20180202-申万宏源研究_香港_-石药集团-01093.HK-Strong_pipeline_13页_1mb

CSPC Pharmaceutical Group (1093:HK) Summary

Core Content

CSPC Pharmaceutical Group (1093:HK) is a Chinese pharmaceutical company that has been upgraded to "Outperform" due to its strong growth in oncology drugs and the upcoming launch of new products. The company's financial performance and market outlook show promising growth in both revenue and net income, with significant expansion potential in its key products.

Financial Overview

Main Points

• NBP (Butylphthalide):

  • A flagship drug for acute ischemic stroke treatment.
  • Sales increased by 33% YoY in 9M17.
  • Soft capsule and injection forms have different distribution coverage.
  • Penetration in lower-tier markets is expected to drive continued growth.
  • Forecasted CAGR of 30% for 2017-19E.

• Oncology Drugs:

  • Strong growth momentum with products such as Jinyouli (PEG-rhG-CSF injection) and Duomeisu (Doxorubicin Liposome).
  • Jinyouli was added to the new NRDL in 2017, leading to a 90% CAGR and projected sales of HK$1.0bn in 19E.
  • Duomeisu holds a 58% market share in the doxorubicin liposome market in 9M17, with a forecasted CAGR of 41% and HK$1.0bn in 19E.
  • CSPC's albumin-bound paclitaxel injection is expected to gain approval in 1Q18 and reach peak sales of c.Rmb1.6bn by 2024E.

• Upcoming Generic Drug Approvals:

  • CSPC is expected to receive CFDA approval for nine generic drugs in 2018, including albumin-bound paclitaxel injection, bortezomib injection, sunitinib capsule, dasatinib tablet, dronedarone tablet, ticagrelor tablet, clopidogrel tablet, pramipexole tablet, and metformin sustained release tablet.

• Rating Upgrade:

  • The rating is upgraded from "Hold" to "Outperform" due to the strong growth of oncology drugs and new product launches.
  • Target price is raised to HK$19.50, representing a 14% upside.

Key Information

• Market Expansion:

  • NBP has substantial potential for growth in lower-tier markets.
  • The company is expanding its market share in oncology and other therapeutic areas.

• Product Pipeline:

  • CSPC has a strong R&D pipeline with around 170 drugs under development.
  • The company plans to conduct bioequivalence tests for c.44 drugs and is actively seeking approvals for several generics.

• Vitamin C Business:

  • CSPC is the largest vitamin C supplier in China with an annual capacity of c.45,000 tons.
  • The average export price of vitamin C increased from US$4.3/kg to US$7.3/kg in 2017.
  • New capacity from Anhui Tiger Biotech may increase competition in the market.

• Analyst Note:

  • The company does not hold any equities or derivatives of the listed company but provides financial advisory services.
  • Affiliates may hold equities exceeding 1% of issued shares.
  • The target price is based on 35x 18E PE and 27x 19E PE.

Conclusion

CSPC Pharmaceutical Group is positioned for sustainable growth in both its core product NBP and its oncology drug portfolio. The company is expected to benefit from the expansion of reimbursement coverage, the launch of new products, and the approval of several generic drugs. The upgrade to "Outperform" reflects the positive outlook for the company's future performance and its ability to capitalize on market opportunities.