Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707)
Event: regalosan injection was approved and large varieties were cashed
On April 13, 2022, the company announced that it was notified by the US FDA, and the Anda of regalosan injection declared by its subsidiary to the US FDA was approved. According to the announcement, "the US market sales of regalosan injection in 2020 is about US $600 million".
Viewpoint: high quality manufacturing, international competition, and sustained delivery of preparation exports
The products with better competition pattern and larger market space continue to be approved, which we believe is the further verification of the company's comprehensive export ability of preparations. (1) The competition pattern is better, which is reflected in that there are few varieties approved (FDA's official website shows that there are four temporarily approved anda) and the product is relatively new compared with other generic drugs. We believe that the product is still in the window period of large volume after the expiration of the patent, and the company's approval is expected to achieve a relatively higher net profit margin. (2) The market space is larger, which is reflected in the relatively high sales in 2020 and 2021 (according to iqvia, the sales of the product in 2021 was US $650 million +). According to the products and competition pattern of the US generic injection Market, we believe that the products with sales of more than US $100 million are large products (according to IMS data, the sales of enoxaparin injection in 2021 was about US $550 million), Even considering the possibility of price reduction of reganosen injection, the product is still expected to become an important large single product. We simply assume that the price is reduced by 50% and the market share of the company is 10%. This variety is expected to generate an income of about 200 million yuan; Assuming a 30% net profit margin, it is expected to achieve a net profit of 55-60 million. Considering the production, delivery and sales cycle of the company, we are optimistic about the continuous profit contribution of this variety from 2023 to 2024.
China's largest comprehensive preparation export platform, high-quality manufacturing, international competition, growth ceiling and sustainability are expected to exceed expectations. We believe that the core of American injection competition is the comprehensive ability of systematic high-quality manufacturing, which does not lie in the self-sufficiency of API and low-cost competition. High-quality manufacturing can be reflected in the continuous zero defect inspection by FDA for many times, or in the rush to copy, the first copy or the varieties with better layout competition, It can also be reflected in the detailed control of special packaging (according to the company's news, carmustine for injection packaging contains both cytotoxic drug solids and flammable solvents. This product is the first sterile preparation drug exported in different forms of double dangerous goods package in China's free trade zone). Based on the company's ability accumulated in high-quality manufacturing and international competition, we are optimistic about the company's promotion of cdmo, innovative varieties and new growth curve.
Profit forecast and valuation
We expect that the company's EPS from 2021 to 2023 will be 0.89, 1.22 and 1.64 yuan / share respectively, and the closing price on April 14, 2022 corresponds to 23.5 times PE in 2022. In the profit forecast, we assume that China's heparin preparations will be intensively purchased in 2022 without considering the elasticity of winning the bid for the centralized purchase of new preparation varieties in China. Under the adjustment of the rhythm of centralized purchase, the net profit in 2023 may exceed expectations. On the whole, considering the company's ability to fulfill industrial upgrading in the field of unique resources, the growth potential of the comprehensive preparation export platform, and the company's advantages in the development of biological drug compliant production process, the "buy" rating is maintained.
Risk tips
The risk of excessive inventory proportion and sharp price fluctuation; Risk of flow standard for centralized purchase of heavy varieties; The approval speed of Anda varieties is lower than the expected risk; Risk of production quality accidents.
