovative drugs is lower than the expected risk, the internationalization process is lower than the expected risk, the centralized purchase risk of generic drugs, etc.
