news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

the 2024 semi-annual report is coming to an end, and a-share and hong kong-listed pharmaceutical and health companies have also announced their first-half results one after another.

on august 30, a reporter from the paper found that innovative pharmaceutical companies on the a-share market, such as baili tianheng (688506), sinovac biotech (688136), and sinocell (688520), as well as hong kong-listed biotech companies (18a), such as kelun biotech (6990.hk), heyu pharmaceuticals (2256.hk), ascent pharmaceuticals (6855.hk), guichuangtongqiao (2190.hk), tot biopharm (1875.hk), and cstone pharmaceuticals (2616.hk), have turned losses into profits compared with the same period last year, and some of them have achieved profitability for the first time, which undoubtedly conveys great confidence to the industry.

different companies have different ways of making profits. bd (business development) transactions have become an important driving force for the profits of many innovative pharmaceutical companies. for example, baili tianheng's net profit in the first half of the year was 4.666 billion yuan, mainly due to the irrevocable and non-deductible down payment of 800 million us dollars received from its overseas partner bristol-myers squibb (bms). some industry insiders believe that relying on bd funds to achieve revenue growth and profits is more like "blood transfusion". if an innovative pharmaceutical company wants to truly maintain steady development, it needs to enhance its "hematopoietic" ability.

many innovative pharmaceutical companies have turned losses into profits through bd transactions

in recent years, cross-border bd transactions between domestic biotech companies and foreign pharmaceutical companies have continued. according to incomplete industry statistics, the number of cross-border bd transactions exceeded 40 in the first half of this year alone. for local innovative pharmaceutical companies, selling part or all of the rights and interests of their pipelines under development through bd transactions has achieved the goal of "borrowing a boat to go to sea." generally speaking, the amount of a bd transaction is divided into a down payment and a milestone payment. as the transaction progresses, the transaction funds are continuously cashed, and the innovative pharmaceutical companies as sellers are also expected to turn losses into profits.

on august 21, ascentage pharmaceuticals announced its interim results for 2024, with revenue of 824 million yuan in the first half of the year, a year-on-year increase of 477%, and a net profit of 163 million yuan, turning losses into profits for the first time. ascentage pharmaceuticals already has product sales revenue, but this outstanding performance mainly depends on external cooperation and licensing revenue.

in june this year, ascentage pharmaceuticals announced that it had signed an exclusive option agreement with takeda, granting takeda the exclusive option to sign an exclusive license agreement for nerica (orebactinib). according to the agreement, ascentage pharmaceuticals can receive an option payment of us$100 million and will be eligible to receive an option exercise fee of up to approximately us$1.2 billion and additional potential milestone payments, as well as sales revenue of a double-digit percentage of annual sales. on july 4, ascentage announced that it had received an option payment of us$100 million.

similarly, cstone pharmaceuticals reported a revenue of 254.2 million yuan and a net profit of nearly 16 million yuan in the first half of the year, achieving profitability for the first time. cstone pharmaceuticals mentioned in its financial report that by the end of june 2024, revenue included drug sales (afatinib and pratinib) of 118.3 million yuan, licensing fees of 122.6 million yuan, and royalties of sugemalimab of 13.3 million yuan. the increase in licensing fees largely offset the decrease in drug sales.

according to public information, cstone pharmaceuticals has reached a number of external cooperations. for example, in may this year, cstone pharmaceuticals has reached a commercialization strategic cooperation with the european pharmaceutical company ewopharma. ewopharma will obtain the commercialization rights of sugemalimab in switzerland and 18 central and eastern european countries. cstone pharmaceuticals will receive a down payment of up to us$51.3 million and subsequent registration and sales milestone payments. in addition, in july this year, cstone pharmaceuticals also granted hengrui medicine the exclusive promotion rights of taijihua in mainland china, and cstone pharmaceuticals received a down payment of 35 million yuan.

dongwu securities research report believes that the capital market is still very enthusiastic about innovative drugs, but the certainty requirements for innovative drugs are extremely high. with the arrival of the cold winter of the capital market in recent years, whether innovative drugs have the ability to generate revenue is one of the main criteria for the asset market to select stocks. some innovative drug companies have achieved profitability through commercial approval of products and the transfer of global rights and interests of products to overseas mncs (multinational pharmaceutical companies). judging from the 2024 interim report, eli lilly, beigene, innovent biologics, and hutchison medicine have gradually turned losses into profits through the sale of products in china or the united states, and kelun botai, ascent pharmaceuticals, and baili tianheng have achieved profitability through bd.

"bd transactions provide performance support for innovative pharmaceutical companies in a relatively short period of time, but they are not enough to become the long-term driving force for the development of innovative pharmaceutical companies." an unnamed person from an innovative pharmaceutical company told reporters that the risk of new drug research and development is high and the cycle is long, which also determines the uncertainty of related bd transactions, and "returns" often occur. in addition to the down payment that does not need to be refunded, there are still large variables for higher milestone payments to become confirmed revenue. if an innovative pharmaceutical company wants to achieve long-term development, it must rely more on its own hematopoietic ability, which includes the company's operational capabilities, as well as the research and development and commercialization capabilities of innovative drugs.

product revenue becomes the continuous driving force for the development of innovative pharmaceutical companies

in fact, before 2024, some domestic innovative pharmaceutical companies have achieved profitability through bd transactions. take kangfang biopharma (9926.hk) as an example. the company achieved profitability for the first time in the first half of 2023, mainly relying on the receipt of the us$500 million down payment for the overseas rights license of ivoside, and rmb 2.92 billion was confirmed as licensing fee income during the period.

judging from the latest semi-annual report for 2024, without the large license income, its overall performance declined year-on-year, but it is worth noting that its product revenue has increased significantly, and future growth is expected. specifically, kangfang biopharma's innovative product revenue in the first half of the year was 940 million yuan, a year-on-year increase of 24%. among them, the first world-first innovative drug pd-1/ctla-4 dual antibody cardunili achieved product sales of approximately 710 million yuan, a year-on-year increase of 16.5% against the background of only one small indication of 2/3l cervical cancer approved; the company's second world-first innovative drug ivosi, which was approved for listing in may this year, had product revenue of 103 million yuan.

the above-mentioned pharmaceutical company personnel believe that only by continuously delivering innovative results while bd transactions are being realized can the continued growth of performance be supported. given the complexity and variability of the current market environment, relevant companies should also adhere to high r&d efficiency to better balance mid- and long-term development.

judging from the performance in the first half of 2024, whether it is the science and technology innovation board or the hong kong stock market, some innovative pharmaceutical companies have achieved positive growth in performance by relying on highly competitive star products.

eli lilly, a domestic innovative pharmaceutical company, has turned a profit in 2022. the latest semi-annual report shows that the total operating income is 1.576 billion yuan, a year-on-year increase of 110.57%; the net profit attributable to the parent is 656 million yuan, a year-on-year increase of 214.82%. eli lilly's performance growth mainly relies on its star product, namely its independently developed third-generation egfr-tki vometinib. in 2023, the sales amount of vometinib exceeded 2 billion yuan; in the first half of 2024, vometinib continued to grow on the high base of 2023, and the sales amount exceeded 1.5 billion yuan in half a year.

hong kong-listed innovative pharmaceutical company genting neway (1952.hk) has not yet achieved profitability, but the 2024 interim performance report shows that thanks to the market performance of a number of commercialized products, the company's revenue reached 302 million yuan, and achieved the first commercial-level profit in the company's history. this achievement is also supported by star products. specifically, the flagship drug in the renal product portfolio, naifencon, was commercialized and issued its first prescription in mainland china in may 2024, and sales revenue reached 167.3 million yuan in more than a month after its launch. in addition, the world's first fluorocycline antibacterial drug yijia achieved revenue of 134.2 million yuan in the first half of the year, and revenue of 233 million yuan since its commercialization in july 2023.