Economic Observer reporter Zhang Ling "Cologne is now ashore." In Kelun Pharmaceutical (002422. SZ) released on May 14 in an investor relations activity record form, Kelun Pharmaceutical Chairman Liu Xinxin was asked how to view the current downturn in the industry, saying that the downturn in the industry is not equal to the downturn of the company.
Kelun Pharmaceutical's 2023 performance report shows that its revenue is 21.5 billion yuan, a year-on-year increase of 13%; net profit was 2.5 billion yuan, a year-on-year increase of 44%. This is the first time since 2019 that Kelun Pharmaceutical's revenue and profit have returned to double-digit growth.
In 2019, Kelun Pharmaceutical's profit fell by nearly 23% year-on-year due to the sharp decline in product prices after intensified market competition. In 2020, after the impact of the new crown epidemic, Kelun Pharmaceutical's profit fell by 12% year-on-year. In 2021 and 2022, Kelun Pharmaceutical's performance will recover slowly until 2023, when its performance will increase significantly.
In addition to the increase in the number of sales of infusion products in its main business, the price and market recovery of the main products of API intermediates, and the cooperation agreement between the innovative drug pipeline and Merck are the reasons for the growth of Kelun Pharmaceutical's performance in 2023.
Kelun Pharmaceutical is a long-established enterprise in China's pharmaceutical field, established in 1996 and listed in 2010. In the field of biomedicine, Kelun Pharmaceutical has incubated two listed subsidiaries. Among them, Twining Biotech (301301. SZ) focuses on the manufacturing of biomedical intermediates, went public in 2022, and has now become one of the fastest-growing companies in the field of synthetic biology; Columbotai (06990. HK) focuses on the research and development of innovative drugs, which will be launched in 2023 and is a leading ADC (antibody conjugate) drug company in China.
Liu Xinxin said that in the past ten years, Kelun Pharmaceutical has completed the most difficult, expensive and meaningful basic work, and the future is bright.
In this investor relations activity, in addition to the strategy and overall operation of Kelun Pharmaceutical, Liu Xinxin and several senior executives also responded in detail to the performance, R&D progress and future planning of the two core subsidiaries of Twining Biotech and Kelun Botai.
Lao Ji and the market value of 100 billion
Liu Xinxin is the founder of Kelun Pharmaceutical and is known as the "King of Infusion" in China. At an exchange meeting in 2015, Liu Xinxin said: (market value) from 30 billion yuan to 100 billion yuan, but only three times, ten years, is not difficult.
In March 2024, the total market value of Kelun Pharmaceutical's "product" character operation structure (Kelun Pharmaceutical + Kelun Botai + Chuanning Biotech) exceeded 100 billion yuan for the first time. As of the close of trading on May 15, the total market value of Kelun Pharmaceutical, Twining Biotechnology and Kelun Botai was 54.5 billion yuan, 35.4 billion yuan and 38.5 billion Hong Kong dollars (about 35.6 billion yuan) respectively, with a total market value of more than 120 billion yuan.
In the years of development, Kelun Pharmaceutical has formed a "three-driven" strategic pattern of "large infusion + antibiotics + drug research and development". In 2023, the revenue of Twining Biotech will account for 22% of Kelun Pharmaceutical's revenue, and the revenue of Kelun Botai will account for 7% of Kelun Pharmaceutical's revenue; Twining Biotech contributed 27% of the net profit to Kelun Pharmaceutical, and Kelun Botai was temporarily in a state of loss, not making a positive contribution to Kelun Pharmaceutical, but the profit was significantly reduced year-on-year.
At this exchange meeting, when asked whether he still had the ambition of a market value of 100 billion yuan, Liu Xinxin replied with a poem from Cao Cao's "Turtle Although Shou": Lao Ji is a long way, and his ambition is thousands of miles; The martyrs are in their twilight years, and their hearts are strong.
Liu Xinxin is 73 years old this year, and the succession of Kelun Pharmaceutical has become one of the focuses of investors. In September 2015, Liu Sichuan, the son of Liu Xinxin and 31 years old at the time, was promoted to the general manager of Kelun Pharmaceutical. Some investors asked about the formation and run-in of Liu Sichuan's team in recent years, and whether he can take on the banner of Kelun Pharmaceutical's later development. Liu Xinxin replied that it is not Liu Sichuan who takes over alone, but the team, which is the long-term task of Kelun Pharmaceutical and the strategic responsibility of everyone.
The market positioning is profitable
Since the end of April 2024, synthetic biology has become a hot concept, and Twining Biotech has also become a company that has been focused on on the track, and its stock price has nearly doubled in two weeks. At this exchange meeting, some investors asked, what is the market positioning of Twining Biotech in the field of synthetic biology?
"The market is positioned to be profitable." Kelun Pharmaceutical responded that the vast majority of people's understanding of the synthetic biology industry is one-sided, ignoring that the most important and ultimate factor is the success of marketization.
In response to the problem of the soaring share price of Twining Biotech, Kelun Pharmaceutical said that the performance of the stock price is affected by multiple factors such as the secondary market and the macroeconomy, and the management will focus on the improvement of the main business.
According to Kelun Pharmaceutical, Twining Biotech will set up a research institute specializing in synthetic biology in Lingang District, Shanghai in 2020, and the number of products in production, pilot products and products under development may be leading in the country.
Another subsidiary, Columbotech, has an innovative drug pipeline that is also one of the focus of investors' attention. At present, Columbus has more than 30 innovative drug pipelines, of which more than 10 are in the clinical stage, and 4 have applied for NDA (New Drug Application Application).
In 2022, Columbotai reached a cooperation with Merck, a multinational pharmaceutical company, on ADC drugs. At this exchange meeting, Liu Xinxin said that Columbotai will consider continuing to license product rights overseas.
Compared with the subsidiary, the imagination brought to the market by the parent company Kelun Pharmaceutical is insufficient, and how to break through the existing pattern and how to plan a new track has become a concern for investors.
From the perspective of breaking through the existing pattern, Liu Xinxin responded that Kelun Pharmaceutical's large-volume injections are making breakthroughs in the field of high-tech barriers such as liquid-liquid multi-chamber bags and liquid-liquid double-chamber bags. At the same time, the categories of large infusion therapeutic varieties and therapeutic nutrition, vitamins and other categories that have expired or are about to expire are also in the attention of Kelun Pharmaceutical.
At the level of new track planning, Liu Xinxin said that high-end raw materials, high-end preparations, plastic ampoule injections, high-level generic drugs and improved innovative drugs are the future business connotation of Kelun Pharmaceutical. In addition, Kelun Pharmaceutical's international export business is also in a state of growth.
According to an executive of Kelun Pharmaceutical, Kelun Pharmaceutical's infusion products have been exported to Japan in batches. In addition, due to the peculiarities of logistics, infusion products are not suitable for export to countries that are too far away. For the European and American markets, Kelun Pharmaceutical is seeking breakthroughs in APIs and other products, and has achieved preliminary results. At the same time, the infusion products of Kunming Nanjiang Pharmaceutical Co., Ltd., a subsidiary of Kelun Pharmaceutical, have a mature market in Southeast Asian countries, and the price is not lower than the domestic level.