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Yangtze Business Daily News● Yangtze Business Daily reporter Shen Yourong

In vitro diagnostic company Wondfo Biologics (300482.SZ) has achieved initial success in its operational breakthrough.

On the evening of August 13, Wondfo Biotech disclosed its 2024 semi-annual report. In the first half of the year, the company achieved operating income of 1.575 billion yuan, a year-on-year increase of more than 5%; the net profit attributable to the parent company's shareholders (hereinafter referred to as "net profit") was 356 million yuan, a year-on-year increase of more than 6%.

In the same period last year, the company's operating income and net profit both decreased year-on-year. In the first half of this year, the company's operating income and net profit turned from decline to increase.

Wondfo Biotech specializes in the research and development, manufacturing, marketing and service of rapid diagnostic reagents and supporting instruments. In 2022, the company's net profit increased significantly due to the growth of market demand. In 2023, market demand fell and the company's net profit declined.

In the first half of this year, many in vitro diagnostic companies still experienced declining performance. Why was Wondfo Biotech the first to get out of trouble? The company said that in the first half of the year, it had made breakthrough progress in several strategic areas.

Wanfu Biologics focuses on R&D, with R&D investment of 217 million yuan in the first half of this year, accounting for 13.78% of its operating income.

The company said its products have been sold to more than 150 countries and regions around the world.

Taking the lead in breaking through, revenue and net profit return to growth

Wondfo Biologics' operating performance returned to the growth track.

According to the semi-annual report, in the first half of this year, Wanfu Biologics achieved operating income of 1.575 billion yuan, a year-on-year increase of 5.82%; net profit of 356 million yuan, a year-on-year increase of 6.37%; net profit after deducting non-recurring gains and losses (hereinafter referred to as "net profit after deducting non-recurring gains and losses") was 325 million yuan, a year-on-year increase of 9.93%.

In addition, there are several indicators showing growth. As of the end of June this year, the company's total assets were 6.664 billion yuan, a year-on-year increase of 15.46%; net assets were 5.377 billion yuan, a year-on-year increase of 19.06%.

Looking at individual quarters, the company's operating income in the first and second quarters of this year was RMB 861 million and RMB 714 million, respectively, up 3.54% and 5.70% year-on-year; net profit was RMB 218 million and RMB 137 million, respectively, up 7.20% and 5.08% year-on-year; non-net profit was RMB 209 million and RMB 116 million, respectively, up 6.78% and 16.06% year-on-year.

In the first half of 2023, the company's operating income, net profit and non-net profit were 1.489 billion yuan, 335 million yuan and 295 million yuan, respectively, a year-on-year decrease of 63.09%, 71.60% and 74.01%.

Why was Wondfo Biologics able to achieve an increase in operating income and net profit in the first half of this year?

The operating income and net profit in the first half of 2023 fell significantly year-on-year, mainly due to the high base in the previous year.

In 2022, under the influence of the epidemic, market demand grew in stages. Based on its supply chain, production capacity, channels, and brand advantages, Wondfo Biopharma relied on local supply and obeyed national allocation, driving the rapid growth of operating income and net profit that year. In 2022, the company's net profit increased by 88.67% over the previous year, and the increase in non-net profit also reached 100.70%.

In the past few years of the epidemic, in vitro diagnostic companies have actively participated in the fight against the epidemic, and the performance of most companies has grown explosively.

However, after the epidemic, many in vitro diagnostic companies have not yet gotten rid of their dependence on anti-epidemic products.

In the first half of this year, Daan Gene expects to lose 350 million to 430 million yuan, and Kehua Bio expects to lose 40 million to 57 million yuan.

When introducing the factors driving its performance, Wanfu Biologics said that the industry and policies are favorable, the company's product pipeline is constantly being updated, and it continues to deepen market development. The combination of multiple factors has driven the company's performance growth.

In the first half of this year, the company's core business maintained growth. For example, the infectious disease detection business revenue was 481 million yuan, a year-on-year increase of 12.50%; the chronic disease management detection business revenue was 762 million yuan, a year-on-year increase of 6.14%; the eugenics detection business revenue was 156 million yuan, a year-on-year increase of 16.92%. The only decline was in the drug (drug abuse) detection business, with revenue of 139 million yuan, a year-on-year decrease of 15.02%.

R&D and innovation "dual track parallel"

Wondfo Biologics has adopted a more proactive R&D strategy.

Wanfu Biologics' predecessor, Wanfu Limited, was established on November 13, 1992, with joint investment from Li Wenmei, Wang Jihua and his wife, Luo Yichun and Xie Yougong, with a registered capital of 300,000 yuan.

Over the past 30 years since its establishment, Wondfo Biotech has been deeply involved in the field of in vitro diagnostics, and has continuously updated its technology through research and development. The company's research and development strategy is to expand the existing product line categories and develop and upgrade new technology platforms in parallel. The company currently has nine major technology platforms, including immunocolloidal gold technology platform, immunofluorescence technology platform, and electrochemical technology platform, forming a rich product line in the fields of cardiovascular and cerebrovascular diseases, inflammation, infectious diseases, toxicology (drug abuse), eugenics and other testing fields. It is the company with the most technology platforms and the richest product lines in the industry.

As of the end of June this year, the company has obtained a total of 653 product registration certificates including NMPA, FDA, CE, and Canadian MDALL, ranking among the top in the industry.

At present, Wondfo Biologics has established R&D bases in Guangzhou, Shenzhen, the United States, Japan and other places, and its technology level in the field of POCT is at the forefront in China. Many of the company's products have passed the on-site assessment and approval of the US FDA, and it is also one of the very few domestic companies that exports POCT products on a large scale to developed countries in Europe and the United States with extremely high entry barriers.

In the first half of this year, Wondfo Biopharma made breakthrough progress in the two strategic areas of chemiluminescence and molecular diagnosis and pathology.

In the first half of the year, the company obtained 20 authorized invention patents. As of the end of June this year, the company had a total of 467 authorized and valid patents, including 110 invention patents.

Wanfu Biologics continues to increase its investment in R&D capacity building and new product development. From 2019 to 2023, the company's R&D investment was RMB 190 million, RMB 390 million, RMB 459 million, RMB 447 million, and RMB 422 million, respectively. In the first half of this year, the company's R&D investment was RMB 217 million, accounting for 13.78% of its operating income. In 2023, R&D investment accounted for 15.26%.

In 2023, while operating income fell by more than 50%, R&D investment fell by 5.59%.

Wondfo Biologics said that it started to explore overseas markets in 2004. Currently, its products are exported to more than 150 countries and regions around the world, and its overseas sales revenue has grown rapidly in recent years.