20180202-申万宏源研究_香港_-石药集团-01093.HK-新品种获批提速_13页_1mb

CSPC Pharmaceutical Group Summary

Core Content

CSPC Pharmaceutical Group (1093:HK) is a Chinese pharmaceutical company that has seen significant growth in its business and is expected to continue to do so in the coming years. The report highlights the company's strong performance in key therapeutic areas, particularly in neurology and oncology, as well as its expanding R&D pipeline and vitamin C production.

Main Points

• Market Data:

  • Closing Price: HK$17.06
  • Price Target: HK$19.50
  • Market Cap (US$m): 13,622
  • Market Cap (HK$m): 106,506
  • Shares Outstanding (m): 6,243
  • 52-week High/Low (HK$): 18.70/8.51
  • Exchange Rate (Rmb-HK$): 1.24

• Analyst: Jill WU, A0230514080002, AXT645, wuyu@swsresearch.com

• Investment Highlights:

  • The company's oncology drugs have shown strong growth, with Jinyouli (PEG-rhG-CSF injection) and Duomeisu (doxorubicin hydrochloride liposome) leading the way.
  • The report upgrades the rating from Hold to Outperform due to strong growth in oncology and new product launches.
  • The target price is increased to HK$19.50, representing a 14% upside.
  • The analyst forecasts a 30% CAGR for NBP (butylphthalide) from 2017 to 2019.
  • Jinyouli is expected to grow at a 90% CAGR and reach HK$1.0bn in 2019.
  • Duomeisu is expected to grow at a 41% CAGR and reach HK$1.0bn in 2019.
  • The company is expected to receive CFDA approval for nine generic drugs in 2018, including albumin-bound paclitaxel injection.
  • The albumin-bound paclitaxel injection is expected to peak at c.Rmb1.6bn by 2024.
  • The analyst forecasts oncology drug sales to grow at a 71% CAGR from 2017 to 2019, reaching HK$2.8bn in 2019.

• NBP (Butylphthalide):

  • NBP is used for the treatment of acute ischemic stroke.
  • Sales of NBP increased 33% YoY in 9M17, with capsules and injections both contributing to growth.
  • The capsule is distributed in 220 cities (c.70% of Chinese cities) and 426 counties (c.15% of all counties).
  • The injection is distributed in 160 cities (c.50% of all cities) and 280 counties (c.10% of all counties).
  • The analyst forecasts 30% CAGR for NBP from 2017 to 2019 due to reimbursement expansion and market penetration in lower-tier markets.

• Oncology Drugs:

  • CSPC's oncology drug portfolio includes Duomeisu, Jinyouli, Ailineng, and Nuolining.
  • Oncology drug sales increased 73% YoY to HK$713m in 9M17, driven by Jinyouli and Duomeisu.
  • Jinyouli is the first-to-market long-acting G-CSF in China and is expected to reach HK$1.0bn in 2019.
  • Duomeisu is expected to grow at a 41% CAGR and reach HK$1.0bn in 2019.
  • The company is expected to gain market share from adjuvant drugs in the neurology space.

• R&D Pipeline:

  • CSPC has 170 drugs under development, including 18 class-1 drugs and 18 drugs pending ANDA review by the US FDA.
  • The company plans to conduct bioequivalence tests for c.44 drugs.
  • CSPC has already submitted equivalence evaluation applications for four generics.
  • The company is expected to increase its R&D expense to sales ratio from 3.3% in 2016 to 5.3% in 2017, 6.8% in 2018, and 6.7% in 2019.

• Vitamin C Business:

  • CSPC is the largest vitamin C supplier in China with an annual capacity of c.45,000t.
  • The average export price of vitamin C increased from US$4.3/kg in January 2017 to US$7.3/kg in December 2017.
  • Anhui Tiger Biotech is expected to increase its vitamin C capacity to 33,000t in 1H18.
  • The new capacity represents c.40% of China's existing capacity.

Key Information

• NBP is expected to grow at a 30% CAGR from 2017 to 2019 due to reimbursement expansion and market penetration in lower-tier markets.
• Jinyouli is expected to grow at a 90% CAGR from 2017 to 2019 and reach HK$1.0bn in 2019.
• Duomeisu is expected to grow at a 41% CAGR from 2017 to 2019 and reach HK$1.0bn in 2019.
• CSPC's oncology drug sales are expected to grow at a 71% CAGR from 2017 to 2019, reaching HK$2.8bn in 2019.
• CSPC's R&D expense to sales ratio is expected to increase from 3.3% in 2016 to 5.3% in 2017, 6.8% in 2018, and 6.7% in 2019.
• CSPC's vitamin C business is expected to face increasing competition due to margin recovery in 2017.
• Anhui Tiger Biotech is expected to increase its vitamin C capacity to 33,000t in 1H18, representing c.40% of China's existing capacity.