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Tonghua Dongbao: Q3 performance improves QoQ, with insulin analog sales doubling
Date：2022-10-31
Author：東寶
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Tonghua Dongbao Pharmaceutical Co., Ltd. (stock code: 600867, hereinafter referred to as “Tonghua Dongbao” or the “Company”) released its quarterly report for Q3 2022 on October 30. According to the report, for the first three quarters of 2022, the Company’s operating revenue was RMB 2.099 billion, down 14.50% YoY, and the net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was RMB 661 million, down 26.65% YoY. In Q3 alone, the operating revenue was RMB 712 million, down 10.24% YoY, and the net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was RMB 220 million, down 10.56% YoY.
Strong sales growth, improved performance QoQ
In Q3, the Company’s insulin product sales continued to grow, with all categories seeing different levels of growth. Human insulin sales increased steadily in the first three quarters, while insulin analogs saw over 100% growth. This impressive growth led to improved operating revenue, net profit excluding non-recurring gains and losses attributable to the parent company, and profitability in Q3, demonstrating the Company’s strong growth momentum and resilience.
The Company’s market share also rose. According to data from Menet.com, in H1 2022, the Company’s insulin and insulin analogs held a market share of 10.83% (by sales) in Chinese public medical institutions, ranking third behind Novo Nordisk and Sanofi. The Company is increasing investment in lower-level markets, retail channels, private hospitals, and other outpatient markets to generate additional growth opportunities. This way, it will counteract the decrease in revenue from lower centralized purchasing prices, while establishing a strong foundation for future stable growth.
The Company is in a strong financial position and running smoothly. By the end of Q3 2022, it had RMB 1.253 billion in own funds, including cash and financial assets for trading. It is actively seeking opportunities for expansion while enhancing its internal dynamics.
Enhanced R&D of diabetes and gout/hyperuricemia drugs
The Company is increasing its R&D investment with a view to long-term business growth. Our R&D spending in Q1-Q3 2022 went up 10.68% YoY. During the reporting period, the Company made progress in the R&D of drugs for diabetes and gout/hyperuricemia.
In 2022, the clinical trial application of the Company's insulin degludec injection was accepted in July and approved in September, the clinical trial application of insulin degludec and liraglutide injection, which is the first of its kind made in China to submit such an application, was accepted in August, the clinical trial application of THDBH151 tablets, a Class 1 novel dual-target inhibitor for gout (a potential best-in-class drug), was accepted in September, and repaglinide tablets were granted a pharmaceutical product registration certificate in October.
Our R&D effort is paying off, and we have made progress in innovation. We are expecting clinical data for BC Lispro, an ultra-rapid acting insulin lispro for diabetes, and URAT1, a Class 1 novel drug for gout/hyperuricemia, to be released in the near future. In addition, we will submit clinical trial applications for several other Class 1 novel drugs including dual-target inhibitors for gout, dual-target receptor agonists for diabetes and weight loss, and insulin degludec and liraglutide injections.
Our premixed insulin aspart 30 and 50 injections are expected to be approved for market launch in Q4, with insulin aspart 50 potentially being the first generic drug of its kind in China. GLP-1 liraglutide injection is expected to be approved in the coming year. Upon expiration of the patents for the brand-name drugs, repaglinide, sitagliptin phosphate, and sitagliptin metformin - the approved OADs - will be released to the market, generating revenue for the Company and presenting new growth opportunities.
Maximizing shareholder value and earning industry recognition
Returning value to shareholders is one of our top priorities. In Q3, the Company repurchased and canceled approximately RMB 144 million worth of shares, and recently distributed mid-term cash dividends totaling RMB 500 million at a rate of RMB 2.50 per 10 shares. These actions demonstrate management's confidence in the company's future and their commitment to increasing shareholder returns.
During the reporting period, our strong brand and steady performance earned us several accolades. These include being named one of Menet.com’s "Top 20 Chinese Biomedical Companies of 2021," an upgraded Wind ESG rating to Level A, and an improved ranking of 11th out of 98 biotech companies.
Making steady progress and striving for excellence
We will continue to improve our core competencies, especially R&D and commercialization. To increase sales, we will explore new product markets and diverse sales channels beyond centralized procurement. We will continue to advance our business on two fronts: in-house R&D and external collaboration. As we strengthen our R&D capabilities, we will actively seek growth and new market opportunities to establish a strong presence in the endocrine and metabolic field, accelerate our transition to an innovative pharmaceutical company, and drive future high-quality growth.
