Innovative Products Become New Growth Drivers
We expect CSPC to report satisfactory 2022 results, with 10% yoy increases in revenue and earnings. The company saw its newly-launched innovative products become new growth drivers, which are expected to bring in significant revenue contribution from 2023. Pursuing EUA for its COVID-19 mRNA vaccine by end-22, CSPC also expects to launch about eight innovative products in 2023. Maintain BUY and target price of HK$10.00.
WHAT’S NEW
• CSPC Pharmaceutical Group (CSPC) expects NBP to generate steady revenue growth in 2022/23.
• Newly-launched innovative products become new growth drivers.
STOCK IMPACT
• NBP is expected to deliver increasing revenue in 2022/23. The National Healthcare Security Administration (NHSA) recently selected 344 drugs as potential candidates for 2022 National Reimbursement Drug List (NRDL). CSPC saw its blockbuster NBP injection and NBP capsules, as well as the newly-launched innovative product – Duvelisib (an oral dual inhibitor of PI3K-?/? for the treatment of hematologic malignancies), being selected as potential drug candidates for 2022’s NRDL. We estimate that NBP contributed approximately Rmb5.8b revenue in 2021, declining by approximately 11% yoy from Rmb6.6b in 2020, after the significant price cut of approximately 56% in 2020’s NRDL price negotiations. The company anticipates a 10-20% price cut for NBP injection and no price pressure for NBP capsules this year. Supported by the company’s superior sales and marketing capabilities, management is confident that NBP will continue to generate revenue growth in 2022 and 2023. Moreover, CSPC sees no threat of potential generic competition for NBP in the next two years.
• Duvelisib to significantly expand market presence via NRDL inclusion. Approved in Mar 22, Duvelisib is currently indicated for 3L follicular lymphoma (FL). It is the first approved orally available dual PI3K-? and PI3K-? inhibitor in the global market. The product is expected to significantly expand market presence by being included in the 2022 NRDL. Duvelisib is currently also under development for the treatment of various solid tumours.
• Duoenda targets Rmb150m revenue in 2022. Approved in Jan 22 for the treatment of peripheral T-cell lymphoma (PTCL), Mitoxantrone hydrochloride liposome injection (Duoenda) is a self-developed oncology nano-therapy. The company expects Duoenda to achieve sales revenue of Rmb150m in 2022. Clinical studies indicate that Duoenda has a significantly better efficacy than other drugs in treating patients with relapsed or refractory PTCL. The company is seeking business development (BD) partners for its globalisation potentials.
