Deyuan Pharmaceutical (832735)
Event: the company released its 2021 annual report: the company achieved an operating revenue of 514 million yuan, a year-on-year increase of 29.56%; The net profit attributable to shareholders of listed companies was 778907 million yuan, a year-on-year increase of 21.67%.
We will continue to improve the products of diabetes and hypertension and expand to other areas of chronic diseases and metabolic syndrome. The company specializes in the development, production and sale of therapeutic drugs. It not only sets up a good reputation and strong brand advantage in the direction of diabetes and its complications and hypertension products, but also deals with peripheral nerve diseases, pulmonary hypertension and bladder hyperactivity in the sale of research products. The company’s performance increased significantly in 2021, mainly due to: (1) the announcement of the company’s annual report disclosed that among the current products, the sales volume of four first products that passed the consistency evaluation increased: metformin sustained-release tablets, Ruitong (pioglitazone hydrochloride tablets), tangrui (nateglinide tablets) and Furuitong (pioglitazone metformin tablets) were the first products that passed the consistency evaluation in China, which continuously enhanced the company’s popularity and market competitiveness, The number of products sold increased by 52% year-on-year; (2) Fu Ruitong and Bo Kaiqing increased significantly, and the company’s product sales structure was further optimized: as the company’s key products, the sales revenue of Fu Ruitong and Bo Kaiqing (candithiazide tablets) increased by 106.13% year-on-year, accounting for 43.77% in 2021 from 27.46% in 2020, of which the sales growth of candithiazide tablets reached 168.53%; (3) The centralized purchase of nateglinide tablets led to the growth of sales scale: the company’s product nateglinide tablets (0.12g) won the bid for the fourth batch of drugs, and delivered to relevant bid winning regions from 2021q2, resulting in a year-on-year increase in sales revenue of 57%. (4) The company’s newly added rare disease product allishengtan tablet is on the market: the company’s allishengtan tablet (5mg) was approved by the State Food and Drug Administration for drug registration in 2020, and is deemed to have passed the consistency evaluation.
In 2021, the gross profit margin of the company’s sales was 78.21%, and the restricted stock incentive plan was implemented. In 2021, the gross profit margin of the company’s sales decreased by 4.33 percentage points, mainly due to: (1) the price of main APIs and chemical raw materials increased. (2) The company has continuously invested in safety and environmental protection, which has increased the production and manufacturing cost; (3) Metformin hydrochloride sustained-release tablets (0.5g) won the bid for the centralized procurement of the third batch of drugs, and the bid winning price decreased significantly compared with the non centralized purchase price. In June 2021, the company issued shares to 130 incentive objects such as some senior managers and core employees, and will assess the company’s net profit after deducting non operating income by year from 2021 to 2023.
In 2021, two new products were registered and deemed to have passed the consistency evaluation. At present, the company’s solina Succinate Tablets and epalrestat tablets have obtained the production approval and are currently preparing for marketing. (1) Epalrestat Tablets is a reversible non aldose reductase inhibitor, and its indication is diabetic neuropathy, which can improve the symptoms and neurological dysfunction of diabetic peripheral neuropathy. In December 2021, the company obtained the drug registration certificate issued by nmpa and was deemed to have passed the consistency evaluation, becoming the second evaluated enterprise in China. (2) The indication of solina succinate new tablets is overactive bladder (OAB). China’s 2020 national medical insurance catalogue has included solina succinate new tablets into class B products. The international society against urinary incontinence (ICS) defines overactive bladder as a syndrome characterized by urgency (strong sense of urination), frequent urination and urgent urinary incontinence. In June 2021, the company obtained the drug registration certificate issued by the State Drug Administration (nmpa) and was deemed to have passed the consistency evaluation.
High tech enterprises in Jiangsu Province in 2021, with more than 20 drug varieties under research. The company is a high-tech enterprise, as well as a scientific and technological small and medium-sized enterprise in Jiangsu Province, Jiangsu enterprise technology center, provincial engineering technology research center and provincial postdoctoral innovation practice base. In 2021, the company invested 558641 million yuan in scientific research, and the proportion of R & D expenditure in operating revenue increased from 11.59% in 2020 to 12.50% in 2021. At present, the company has obtained 19 authorized patents, including 14 invention patents, 4 design patents and 1 utility model patent.
It is proposed to raise more capital to hold Tongli Haiyuan and expand the business of biological reagents in the field of biomedicine. The company announced in the early stage that the number of shares planned to be issued is no more than 8 million, which is intended to be used for: capital increase to hold 55% equity of Tongli Haiyuan, (1) capital increase to be used for the construction of Tongli Haiyuan Jiangsu Lianyungang Port Co.Ltd(601008) production base; (2) Upgrading of Beijing Daxing R & D center; (3) Marketing Center upgrading and replenishing working capital projects. Tonglihaiyuan focuses on the development of GMP level core reagents upstream of CGT, and has a relatively complete talent team, production process and R & D experience. Its main products include GMP grade recombinant protein, high-end culture medium, immunomagnetic beads and tool enzymes. Some products have been filed by FDA and DMF. The field of biological reagents in China started late, foreign brands monopolized the market for a long time, and the trend of import substitution has increased in recent years. Frost & Sullivan data predicts that the Chinese market scale of biological research reagent industry will reach 26 billion yuan in 2024; Among them, the market scale of recombinant protein scientific research reagents will reach 9.8 billion yuan, with a compound annual growth rate of 13.6% from 2019 to 2024.
Investment recommendations: the share of Fu Rui Tong and Bo Kai Ching is increasing. Ambrisentan tablets has begun to sell. The number of products that the company has been evaluated consistently is increasing. The brand superiority in the direction of diabetes and hypertension products is more obvious, and the product structure of Future Ltd will be further optimized. Epalrestat tablets, solina Succinate Tablets and Acarbose Tablets have been deemed to have passed the consistency evaluation and will become new performance growth points of the company in the future; In the field of biomedicine, the capital increase holding tonglihaiyuantuo biological reagent business is an industry supported by national policies and has a good market prospect in the future. As of the latest, the total market value of the company is 1.2 billion yuan, with PE (TTM) of 15.8x. It is recommended to pay attention.
Risk tips: quality control risk, increased market competition risk, new drug marketing risk
