Source of this article: Times Finance Author: Li Aohua
Image source: Picture Worm Creative
The impact of centralized procurement has gradually cleared up, and the domestic insulin leader Gan & Lee Pharmaceutical Co., Ltd. (603087. SZ) ushered in a performance inflection point.
On the evening of April 24, Gan & Lee Pharmaceutical released its 2023 annual report, in 2023, the company achieved a total operating income of 2.608 billion yuan, a year-on-year increase of 52.31%, and a net profit attributable to the parent company of 340 million yuan, a year-on-year turnaround.
According to the first quarter report of 2024, which was disclosed at the same time, in the first quarter of 2024, Gan & Lee Pharmaceutical achieved an operating income of 560 million yuan, a year-on-year increase of 0.42%, and a net profit of 96 million yuan, a year-on-year increase of 95.04%.
Centralized procurement has been the key word in the insulin industry in the past two years, and it has also brought a "painful period" to Gan & Lee Pharmaceutical.
In 2022, Gan & Lee Pharmaceutical's operating income will be 1.712 billion yuan, a year-on-year decrease of 52.6%, and it will lose money for the first time since its listing, with an annual net loss of 440 million yuan. Gan & Lee Pharmaceutical said that this was due to the sharp decline in the price of bid-winning products, the one-time price difference of inventory products before the implementation of centralized purchasing, and the short-term sales growth could not offset the impact of the price decline for the time being.
The strategy of exchanging price for volume has achieved initial results, and in the next step, Gan & Lee Pharmaceutical will bet on the fourth generation of insulin and "going overseas".
Centralized procurement Affect the clearanceJust two days before the release of Gan & Lee Pharmaceutical's annual report, on April 23, the bid for the special centralized procurement of insulin was opened in Shanghai. According to the results of the proposed selection, six varieties declared by Gan & Lee Pharmaceutical, including probin human insulin mixed injection (30R), insulin lispro injection, insulin aspart injection, insulin glargine injection, recombinant insulin lispro mixed injection (25R) and insulin aspart 30 injection, were qualified for the proposed selection in the continuous procurement of insulin, and all participating groups had Class A varieties to be selected.
In the first year of the first centralized procurement of insulin in 2021, Gan & Lee Pharmaceutical accounted for only 8%, the international giant Novo Nordisk almost monopolized the "half of the country", accounting for 49% of the procurement demand, and Eli Lilly and Sanofi accounted for 12% and 7% respectively. Among the domestic enterprises, Tonghua Dongbao (600867. SH) also accounted for 15% of Gan & Lee Pharmaceutical's demand in the first year.
In this special centralized procurement of insulin, Gan & Lee Pharmaceutical will implement the strategy of "exchanging price for volume" to the end, and many products are selected in the first order with the lowest price in the same group. Judging from the results, Gan & Lee Pharmaceutical's strategic purpose has been achieved.
According to the first-year procurement demand of this insulin continuous centralized procurement, Gan & Lee Pharmaceutical's first-year procurement demand was 41.77 million, an increase of 25.13 million compared with the first year of the last centralized procurement, with a growth rate of 151%. It accounts for 17% of the overall procurement demand, second only to Novo Nordisk. Among them, in the reporting volume of the third generation of insulin, the procurement demand of Gan & Lee Pharmaceutical accounted for 24%, an increase of 10 percentage points from the last time.
The special centralized procurement of insulin itself is a process of replacing the second generation of third-generation insulin. In the two years since the implementation of centralized insulin procurement, the market share of third-generation insulin has increased significantly, while the procurement demand of second-generation insulin has decreased. Gan & Lee Pharmaceuticals won the battle of insulin iteration at a low price.
With the achievement of the goal of "exchanging price for volume", Gan & Lee Pharmaceutical has also begun to adjust the strategy of centralized procurement quotation. The industry generally believes that compared with the first centralized procurement of insulin, the rules of this successive procurement are more mild. According to statistics, the prices of the six varieties declared by Gan & Lee Pharmaceutical have all increased. Among them, the winning price of insulin glargine was raised from 48.71 yuan to 65.3 yuan, a price increase of 34%.
The relevant person in charge of Gan & Lee Pharmaceutical told many media such as Times Finance and Economics at the scene of the special centralized procurement of insulin that whether it can gain more market share still needs to respect clinical use. "Price only plays a certain guiding role, not the only consideration, the key is to look at the clinical academic promotion and product concept. Judging from the volume of this centralized procurement, it can be seen that in the past two years, the replacement of third-generation insulin for second-generation insulin has accelerated, which has the impact of price reduction, of course, and the promotion of our various enterprises is also inseparable. ”
Accelerate innovation and internationalizationThe impact of centralized procurement has come to an end, and innovation and internationalization are the key words for the next stage of Gan & Lee Pharmaceutical.
In the first quarter of 2024, Gan & Lee Pharmaceutical achieved a net profit of 17.17 million yuan, a year-on-year decrease of 42.93%. Gan & Lee Pharmaceuticals said that the decrease in non-net profit deducted in the first quarter of 2024 was due to the year-on-year increase in R&D expenses. In the first quarter of 2024, Gan & Lee Pharmaceutical's R&D expenses were 133 million yuan, a year-on-year increase of about 10%.
At present, Gan & Lee Pharmaceutical's two key innovation layouts are GLP-1RA and fourth-generation insulin.
Compared with third-generation insulin, fourth-generation insulin has a longer half-life, is able to reduce the number of injections, improves patient compliance, and has more stable blood glucose levels, reducing the risk of hypoglycemia.
Gan Zhongru, chairman of Gan & Lee Pharmaceutical, said in a letter to investors that the fourth generation of insulin should be a revolutionary type of insulin, and he believes that the fourth generation of insulin will bring new treatment options and better treatment effects to patients.
The GZR4 injection and GZR101 injection independently developed by Gan & Lee Pharmaceutical are both fourth-generation insulin. In September 2023, GZR4 injection completed the dosing of the first subject in the phase II clinical trial in China. In addition, clinical trials of GZR4 injection in the United States are also advancing.
GZR101 injection is a fourth-generation premixed bisulin combination preparation, which is made by mixing long-acting basal insulin GZR33 and rapid-acting insulin aspart under development by Gan & Lee Pharmaceutical, which is expected to simulate the biphasic mode of physiological insulin secretion under the condition of once-daily administration, taking into account fasting and postprandial blood glucose control and stable blood sugar reduction. In December 2023, the first patient was dosed in a head-to-head phase II clinical trial of GZR101 injection and insulin degludec aspart injection.
For the popular GLP-1 receptor agonist, Gan & Lee Pharmaceutical has laid out both long-acting injection and oral dosage forms. The indications for weight loss and diabetes of GZR18 injection have entered the phase II clinical stage, and Gan & Lee Pharmaceutical has also launched a head-to-head clinical trial of GZR18 injection and semaglutide in type 2 diabetes.
GZR18 tablets (oral GLP-1RA) obtained the "Drug Clinical Trial Approval Notice" issued by the National Medical Products Administration in November 2023, and the first subject of the phase I clinical trial was completed on April 8 this year.
In terms of internationalization, in the first half of 2023, the marketing applications of Gan & Lee Pharmaceutical's insulin glargine, insulin lispro and insulin aspart have been officially accepted by the U.S. Food and Drug Administration (FDA). In the second half of 2023, the US FDA conducted pre-approval inspections for the above three insulins. Gan & Lee Pharmaceutical said that it has received preliminary feedback from the US FDA and will complete the rectification as soon as possible according to the opinions of the US FDA.
Regarding the progress of the completion of rectification matters, Times Finance contacted Gan & Lee Pharmaceutical, and the relevant person only said, "The announcement shall prevail".