Hengrui Medicine (600276): Interim report is beautiful, Erica is expected to become a phenomenal product

Hengrui Medicine (600276): Interim report is beautiful, Erica is expected to become a phenomenal product

Key Investment Events: The company released its semi-annual report for 2019, reporting that the two companies achieved operating income of 100.

26 ppm, an increase of 29 in ten years.

2%, net profit attributable to mother 24.

10,000 yuan, an increase of 26 in ten years.

3%, deducting non-net profit 22.

89 ‰, an increase of 25 in ten years.

2%; realized operating cash flow14.

52 ppm, an increase of 9 in ten years.


Opinion: The company’s overall performance is in line with market expectations.

The company’s revenue in the first half of the year exceeded the 10 billion mark for the first time, of which Q2 achieved revenue of 50 in a single quarter.

59 ppm, an increase of 29 in ten years.

6%, a slight increase in the earlier Q1. We believe that it is mainly driven by the continuous increase in the volume of newly approved products; the profit growth rate is 27.

0%, profit growth rate is lower than revenue growth rate mainly due to Q2’s sales expense ratio increased; Q2 company’s sales expense ratio and management expense ratio were 37.

1% and 8.

4%, overall remained stable compared with the same period last year.

Key areas and product performance: With reference to IQVIA data and terminal research, we expect the company to achieve revenue growth rates of 30%, 40% and 20% in the fields of tumor, angiography and anesthesia, respectively.

Among them, docetaxel, irinotecan, tigio, and apatinib have achieved revenue growth of -5%, + 15%, 10%, and 5%, respectively.It added 500 million and more than 200 million supplementary contributions; iodixanol, sevoflurane, butorphanol, key products in the field of contrast agents and anesthesia, achieved revenue 无锡桑拿网 growth of 45%, 15%, and 100%, respectively.

With the approval of multiple ANDAs overseas, especially in the United States after 2018, we expect the company to achieve more than 20% revenue growth overseas in the first half of the year.

R & D continues to remain high investment, and the pipeline of innovative drugs is constantly enriching: reports and company R & D expenses14.

84 ppm, a 49-year increase of 49.


At present, the company has more than 30 new active substances in the clinical stage, of which 12 new active substances are in the phase III clinical stage. SHR6390 (CDK4 / 6 inhibitor), SHR3680 (AR inhibitor), SHR3162 (PARP) Inhibitors), both entered Phase III clinical trials in the first half of the year, with the first two targets domestically progressing.

Continuous breakthroughs in the development of indications for PD-1 products: Karelizumab (brand name Erica) was officially launched at the end of July 2019. In addition to the approved classic Hodgkin lymphoma, KarelizumabKang has obtained positive data from three clinical trials of solid tumor registration, namely second-line liver cancer, second-line esophageal cancer, and first-line non-squamous non-small cell lung cancer; second-line liver cancer has been officially reported, and second-line esophageal cancer is also in the NDA preparation processThe just-announced 2019 WCLC summary Karelizumab for first-line treatment of NSCLC has excellent clinical data (PFS: 11).

3mo vs 8.

3mo), is the world’s second trial of PD-1 combined with chemotherapy for first-line treatment of non-scale NSCLC with positive results.

The clinical development of large tumors is among the best in the country. With the breakthrough of the first domestically produced first-line vein, with flexible pricing and the support of a strong promotion team, Carelizumab is expected to become a phenomenal product.

Lung cancer, liver cancer, stomach cancer, and esophageal cancer are expected to be the largest target market for PD-1 / L1 antibody drugs in China. With reference to our related research, the domestic market of the four major tumor types is expected to exceed 32 billion; KarelizumabThe first-line clinical trials for the four major tumor types have been completed, and most have progress advantages, and have obtained 3 positive data; especially the non-squamous NSCLC first-line, in addition to the approved K drug, the company’s progress is significantly ahead of otherIn the same industry, K medicine used to be able to cure the first-line development success, so that the sales came later.

Erica’s pricing strategy is flexible, and annualized treatment costs after drug donation11.

90,000 yuan (under indication), is one of the most cost-effective PD-1 antibody drugs in China.

Sales scale. The company has the largest oncology drug promotion team in China, with significant advantages in product access and penetration.

In summary, taking advantage of indications, pricing, and promotion teams, we expect that Carelizumab is expected to gain more than 20% of the market in the domestic PD-1 market, which is expected to exceed 40 billion.

Earnings forecast and investment advice: We estimate that the company’s net profit attributable to the parent in 2019-2021 will be 53.

400 million, 67.

800 million, 87.

200 million, an increase of 31 each year.

2%, 27.

2% and 28.5%.

We give the company generic drugs and already apatinib, pirlotinib profit 30-35 times, corresponding to the market value of 1800-2100 ppm in 2020; DCF estimation of the company’s innovative drug echelon, a discount factor of 8%, has considered different stagesThe market probability of innovative drugs corresponds to a value of 2009 trillion in 2019, and the company’s total market value in 2020 is 3809-4109 trillion, corresponding to a target interval of 86.


9 yuan, maintain “Buy” rating.

Risk warning events: the risk of new drug development not meeting expectations; the risk of drug price reduction; the risks related to drug quality and safety.