After the market on April 18, Xingqi Eye Medicine (300573. SZ) released its 2023 annual report, which showed that the company's revenue was 1.468 billion yuan, a year-on-year increase of 17.42%, the net profit attributable to the parent company was 240 million yuan, a year-on-year increase of 13.39%, and the net cash flow from operating activities was 318 million yuan, a year-on-year increase of 10.94%.
In terms of separation, the fourth quarter contributed the best single-quarter growth of the year, with Q4 company's revenue of 363 million yuan, a year-on-year increase of 47.69%, and net profit attributable to the parent company of 58 million yuan, a year-on-year increase of 552.30%.
Titanium Media App Mapping Data source: company financial report
At the same time, Xingqi Ophthalmology released the 2023 annual distribution plan, and the company intends to distribute a cash dividend of 30 yuan (tax included) to all shareholders for every 10 shares, and 4 shares for every 10 shares, with a total dividend of 374 million yuan.
On April 19, Xingqi eye medicine opened high and went low, closing at 212.50 yuan, down 1.62%, with the latest total market value of 26.475 billion yuan.
The income structure has been adjusted, and dry eye products have become the pillars
In the first full fiscal year when atropine eye drops ceased online sales, cyclosporine, the main indication for dry eye disease, supported the company's performance.
In 2013, pharmaceutical manufacturing became the main revenue force, with a year-on-year increase of 32.62% to 1.089 billion yuan, accounting for 74.19% of the total revenue. The growth rate is the highest since 2019, and the proportion is the largest since 2021.
Up to now, Xingqi Ophthalmic Medicine has a total of 57 ophthalmic drug approval numbers, of which 35 products have been included in the medical insurance catalogue and 6 products have been included in the national essential drug catalogue.
Among them, the company's self-developed Class 3 generic Cyclosporine Ophthalmic Solution (II) (trade name: Zirun) was approved for marketing in June 2020, and is the first 0.05% cyclosporine ophthalmic preparation approved for dry eye disease in China. At the end of 2021, the product was included in the medical insurance, and although the price dropped from 799 yuan/box to 165 yuan/box, it also enjoyed the industry dividend alone. In May last year, Xingqi Ophthalmology replied to investors that the product had achieved most of the coverage of core hospitals in the country and regional core hospitals.
Cyclosporine promotes tear production in patients with dry eye syndrome and is indicated in patients with decreased tear production due to ocular inflammation associated with keratoconjunctivitis sicca. In the past two years, the sales volume of Xingqi Ophthalmic Pharmaceutical's Ziruncyclosporine Eye Drops (II.) has increased rapidly, contributing more than 10% of the company's revenue in 2022 and 2023.
The picture comes from Xingqi Ophthalmology's 2022 annual report
The picture comes from Xingqi Ophthalmology's 2023 annual report
As far as the pharmaceutical manufacturing sector is concerned, Xingqi Ophthalmology has smoothly completed the succession of its main products.
Prior to 2021, its three important ophthalmic drugs were Sugaojie Calf Blood Deproteinized Extract Ophthalmic Gel, Diyou Ophthalmic Gel and Difei Ophthalmic Solution, all of which contributed more than 10% of the company's revenue. However, these three products are all "old seniority" products that were listed before 2010, and the market competition has been very sufficient.
Today, none of these products are on the list of more than 10% of revenue, and Ziruncyclosporine eye drops (II.) have become the only one, and at the same time, the growth rate of its pharmaceutical manufacturing segment has reached a new high, which shows that the volume of this product is very considerable.
Eye diseases in China mainly include ocular inflammation, glaucoma, cataract, eye fatigue, myopia and dry eye syndrome, among which dry eye syndrome is the most affected eye disease. Relevant statistics show that there are currently about 360 million patients with dry eye disease in mainland China, with a prevalence rate of about 20%, while the treatment rate is only 10%, and the domestic market size for moderate to severe dry eye disease will be close to 1.2 billion yuan in 2021, and the average growth rate will reach more than 30% in the next five years.
In this unmet market, there are many potential competitors of Xingqi Ophthalmology.
At present, sodium hyaluronate ophthalmic preparation is the largest sales dry eye eye drop in the hospital market, with German Wuzfam Pharmaceutical and Santen Pharmaceutical as the main players, and recombinant bovine alkaline fibroblast growth factor ophthalmic preparation has been on the rise in recent years, which is exclusively produced by Zhuhai Yisheng Biotech.
Focusing on the R&D track, Grand Pharma (00512. Hengrui Pharmaceutical (600276.SH) has accepted the NDA of SHR8058 eye drops (1% cyclosporine A preparation) from Novaliq, a German company, for the treatment of meibomian gland dysfunction-related dry eye disease, CMS (00867.HK) OTX101 (0.09% cyclosporine eye drops) and Harbour BioMed (02142.HK). The tenaercept eye drops (HBM9036, cyclosporine) authorized by HK) are all in the phase III clinical stage.
For Xingqi Ophthalmology, Ziruncyclosporine Eye Drops (II.) is one of the company's important revenue pillars, but it has received far less attention than another newly approved product, atropine sulfate eye drops.
Medical services, which experienced negative growth for the first time, are again expected to be high
In 2023, the revenue of the medical service segment, which is mainly responsible for revenue generation by atropine sulfate eye drops, will decline for the first time, with revenue falling by 13.49% year-on-year to 351 million yuan. The revenue of this segment comes from Shenyang Xingqi Eye Hospital.
According to the company's 2021 reply to the inquiry letter of the Shenzhen Stock Exchange, the sales data of atropine disclosed by the company in 2021, the optometric diagnosis and treatment revenue of Xingqi Eye Hospital is the main source of growth, including drug revenue, optometry and optical lens revenue, among which the drug revenue is dominated by atropine sulfate eye drops, accounting for more than 8%.
Retrospectively, Xingqi Eye Hospital obtained the approval of in-hospital preparation for atropine sulfate eye drops (main specification: 0.4ml: 0.04 mg) in January 2019, and added the Internet Hospital of Shenyang Xingqi Eye Hospital in December of the same year, and began the model of "in-hospital preparation + Internet sales", which brought triple-digit growth to its medical service sector until the online sales were stopped in 2022.
On July 22, 2022, Xingqi Eye Hospital issued an announcement stating that the hospital's Internet Hospital has suspended the prescription of 0.01% atropine sulfate eye drops prepared in the hospital, and patients can go to the physical hospital of Xingqi Eye Hospital for prescription if necessary.
The once growth engine suddenly stalled, and the high growth of the medical services sector also came to an abrupt end. In 2023, Xingqi Eye Hospital's revenue and net profit will both decline.
Titanium Media App Mapping Data source: company financial report
However, a turnaround has already occurred.
In March 2024, Xingqi Ophthalmic Pharmaceutical's 0.01% atropine sulfate eye drops obtained the "Drug Registration Certificate" issued by the National Medical Products Administration for delaying the progression of myopia in children. Similar atropine sulfate eye drops have been marketed abroad, including 0.01% atropine sulfate eye drops from Aspen in Australia and Entod in India.
According to the data of the National Bureau of Disease Control and Prevention, the overall myopia rate of children and adolescents in mainland China will be 51.9% in 2022, and traditional myopia prevention and control products are mainly OK lenses, but OK lenses are troublesome to remove, expensive, and require high hygienic conditions, and the penetration rate among children and adolescents with myopia in mainland China is only about 2%. In contrast, 0.01% atropine eye drops have the advantages of ease of use and affordable price, and are expected to gain higher market penetration in the future.
Guosheng Securities previously made a forecast based on the report "New Pharmaceutical Demand Large Single Product Sorting Five: Low-concentration Atropine" that it is expected that the revenue of Xingqi Ophthalmic Low-concentration Atropine Sulfate Eye Drops is expected to reach about 1.5 billion yuan in 2024, and the revenue is expected to reach about 6.8 billion yuan in 2030 under the condition of gradual increase in penetration.
Because Xingqi Ophthalmic Drug's 0.01% atropine eye drops were approved first, there will be a period of market exclusivity, but the chasers are already gearing up.
According to the data of Yaorongyun, the same type of products of many Chinese pharmaceutical companies are also in the process of clinical trials, and Ocumension (01477. HK) and Zhaoke Ophthalmology (06622.HK) have completed patient enrollment in clinical trials, while the clinical trials of the remaining companies are still enrolled in patients or have not yet started recruitment.
The picture comes from the Pacific Securities Research Report
Atropine sulfate for Xingqi Ophthalmology has pushed up the company's valuation in the secondary market in advance before contributing greater revenue and bringing more profits.
Taking 2019 as the cut-off point, before that, its stock price was as high as 37.31 yuan, since the layout of atropine sulfate, the company's share price took off, reaching a new high of 239.50 yuan in April this year, and now the company's total assets are only 2.024 billion yuan, but its three price-earnings ratio (PE) indicators have exceeded 100 times. It is worth noting that as of the end of 2023, the number of shareholders of Xingqi Ophthalmic is 10,576, a decrease of 345 from the previous period, and as of the end of the first quarter of 2024, the number of shareholders is 15,740, an increase of 5,164 from the previous period, a change of 48.83%.
(This article was first published in Titanium Media App Author丨Yang Yaru Editor丨Sun Cheng)