On the evening of April 17, Hengrui Pharmaceutical released its 2023 annual report, in 2023, Hengrui Pharmaceutical achieved operating income of 22.820 billion yuan, an increase of 7.26% year-on-year, net profit attributable to shareholders of listed companies of 4.302 billion yuan, an increase of 10.14% year-on-year, non-net profit attributable to shareholders of listed companies of 4.141 billion yuan, an increase of 21.46% year-on-year, and net operating cash flow of 7.644 billion yuan, a year-on-year increase of 504.12%, and the company's performance rebounded steadily.
According to the report, with the continuous approval of Hengrui Pharmaceutical's innovative achievements, the clinical value of innovative drugs has been highlighted, driving revenue growth. In 2023, the company's innovative drug revenue will reach 10.637 billion yuan (including tax, excluding external licensing revenue), and despite the impact of external environmental changes, product price reductions and access difficulties, it still achieved a year-on-year growth of 22.1%.
In order to ensure innovation output, Hengrui continued to increase innovation efforts and maintain high R&D investment, and the company invested a total of 6.15 billion yuan in R&D during the reporting period, which strongly supported the company's project R&D and innovative development. At the same time, the company continued to improve operation management, promote quality and efficiency, and the sales expense ratio decreased by 1.34% compared with the same period last year. It is worth noting that the report mentions that the company is continuing to strengthen the construction of the commercialization system, and strategically deepen the layout of the retail market, expand DTP pharmacies and other channels, and accelerate the coverage of innovative drug sales channels.
At the same time, the company also announced an annual dividend plan, distributing cash dividends of 2.00 yuan (tax included) to all shareholders for every 10 shares, plus a total dividend of more than 2.1 billion yuan plus repurchases.
Changjiang Securities analysis believes that the company's transformation pains have passed, the impact of centralized procurement has come to an end, the pressure of medical insurance price reduction has been released one after another, innovative products continue to be cashed, and the performance has entered the upward channel, and there are a number of blockbuster varieties under research to provide long-term growth momentum, and the future growth can be expected.
Innovation drives revenue growth, and R&D results are accelerated
The report shows that the cumulative R&D investment in 2023 will be 6.150 billion yuan, providing a strong guarantee for the company's continuous innovation output.
With the support of high-intensity R&D investment, Hengrui's R&D achievements have been accelerated. During the reporting period, Hengrui had 3 Class 1 innovative drugs (adebelimab, repagliptin phosphate, otecoconazole) and 4 Class 2 new drugs (dexmedetomidine hydrochloride nasal spray, abiraterone acetate nanocrystal, irinotecan hydrochloride liposome, hengpagliflozin metformin extended-release tablets) approved for marketing, and up to now, the company has been approved for marketing 16 Class 1 innovative drugs in China. 4 Class 2 new drugs, 5 new indications were approved for marketing during the reporting period, the 9th indication of camrelizumab and the 3rd indication of apatinib, which were combined for the first-line treatment of advanced liver cancer, the 3rd indication of pyrotinib maleate and the 2nd indication of darcilib isethionate were approved for marketing respectively to further expand their application in the field of breast cancer, and the 2nd indication of dexmedetomidine hydrochloride nasal spray was used for sedation before general anesthesia surgery in children/ During the reporting period, a total of 14 marketing applications were accepted by the NMPA, including new drug applications such as relcarcimab and emaxitinib, as well as new indications such as fluzoparib combined with apatinib, involving cancer, diabetes, autoimmunity, ophthalmology, analgesia and other therapeutic fields, and in terms of patent application and maintenance, as of the end of 2023, the company has applied for 2,389 invention patents, 662 PCT patents, 545 domestic valid authorized invention patents, and 667 foreign authorized patents such as Europe, America and Japan.
The company's pipeline under development is advancing rapidly. During the reporting period, 12 clinical trials were advanced to phase III, 35 clinical trials were advanced to phase II, and 30 clinical trials were advanced to phase I, the company has more than 90 independent innovative products under clinical development, and nearly 300 clinical trials have been carried out at home and abroad. Since 2023, a total of 7 CDE breakthrough therapy varieties have been designated, and the approval is expected to accelerate in the future, of which only the company's HER2 ADC star product SHR-A1811 has won 5 items, the company's first self-developed small nucleic acid drug HRS-5635 injection has been approved for clinical trial for chronic hepatitis B, and no similar product has been approved for marketing at home and abroad, and the company's first pair of radioactive precision therapy products in the field of nuclear medicine has been approved for clinical trials, and the company has approved 4 nuclear drugs for clinical trials.
The achievement of these innovative achievements is inseparable from the increasingly complete innovation system built by the company over the years. First of all, after years of development, the company has formed a large-scale, professional and comprehensive R&D team of more than 5,000 people, and has successively set up R&D centers in Lianyungang, Shanghai, Suzhou, Chengdu, Xiamen, Jinan, Guangzhou, Beijing, the United States and Europe to meet the discovery and development needs of pipelines in multiple disease fields continue to focus on the target forward and strengthen source innovation. The company has a rich R&D pipeline in the field of oncology, and has also made extensive layouts in the fields of autoimmune diseases, metabolic diseases, cardiovascular diseases, infectious diseases, respiratory diseases, blood diseases, pain management, nervous system diseases, ophthalmology, kidney diseases, etc. γδT, drug resistance, in vivo pharmacology, molecular dynamics, bioinformatics, etc., and continue to optimize and develop, providing a strong foundation for innovative R&D and internationalization. Among them, 11 new and differentiated ADC molecules have been successfully approved for clinical trials, the HER2 ADC product SHR-A1811 and the TROP2 ADC product SHR-A1921 have quickly entered the phase III clinical research stage, 2 PROTAC molecules have been in the clinical research stage, the PD-L1/TGFβ fusion protein drug SHR-1701 has rapidly advanced to a number of clinical phase III studies, and the new generation of TIGIT/PVRIG bispecific antibody has successfully started clinical studies. There are also more than 10 first-in-class/Best-in-class bi/multi-specific antibodies in development.
Internationalization has been progressing steadily, with a total out-licensing transaction value of more than US$4 billion
Hengrui Pharmaceutical continues to steadily promote the internationalization strategy, insists on paying equal attention to independent research and development and open cooperation, and strengthens international cooperation on the basis of endogenous development.
Fruitful results have been achieved in foreign cooperation. In 2023, Hengrui pressed the BD accelerator button and reached a total of 5 licensing cooperation with a total transaction amount of more than 4 billion US dollars, involving innovative drugs including PARP1 inhibitor HRS-1167, Claudin-18.2 ADC drug SHR-A1904, EZH2 inhibitor SHR2554, The combination of TSLP monoclonal antibody SHR-1905, TKI pyrotinib and PD-1 inhibitor camrelizumab for the treatment of hepatocellular carcinoma is indicated. Among them, the company exclusively licensed the anti-cancer innovative drugs HRS-1167 and SHR-A1904 to Merck KGaA, Germany, with a total transaction amount of more than 1.4 billion euros, which is also the first time that Hengrui has cooperated with a large multinational pharmaceutical company in the world. At present, Hengrui has achieved 10 overseas authorizations for innovative drugs.
International clinical trials are steadily underway. The company's first international multi-center phase III clinical study, camrelizumab combined with apatinib in the treatment of advanced liver cancer, has reached the primary study endpoint, and has been officially accepted by the FDA for marketing in the United States. SHR-A1921 has successively obtained Fast Track Designation from the U.S. FDA, which is expected to accelerate the progress of clinical trials and marketing registration, and the innovative drug Edralbrutinib tablets for the treatment of neuromyelitis optica spectrum disease (NMOSD) has been granted orphan drug designation by the U.S. FDA, and the company has obtained this designation for three products. Asia-Pacific and other countries and regions have obtained clinical trial qualifications, 6 ADCs and innovative oncology products such as PVRIG-TIGIT bispecific antibodies have been developed simultaneously at home and abroad, and the clinical trial of SHR-1707, an anti-Aβ monoclonal antibody for the treatment of Alzheimer's disease, is successfully underway in Australia. In the future, the company will expand the boundaries of overseas R&D and enrich the pipeline of innovative products through various modes such as self-development, cooperation, and licensing introduction.
At the same time, the company's innovative strength continues to win international recognition. During the reporting period, 119 important research results of the company were successively published in the world's top journals such as The Lancet, BMJ (British Medical Journal), Nature Medicine, JAMA Oncology, etc., with a cumulative impact factor of nearly 1,400 points. Among them, the main paper of the global multicenter phase III clinical study (CARES-310 study) of the company's camrelizumab (Erica ®) in combination with apatinib (Etan ®) ("double Ai") versus sorafenib for the treatment of advanced unresectable hepatocellular carcinoma was published online in the top international medical journal The Lancet (IF: 168.9), and the results of the study showed that the median overall survival (mOS) reached 22.1 months [1] , which is the longest-term OS regimen in pivotal studies for the first-line treatment of advanced liver cancer for which data have been published so far [2]. At the same time, more than 100 of the company's innovative drug academic achievements have been unveiled at internationally renowned academic conferences such as the American Society of Clinical Oncology (ASCO) Annual Meeting, the European Society for Medical Oncology (ESMO) Congress, the American Association for Cancer Research (AACR) Annual Meeting, and the American Hematology (ASH) Annual Meeting.
Continue to optimize operation management and improve talent team building
In the face of various uncertain market factors, Hengrui comprehensively promotes the integration of resources, consolidates the dual-engine driving mechanism of medicine and market, continuously optimizes the organizational structure, strengthens the team of professional medical and market talents, further reduces front-line sales personnel, and promotes operational efficiency. The company's 2023 sales expense ratio decreased by 1.34% from the same period last year.
The company's senior management team continued to increase fresh blood, and at the same time as the annual report was released, Hengrui announced the appointment of Lu Yun as the company's deputy general manager. Lu Yun is a senior executive who has been cultivated and grown up within Hengrui, has worked in Hengrui for 15 years, and has been deeply involved in the field of CMC R&D for many years.
Talent is the foundation of enterprise innovation and development. Hengrui Pharmaceutical continues to adhere to the concept of "talent is the first resource" and "contributor-oriented", continues to introduce high-level talents at home and abroad, sets up the "Paratrooper Program", etc., and raises the "ceiling" of the entire innovative talent team by enriching the leading talents with an international vision, and in 2023, the company will introduce more than 600 core talents, of which more than 150 have doctoral degrees; Since the launch of the new share repurchase plan in May 2023, Hengrui has repurchased about 14.35 million shares for the employee stock ownership plan, with a total amount of more than 600 million yuan.
Actively fulfill social responsibilities and promote sustainable development
As a leading enterprise in the field of medicine in China, Hengrui Pharmaceutical has been actively fulfilling its social responsibilities for many years, striving to make the development results better benefit people's livelihood and give back to the society.
This year, 19 products of Hengrui Pharmaceutical have been adjusted through the new version of the National Medical Insurance Catalog, including a number of innovative drugs and new indications, and a total of 103 products have entered the National Medical Insurance Catalog, of which 13 innovative drugs have been marketed, further improving the accessibility and affordability of drugs for patients.
In 2023, Hengrui will provide public welfare support for the "Healthy China Tour, Re-take the Long March Road" public welfare project, which aims to promote the development of medical and health undertakings in the regions through which the Long March passes, and the activities have been successfully held in Longyan, Fujian and Ganzhou, Jiangxi, and donated 2 million yuan through the China Rural Development Foundation for earthquake relief in Jishishan County, Linxia Prefecture, Gansu Province.
At the same time as the release of the annual report, Hengrui also disclosed the 2023 Environmental, Social and Governance (ESG) report, showing the company's sustainable development practices and achievements. With its excellent performance in benefiting patients' health, green and sustainable development, employee well-being, social responsibility, etc., Hengrui Pharmaceutical's MSCI ESG rating has been continuously improved to "A" grade for consecutive years, and is at the leading level in China's pharmaceutical industry.
Under the guidance of the two-wheel drive development strategy of innovation and internationalization, the transformation and development results of Hengrui Pharmaceutical have been recognized. Recently, Citeline, an internationally renowned consulting agency, released the "2024 Annual Review of Pharmaceutical R&D" and selected the world's top 25 pharmaceutical companies with pipeline scale.