\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 276 Jiangsu Hengrui Medicine Co.Ltd(600276) )
Jiangsu Hengrui Medicine Co.Ltd(600276) issue the 2021 annual report. In 2021, the company achieved an operating revenue of 25.906 billion yuan, a year-on-year decrease of 6.59%; The net profit attributable to the parent company was 4.53 billion yuan, a year-on-year decrease of 28.41%, and the net profit not attributable to the parent company was 4.201 billion yuan, a year-on-year decrease of 29.53%. Looking at Q4 alone, the operating revenue was 5.707 billion yuan, a year-on-year decrease of 31.42%; The net profit attributable to the parent company was RMB 323 million, a year-on-year decrease of 84.39%, and the net profit deducted from non attributable to the parent company was RMB 52 million, a year-on-year decrease of 97.16%.
Jiangsu Hengrui Medicine Co.Ltd(600276) released the first quarterly report of 2022. In 2022q1, the company realized an operating revenue of 5.479 billion yuan, a year-on-year decrease of 20.93%; The net profit attributable to the parent company was 1.237 billion yuan, a year-on-year decrease of 17.35%, and the net profit not attributable to the parent company was 1.180 billion yuan, a year-on-year decrease of 19.80%.
Revenue and profits fell less than expected, R & D was strongly promoted, and international development accelerated
In the dimension of the whole year, the income fell by 6.6% in line with expectations, mainly due to the continuous impact of centralized purchase and the large decline of medical insurance negotiation products. The profit side, especially Q4, was lower than expected in a single quarter, mainly due to the landing of Q4, the largest batch of centralized mining in the fifth batch, a sharp decline in gross profit, and large R & D investment (accounting for 23.95% of revenue in the whole year). If the influence of centralized purchase varieties and PD-1 price reduction are deducted, other varieties of the company have a steady growth (we estimate that the growth rate is 6%), and the sales volume of PD-1 company has increased by 360.7%, the sales volume of figeristine has increased by 37.5%, and the sales volume of pyrrolidinib has increased by 22.85%, which still reflects the relatively strong sales capacity of the company. The company's expenses are uneven in four quarters, resulting in the exceptionally low Q4 single quarter. Quarterly, due to the high management expenses in Q4 single quarter (1.32 billion, the management expense rate in a single quarter is as high as 13%, and the average management expense rate in the first three quarters is 7.6%), because the net profit in a single quarter has narrowed significantly, the difference between parent and deduction comes from government subsidies and investment income, and the non recurring is mainly reflected in Q4. There is not much difference between the parent and deduction profits in the first three quarters. The revenue and profit of 22q1 fell in double digits year-on-year, and the revenue of Q4 continued to decline by 4% month on month, which is in line with expectations, because from the situation of pharmaceutical enterprises, the general revenue of Q1 in the second year will be lower than Q4 in the previous year. We expect that the revenue pressure brought by centralized purchase will continue to Q3; The company's R & D expenditure was 3.14 billion yuan, accounting for 53.3% of the total R & D expenditure. Sales / management expenses decreased by 24.5% / 11.1% year-on-year, and the cost reduction and efficiency increase were obvious.
In terms of business types, innovative drugs and generic drugs are subject to price reduction pressure.
In terms of innovative drugs, the price reduction of medical insurance is large and the volume is lower than expected. Carrelizumab, the main product, entered the national medical insurance catalogue, with a decrease of 85%. After the implementation of 2021q1, it was difficult for the products to enter the hospital, the implementation time of medical insurance in different places was different, the sales decreased year-on-year, and the performance was under pressure.
In terms of generic drugs, the revenue of stock varieties continued to decline. At present, 28 varieties have entered the national centralized belt procurement, and 18 of them have been selected, with an average decrease of 73%. Among them, the sales of 6 varieties in the third batch of centralized purchase will reach 860 million yuan (- 55%) in 2021, and the income of 8 varieties in the fifth batch of centralized purchase will reach 2.77 billion yuan (- 37%) in 2021.
In terms of sectors, the income of anti-tumor and imaging lines decreased, and the gross profit margin of each sector decreased. The revenue of anti-tumor line is 13.072 billion yuan (- 14.39%), and the gross profit margin is 90.68% (- 2.67pp); The revenue of anesthesia line is 4.916 billion yuan (+ 7.09%), and the gross profit margin is 89.08% (- 1.26pp); The revenue of contrast medium line was 3.270 billion yuan (- 9.93%), and the gross profit margin was 72.24% (-0.17pp); The revenue of other products was 4.523 billion yuan (+ 9.69%), and the gross profit margin was 76.89% (- 1.60pp).
The company has invested heavily in R & D and accelerated the development of innovation and internationalization. In 2021, R & D investment reached 6.203 billion yuan (+ 24.34%), accounting for 23.95% of revenue, a record high, of which overseas R & D accounted for 19.93%. At present, 10 innovative drugs have been approved in China, and carrelizumab is the domestic PD-1 monoclonal antibody with the most approved indications (8); The number of innovative drugs under development ranks first in China, including repagliptin (DPP4), shr3680 (AR), shr-1316 (PD-L1) and linpril tablets (PI3K) δ） It is expected to be approved within 2022; More than 250 clinical research projects continue to be promoted, and shr8058 (nov03), shr8554 (MOR) and shr0410 (KOR) are expected to submit NDA; There are nearly 20 international multicenter clinical projects under research (7 are registered in phase III). Carrelizumab combined with apatinib for HCC is expected to apply to FDA for listing in 2022.
We expect that the pressure caused by centralized mining will affect 2022q3. At present, the company has commercialized 10 innovative drugs and will continue to enrich innovative drugs in the future. It is expected that the proportion of revenue will increase to more than 50% in 2022 (39.15% in the mid-term report in 2021). Overseas layout opens up broader space for long-term development. At present, the company is in the painful period of transformation from imitation to innovation. Excellent R & D capabilities are superimposed on strong market sales, and innovative international development is worth looking forward to.
Profit forecast and investment rating. Based on the impact of centralized mining, we lowered the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 4.713 billion yuan, 5.478 billion yuan and 6.418 billion yuan respectively, with a year-on-year increase of 4.0%, 16.2% and 17.1% respectively, and the corresponding PE will be 45x, 38x and 33x respectively. We are optimistic about the company's development for a long time and maintain the "buy" rating.
Risk tip: the internationalization progress is lower than expected, and there is a risk of failure in the research and development of innovative drugs.
