On the evening of April 17, 2024, Huadong Medicine (000963. SZ) announced its 2023 annual results. According to the annual report, in 2023, the company will achieve a total operating income of 40.624 billion yuan, a year-on-year increase of 7.71%, a net profit attributable to the parent company of 2.839 billion yuan, a year-on-year increase of 13.59%, and a net profit of 2.737 billion yuan, a year-on-year increase of 13.55%. In the fourth quarter of 2023, Huadong Medicine achieved operating income of 10.229 billion yuan, a year-on-year increase of 3.79%, and net profit attributable to the parent company of 650 million yuan, a year-on-year increase of 25.51%.
The dividend plan for 2023 is: it is planned to distribute a cash dividend of 5.8 yuan (tax included) to all shareholders for every 10 shares, and a total of 1.018 billion yuan (tax included) will be distributed. According to the announcement, Huadong Pharmaceutical has paid dividends 21 times since its listing, with a cumulative dividend amount of 5.61 billion yuan, which is 22.44 times the 250 million yuan raised by the IPO, bringing shareholders a sustainable and stable return on investment.
In 2023, Huadong Medicine will continue to maintain a steady and positive development trend. The four major business segments of pharmaceutical industry, pharmaceutical business, medical cosmetology, and industrial microbiology have made multi-point efforts and multi-dimensional efforts to jointly promote the company's operating income and profit to reach the best level in history, fully completed the annual business goals, and achieved hard-won development results.
The pharmaceutical industry has accumulated and entered the harvest period of innovative achievements
In 2023, the annual sales revenue of Huadong Pharmaceutical Industry Segment will be 12.217 billion yuan, a year-on-year increase of 9.45%, the net profit attributable to the parent company will be 2.330 billion yuan, a year-on-year increase of 9.63%, and the return on net assets will be 23.98%.
In 2023, Huadong Pharmaceutical's innovative drug and biosimilar pipeline continued to make important progress, and a good development trend of continuous clinical promotion and listing of innovative products has been formed, providing new momentum for medium and long-term development. As of 2023, the company has more than 60 innovative product pipelines, and 6 innovative products are expected to usher in the harvest period in 2024, namely the CAR-T product Zevogene autoleucel injection (trade name Sekaize ®), which was approved for marketing in early 2024, and the two indications of ARCALYST, ELAHERE®, Senaparib and ustekinumab, which are in the key stage of marketing sprint.
According to the announcement, the domestic marketing application of ELAHERE®, the world's first-in-class ADC drug for the treatment of ovarian cancer, was accepted in October 2023, and has been included in the list of domestic priority review varieties, and is expected to be approved for marketing in 2024. In December 2023, Huadong Medicine entered into an exclusive marketing cooperation with Yingpai Pharmaceuticals for the innovative PARP inhibitor senaparib, and the Chinese marketing application of senapalib was accepted in August 2023 for the maintenance treatment of adult patients with advanced epithelial ovarian, fallopian tube or primary peritoneal cancer who have achieved complete or partial response to first-line platinum-based chemotherapy. Its indication is positioned as first-line maintenance therapy for the whole population, which can prolong the remission time after first-line platinum-containing chemotherapy and delay recurrence, and can complement each other with ELAHERE® and is highly synergistic.
In the field of self-immunity, in August 2023, the marketing authorization of Huadong Pharmaceutical HDM3001 (QX001S) was accepted for the treatment of plaque psoriasis, making the company expected to become the first company in China to obtain the drug registration certificate for ustekinumab injection biosimilars. In addition, the Chinese marketing applications of ARCALYST® (linacept for injection) for the treatment of cold pyriline-related periodic syndrome and recurrent pericarditis have been accepted in China, both of which are listed in the National Rare Disease Catalogue and have been included in the list of priority review varieties.
It is worth mentioning that in March 2024, Huadong Pharmaceutical and CARsgen reached an exclusive commercialization cooperation with CARsgen Pharmaceutical's CAR-T product Saikaze ® was approved for marketing in China, successfully entering the new track of CAR-T, and the company has set up a special commercialization team, and the first prescription in China was issued on the day the product was approved for marketing.
In 2024, a number of products in the pharmaceutical industry sector of Huadong Pharmaceutical will meet milestones, which are inseparable from the continuous increase in R&D investment of Huadong Pharmaceutical. The company attaches great importance to innovative R&D, continues to maintain a high proportion of R&D investment, and has built a relatively complete independent drug R&D innovation system covering drug discovery, pharmaceutical research, preclinical research, clinical research to industrialization, and established a global new drug R&D center. In recent years, the pharmaceutical industry has continued to maintain an average annual R&D investment of more than 1 billion yuan, and in the environment of continuous expansion of the scope of national centralized procurement, the R&D investment of the pharmaceutical industry in East China has continued to increase, and the R&D investment of the pharmaceutical industry (excluding equity investment) was 2.293 billion yuan, a year-on-year increase of 23.67%, of which the direct R&D expenditure was 1.600 billion yuan, a year-on-year increase of 33.74%, accounting for 13.10% of the revenue of the pharmaceutical industry. It is worth mentioning that while the R&D investment continues to increase, Huadong Pharmaceutical's revenue still maintains steady growth, its own R&D strength has been continuously consolidated, and a number of major phased results have been achieved in independent R&D.
With continuous R&D and innovation, Huadong Medicine has a first-in-class layout of first-in-class drugs in the three core therapeutic areas of anti-tumor, endocrine and autoimmunity, and has formed three characteristic R&D matrices of ADC, GLP-1 and topical preparations to build differentiated advantages.
Focusing on GLP-1 targets, the company has built a comprehensive and differentiated product pipeline combining long-acting and multi-target global innovative drugs and biosimilars, including oral and injectable. In 2023, Huadong Pharmaceutical's liraglutide diabetes indications and weight loss indications have been approved one after another, both of which are the first in China, and the first to take the lead in the domestic GLP-1 market. In addition, Huadong Pharmaceutical's self-developed oral small molecule GLP-1 receptor agonist HDM1002 for the indication of diabetes has been approved for the first time in May 2023, and the Chinese IND application for the indication of obesity has been approved in September 2023. The phase III clinical trial of semaglutide injection has completed the enrollment and dosing of the first subject, and the primary endpoint data is expected to be obtained in Q4 of 2024. The self-developed GLP-1R/GIPR dual-target long-acting peptide agonist HDM1005 was approved in China for two indications in March 2024, and the company has submitted a U.S. IND application for the indication of obesity or overweight in March 2024.
In the field of oncology, Huadong Medicine focuses on ADC through independent innovation and R&D, and continuously consolidates its product pipeline. The company's first self-developed ADC project HDM2005, which is intended to be developed for the treatment of advanced solid tumors and hematologic tumors, has submitted an IND application in China in March 2024 and has been accepted. The company's first fully self-developed small molecule anti-tumor drug and the first fully self-developed HPK-1 PROTAC (hematopoietic progenitor kinase 1 protein degradation targeted chimera) drug have entered HDM2006 the IND research stage, and are intended to be used for monotherapy and combination therapy of advanced solid tumors and hematologic tumors, and are expected to submit IND applications by the end of 2024.
While consolidating its independent R&D strength, Huadong Medicine has carried out in-depth strategic cooperation with advanced pharmaceutical and R&D companies at home and abroad such as Quanxin Biotech, Nuolin Biotech, Doyle Biotech, and Heidelberg Pharma in Germany through product cooperative development and equity investment. Innovation, to build a global R&D ecosystem for Huadong Medicine's ADC, and gradually build a world-class independent R&D industrial platform in the field of ADC belonging to Huadong Medicine, continue to develop differentiated ADC innovative drugs, and bring better and more advanced treatment options to cancer patients.
In the field of autoimmune diseases, Huadong Medicine is one of the most comprehensive pharmaceutical companies in the field of autoimmune diseases in China, and up to now, the company has more than 10 biological drugs and small molecule innovative products under development in the field of autoimmune diseases. In August 2023, the company successively introduced roflumilast topical preparations (ZORYVE® cream and foam) from Arcutis in the United States and Wynzora® cream from MC2 in Denmark to further enrich the innovative product pipeline of topical preparations. The company's autoimmune field extends to topical preparations, builds a research and development platform for topical preparations, and steadily promotes the research and development innovation of topical preparations and complex preparations.
With years of continuous cultivation, Huadong Medicine has gradually expanded the depth and breadth of its layout in the three major fields of oncology, endocrinology and immunology in the pharmaceutical industry sector, vertically cultivated the field of chronic disease treatment, and horizontally enriched the layout of the R&D pipeline of innovative drugs. At the same time, Huadong Pharmaceutical has continuously strengthened the construction of the global innovation and R&D ecosystem and technology platform, actively promoted the progress of clinical trials, and achieved a number of major phased achievements based on the differentiated industrial layout of the pharmaceutical industry.
The strategic results of the global high-end medical cosmetology have emerged, and the hidden dragon is waiting for the wind to rise
In 2023, Huadong Pharmaceutical's overall medical aesthetic sector will continue to maintain rapid growth, with operating income reaching the best level in history, with a total operating income of 2.447 billion yuan (excluding internal offset factors), a year-on-year increase of 27.79%, and the overall profitability of the medical aesthetic sector has steadily improved. Huadong Medicine is one of the few companies in China with a global operation layout of medical aesthetics, and its medical aesthetic business has created a comprehensive, differentiated and international product matrix, with the number of products and coverage areas at the forefront of the industry, and the future potential is worth looking forward to.
Focusing on the global high-end medical aesthetic market, Huadong Medicine has diversified its product pipeline, and has achieved full coverage of the mid-to-high-end market of non-surgical medical aesthetic injection products and energy source devices, with a product portfolio covering non-surgical mainstream medical aesthetic fields such as glabellar line improvement, facial and body filling, thread lifting, skin management, body contouring, hair removal, and intimate restoration. At present, the company has 38 "minimally invasive + non-invasive" international high-end medical aesthetic products, including 24 products that have been marketed at home and abroad, and 14 global innovative products under development.
In the international market, Sinclair, a wholly-owned subsidiary of the United Kingdom, as the company's global medical aesthetic business operation platform, achieved sales revenue of 149.58 million pounds (about 1.304 billion yuan) in 2023, a year-on-year increase of 14.49%, achieving the company's first annual profit since the acquisition. Sinclair actively carries out the listing and registration work in many countries around the world, and promotes the registration and listing process of the listed core products in key markets around the world. In 2023, 16 products of Huadong Medicine have obtained marketing authorization in 37 countries and regions.
In the domestic market, Hinkly Aesthetics, a wholly-owned subsidiary of domestic medical cosmetology, will achieve a cumulative revenue of 1.051 billion yuan in 2023, a year-on-year increase of 67.83%.® ®
In China, Huadong Medicine also has a number of medical aesthetic products that are being registered and marketed. Among them, Ellansé® ® M completed the enrollment of all subjects in the Chinese clinical trial in March 2023, and MaiLi Precise successfully completed the enrollment of the first patient in the Chinese clinical trial in December 2023. Lanluma®V-type and X-type have been launched in Boao Lecheng, Hainan Province, and are the only regenerative products in the world that have been approved for buttock and thigh filling. In the field of medical aesthetic energy source equipment, in September 2023, the marketing application of Huadong Medicine's optical radio frequency therapy device V20 in China was accepted, providing comprehensive solutions for the face and body, intended for skin tightening, hair removal, vascular and pigment lesions, acne, etc., which has obtained the US FDA and EU CE registration certification, and is expected to be approved for marketing in 2024.
It is worth mentioning that in 2023, the company has successively obtained the global rights and interests of ATGC-110, a botulinum toxin product from ATGC in South Korea, and the commercialization rights of Chongqing Yuyan YY001 in China, achieving full coverage of the three major categories of regeneration, hyaluronic acid and botulinum toxin in injectable products.
In addition, Huadong Pharmaceutical's pharmaceutical business and industrial microbiology sector continued to maintain steady development, with the pharmaceutical business segment achieving an operating income of 26.981 billion yuan, a year-on-year increase of 5.59%, and a cumulative net profit of 431 million yuan, a year-on-year increase of 8.74%. In the field of industrial microbiology, the total sales revenue for the whole year was 525 million yuan, a year-on-year increase of 20.67%. Huadong Medicine continues to implement the development strategy of industrial microorganisms, and has clarified its strategic layout in four directions: xRNA, specialty APIs & intermediates, health & biomaterials, and animal health. In April 2023, Huadong Pharmaceutical acquired 70% of the equity of Nannong Animal Medicine, quickly entering the golden track of animal health care, and Nannong Animal Medicine has become an important development platform for the microbial animal protection business of East China Pharmaceutical Industry. In October 2023, it reached a cooperation with Beijing Sels Pharmaceutical Technology Co., Ltd., an animal drug research and development company, and obtained the exclusive distribution right of the first new veterinary drug of opioid central analgesia in ® China.
In 2023, Huadong Medicine will go through the ups and downs, develop its schedule, and make brilliant innovations. The pharmaceutical industry focuses on three major areas, with clear strategic thinking, and GPL-1, auto-exempt, ADC and other pipelines are steadily advancing with outstanding highlights. The development of medical cosmetology focuses on the global high-end medical cosmetology market, with the development of domestic and international dual circulation, and the personalized and differentiated advantages of the medical cosmetology product portfolio are more prominent, and the future potential is worth looking forward to. The core technical barriers of industrial microorganisms have been further consolidated, and new development directions have been continuously explored. Huadong Medicine has gradually opened up a differentiated development path on the golden track. In the future, Huadong Medicine will continue to adhere to the corporate philosophy of "scientific research-based and patient-centered", and draw a brighter future guided by the unmet clinical needs of global patients.