Investment Rating - Buy (Maintained) with a target price of HKD 7.62 [1] Core Views - The company is entering a period of intensive product launches, with a strong pipeline of innovative drugs [2] - Revenue in 2023 reached RMB 6.61 billion (+4.5%), while net profit was RMB 710 million (-23.2%) [2] - The proportion of innovative drugs continues to rise, accounting for 72% of total revenue in 2023 [2] - The company has six innovative drugs in the commercialization stage, with several key products expected to be approved in 2024 [2] Revenue Breakdown by Segment - **Neurology**: Revenue of RMB 1.97 billion (-13.1%), accounting for 29.8% of total revenue [2] - **Oncology**: Revenue of RMB 1.58 billion (+10.2%), accounting for 23.9% of total revenue [2] - **Autoimmune**: Revenue of RMB 1.42 billion (+10.5%), accounting for 21.4% of total revenue [2] - **Other Segments**: Revenue of RMB 1.65 billion (+22.3%), accounting for 24.9% of total revenue [2] Key Product Developments - **Xianbixin Sublingual Tablets**: NDA accepted by NMPA in June 2023, expected to meet clinical needs for stroke treatment [2] - **Enlituo (CMAB009)**: Expected to be approved for colorectal cancer in H2 2024 [2] - **Suvizumab**: Submitted for NDA in March 2024 for recurrent ovarian cancer [2] - **ADC189**: Expected to submit NDA in 2024 [2] R&D Pipeline Progress - **Xianbixin for Cerebral Hemorrhage**: Phase II clinical trials ongoing with over 80 subjects enrolled [2] - **Daliresen**: Phase III clinical trials completed in March 2024, NDA expected in H2 2024 [2] - **Lederceptib**: Exclusive rights obtained for development, production, and commercialization in Greater China [2] Financial Forecasts - **Revenue**: Expected to reach RMB 7.56 billion, RMB 8.6 billion, and RMB 9.78 billion in 2024, 2025, and 2026 respectively [2][7] - **Net Profit**: Expected to grow to RMB 974.65 million, RMB 1.28 billion, and RMB 1.69 billion in 2024, 2025, and 2026 respectively [3] - **EPS**: Forecasted at RMB 0.37, RMB 0.49, and RMB 0.65 for 2024, 2025, and 2026 respectively [3] Valuation and Peer Comparison - The company's 2024 PE ratio is 13.2x, lower than the industry average of 17.4x [8] - Comparable companies include CSPC Pharmaceutical Group, Sino Biopharmaceutical, and Hansoh Pharmaceutical [9] - The company is valued at a 19x PE ratio, supporting the target price of HKD 7.62 [8]

Investment Rating - Buy (Maintained) [1] Core Views - The company's performance is under short-term pressure, but the high growth driven by innovative drugs is becoming more certain [1] - Revenue in 2023 reached 6,640 million yuan (YoY +4.3%), with drug sales and promotion services contributing 6,567 million yuan [2] - Innovative drug revenue was approximately 4,756 million yuan (YoY +15.2%), accounting for 72.0% of total revenue (65.3% in 2022) [2] - Net profit attributable to the parent company was 715 million yuan (YoY -23.4%), impacted by fair value losses in the investment portfolio and one-time income from the disposal of subsidiaries [2] - Operating net profit attributable to the parent company was 757 million yuan (YoY +12.3%), showing steady growth [2] - R&D and sales expenses accounted for 23.7% and 35.7% of revenue, respectively, with both declining for three consecutive years, indicating improved operational efficiency and economies of scale [2] Financial Forecasts and Valuation - Revenue is expected to grow to 7,550 million yuan in 2024E, 8,900 million yuan in 2025E, and 10,600 million yuan in 2026E [2] - Net profit attributable to the parent company is forecasted to be 945.85 million yuan in 2024E, 1,244.75 million yuan in 2025E, and 1,635.91 million yuan in 2026E [2] - EPS is projected to be 0.36 yuan in 2024E, 0.48 yuan in 2025E, and 0.63 yuan in 2026E [2] - P/E ratios are estimated at 15.01x for 2024E, 11.41x for 2025E, and 8.68x for 2026E [2] Business Segments Neuroscience - Neuroscience revenue in 2023 was 1,970 million yuan (YoY -13%), accounting for 30% of product revenue [3] - Xianbixin has digested the impact of price reductions, with hospital listings (+26.7%) and patient numbers (+21.6%) showing steady growth [3] - Xianbixin sublingual tablets received NDA approval in June 2023, and the Xianbixin series is expected to be applied in the full course of stroke treatment [3] - Daridorexant, an anti-insomnia innovative drug, is expected to submit NDA in Q3 2024 [3] - SIM0801 (QPCT) for Alzheimer's disease is in global Phase II trials, and SIM0800 (AQP4) for brain edema is in Phase 1a trials [3] Oncology - Oncology revenue in 2023 was 1,580 million yuan (YoY +10%), accounting for 24% of total revenue [3] - The "Endu + Envida" product combination continues to grow steadily, and the new product Kosela has shown initial success in market expansion [3] - Kosela, a first-in-class full-line bone marrow protection drug, is widely recommended in multiple guidelines and has broad prospects for ADC and IO combination therapies [3] - External collaborations are accelerating commercialization, with EGFR monoclonal antibody CMAB009 expected to launch in 2024 and VEGF antibody Suvaxeta expected to submit NDA in 2024 [3] - High-potential innovative products include SIM0270 (SERD), SIM0500 (GPRC5D-BCMA-CD3), SIM0501 (USP1), and SIM0237 (PDL1/IL15v) [3] - ADC pipeline includes SIM0508 (CDH6-ADC) and SIM0686 (FGFR2b-ADC) with differentiated layouts [3] Autoimmune and Anti-Infective - Autoimmune and anti-infective revenue in 2023 was 1,600 million yuan (YoY +44%), accounting for 24% of total revenue [3] - The company has a deep layout in rheumatoid arthritis (RA) treatment, with Aitoxin maintaining growth [3] - Key targets in the autoimmune field include IL4R (Lederchibai, IL4Rα), IL17 (SIM335, IL17A), URAT1 (SIM295, URAT1), and JAK1 (LNK01001, JAK1) [3] - The anti-infective segment is in the initial construction phase, with Xiannuoxin quickly entering the market and BIC new drug ADC189 expected to bring new growth [3] Financial Ratios - ROIC is expected to increase from 8.23% in 2023A to 14.04% in 2026E [9] - ROE is projected to rise from 9.90% in 2023A to 14.81% in 2026E [9] - Gross margin is forecasted to remain stable at around 75-77% from 2023A to 2026E [9] - Net profit margin is expected to increase from 10.82% in 2023A to 15.43% in 2026E [9] - Debt-to-asset ratio is projected to decrease from 33.45% in 2023A to 28.35% in 2026E [9] Market Data - Closing price: HKD 5.44 [5] - 52-week low/high: HKD 4.94/10.42 [5] - P/B ratio: 1.98x [5] - Market capitalization: HKD 14,197.10 million [5] Key Financial Data - Total assets: 10,853.67 million yuan in 2023A, expected to grow to 15,404.96 million yuan in 2026E [8] - Total liabilities: 3,630.93 million yuan in 2023A, expected to increase to 4,367.16 million yuan in 2026E [8] - Shareholders' equity: 7,222.74 million yuan in 2023A, expected to grow to 11,049.24 million yuan in 2026E [8]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 11.50, indicating a potential upside of 109.4% from the current closing price of HKD 5.49 [1][12]. Core Insights - The company's performance in 2023 met expectations, with a revenue increase of 4.5% year-on-year to RMB 6.608 billion, while net profit decreased by 23.2% to RMB 715 million due to one-time losses from investments [1]. - The management has provided guidance for 2024, projecting a revenue growth of 10-15% and a 30% increase in operating net profit, with gross margin expected to recover to around 79% [1][2]. - The proportion of revenue from innovative drugs is expected to rise from 72% in 2023 to 80% by 2026, driven by the anticipated launch of five new products in the next two years [2]. - The company plans to enhance shareholder returns, proposing a dividend of RMB 0.16 per share, corresponding to a payout ratio of 59% [2]. Financial Summary - Revenue for 2023 was RMB 6.608 billion, with projections for 2024, 2025, and 2026 at RMB 7.783 billion, RMB 9.372 billion, and RMB 10.474 billion respectively, reflecting year-on-year growth rates of 17.8%, 20.4%, and 11.8% [5][13]. - The net profit for 2023 was RMB 715 million, with forecasts of RMB 1.013 billion for 2024, RMB 1.307 billion for 2025, and RMB 1.627 billion for 2026, indicating significant recovery and growth [5][13]. - The company’s gross margin is projected to improve, with estimates of 78.5% for 2024 and 79.0% for 2025 [8][13]. Research and Development Focus - Key R&D catalysts for 2024 include the completion of Phase III trials for several products, including a treatment for insomnia and a drug for triple-negative breast cancer [6]. - The company is focusing on differentiated products and unmet clinical needs, with plans to continue its development of innovative therapies [6].

Financial Performance - The group's revenue for the year ended December 31, 2023, was approximately RMB 6.608 billion, an increase of about 4.5% compared to RMB 6.324 billion in 2022[2]. - Profit attributable to equity shareholders for the year was approximately RMB 715 million, a decrease of about RMB 216 million or 23.2% from RMB 931 million in 2022[2]. - Gross profit for the same period was RMB 4,984,153 thousand, slightly down from RMB 4,996,678 thousand in 2022, indicating a decrease of about 0.25%[78]. - Operating profit decreased to RMB 711,802 thousand from RMB 860,605 thousand in the previous year, reflecting a decline of approximately 17.3%[78]. - The net profit for the year was RMB 713,950 thousand, down from RMB 926,732 thousand in 2022, which is a decrease of around 23%[79]. - Basic and diluted earnings per share for 2023 were RMB 0.27, compared to RMB 0.36 in 2022, marking a decline of approximately 25%[79]. - Total comprehensive income for the year was RMB 791,410,000, down from RMB 947,199,000 in the previous year, reflecting a decline of approximately 16.5%[81]. - The company reported a financial income of RMB 54,960 thousand, a slight decrease from RMB 59,867 thousand in the previous year, representing a decline of approximately 8.5%[78]. Research and Development - Research and development expenses were approximately RMB 1.563 billion, a decrease of about RMB 165 million or 9.6% from RMB 1.728 billion in 2022, with R&D expenses accounting for 23.7% of revenue[2]. - The total R&D investment for the reporting period was approximately RMB 1.96 billion, an increase of about 1.2% compared to RMB 1.93 billion in 2022, with R&D expenses accounting for approximately 29.7% of revenue, down 0.9 percentage points from 30.6% in 2022[10]. - The company has established a pipeline of over 60 new drug varieties, with 15 innovative drugs currently undergoing registration clinical studies[6]. - The company is focused on enhancing research and development (R&D) and business development capabilities to seek differentiated mechanisms and drug forms[14]. - The company has approximately 40 preclinical candidates, focusing on differentiated targets with FIC and BIC potential for sustainable growth[46]. Innovative Drug Portfolio - Revenue from innovative drug business reached approximately RMB 4.756 billion, accounting for 72.0% of total revenue, representing a growth of about 15.2% from RMB 4.128 billion in 2022[2]. - The innovative drug portfolio has expanded to six products, with a focus on neurology, autoimmune diseases, oncology, and anti-infection areas[4]. - The innovative drug "Xianbixin" has benefited approximately 1.07 million patients, covering about 5,000 medical institutions[4]. - The first domestically produced 3CL anti-COVID innovative drug "Xianuoxin" was conditionally approved for listing and has covered 31 provinces and 306 cities, benefiting 670,000 patients[5]. - The company achieved a significant milestone with the approval for the production of Kexaila on December 20, 2023, indicating readiness for commercial supply[8]. - The company currently has six commercialized innovative drugs and a pipeline of nearly 60 research projects, with 15 new drug molecules undergoing registration clinical trials[15]. Clinical Trials and Approvals - The Phase III clinical trial for Enzashu (Suvesevimab) has met its primary endpoint for patients with recurrent platinum-resistant ovarian cancer, leading to a new drug application submission to NMPA on March 11, 2024[7]. - The complete data from the Phase II/III trial of Xianoxin for COVID-19 was published, showing significant symptom recovery and viral load reduction in adult patients[7]. - The Phase II clinical trial for the new indication of Xianbixin® for intracerebral hemorrhage has enrolled over 80 patients as of the announcement date[17]. - The NDA for Xianoxin® has been accepted for regular approval by NMPA as of February 2, 2024[28]. - The NDA for Xianbixin® sublingual tablets was accepted by NMPA on June 28, 2023, targeting improvement of neurological symptoms in acute ischemic stroke (AIS) patients[29]. Financial Position and Cash Flow - The group had cash and cash equivalents of approximately RMB 2.007 billion as of December 31, 2023, an increase from RMB 1.658 billion as of December 31, 2022[55]. - The group's bank loan balance was approximately RMB 1.221 billion as of December 31, 2023, down from RMB 1.292 billion as of December 31, 2022[55]. - The asset-liability ratio was approximately 33.5% as of December 31, 2023, slightly down from 33.7% as of December 31, 2022[55]. - The group recorded a one-time pre-tax gain of approximately RMB 789 million from the disposal of a subsidiary in the first half of 2023[54]. - The group had a total employee cost of approximately RMB 2.402 billion for the year ended December 31, 2023[59]. Strategic Initiatives - The company plans to enhance the scale of its innovative drug business and improve product coverage through resource integration and lean operations[14]. - The company aims to implement Innovation Strategy 2.0 in 2024 to maximize innovation value in China and expand global capabilities[14]. - The company plans to allocate 60% of the utilized proceeds (approximately HKD 2,107.85 million) towards ongoing R&D in key therapeutic areas[63]. - The company has established strategic partnerships for three new drug molecules as of December 31, 2023, enhancing its product pipeline and disease coverage[9]. - The company intends to utilize the unutilized net proceeds in accordance with the prospectus and related announcements[64].

Revenue and Profit Growth - Revenue for the six months ended June 30, 2023, was approximately RMB 3.379 billion, an increase of about 25.2% compared to RMB 2.700 billion for the same period in 2022[5] - Profit attributable to equity shareholders for the period was approximately RMB 2.275 billion, a significant increase from RMB 64 million in the same period of 2022[5] - Basic earnings per share were approximately RMB 0.87, a substantial increase from RMB 0.02 in the same period of 2022[5] - The group reported a revenue growth of approximately 25.2% for the first half of 2023, reaching RMB 24.13 billion, with innovative drug revenue accounting for 71.4% of total revenue[10] - The group recorded a profit attributable to equity shareholders of approximately RMB 2.275 billion for the six months ended June 30, 2023, a significant increase from RMB 64 million in the same period of 2022[62] - The increase in profit is primarily due to a fair value change in the investment portfolio, resulting in a pre-tax net gain of approximately RMB 1.149 billion, compared to a loss of approximately RMB 331 million in the same period of 2022[62] Innovative Drug Development - Innovative drug revenue was approximately RMB 2.413 billion, accounting for 71.4% of total revenue, and increased by about 36.6% from RMB 1.767 billion in the same period of 2022[5] - The company has six innovative drugs approved for sale and 14 products included in over 100 guidelines published by government agencies or authoritative professional societies as of June 30, 2023[6] - The group has six innovative drugs in the commercialization stage, with the recent acceptance of a new drug application (NDA) for the sublingual form of Xianbixin®[10] - The group has over 60 innovative drug candidates in its pipeline, with three new NDAs and three new molecular INDs approved recently[11] - The group established a Scientific Advisory Board (SAB) to enhance early drug discovery and clinical development with leading global scientists[7] - The company is advancing the commercialization of innovative drugs, with a focus on high clinical value and compliance in operations[9] Research and Development - Research and development expenses were approximately RMB 776 million, an increase of about 19.1% from RMB 652 million in the same period of 2022[5] - The company has established research and development innovation centers in Shanghai, Nanjing, Beijing, and Boston, with approximately 1,000 R&D personnel[6] - The company is focused on research and development in pharmaceuticals, with a commitment to expanding its product offerings and market presence[109] Market Presence and Distribution - The marketing network covers over 2,800 tertiary hospitals and approximately 17,000 other hospitals and medical institutions across China[6] - The company has five drug production bases that comply with China's GMP requirements, with some production lines certified by EU GMP or inspected by the FDA[6] - The company aims to enhance market share and accessibility of existing products through specialized promotion and multi-channel development in the current fiscal year[61] Financial Position and Assets - Total assets as of June 30, 2023, amounted to RMB 10,184,363 thousand, up from RMB 7,817,385 thousand at the end of 2022, indicating strong asset growth[102] - Cash and cash equivalents increased to RMB 2,446,295 thousand from RMB 1,657,600 thousand, showing improved liquidity[102] - The company's non-current assets totaled RMB 6,800,125 thousand, compared to RMB 5,327,329 thousand at the end of 2022, reflecting ongoing investment in long-term assets[102] Shareholder and Equity Information - The total issued shares amount to 2,664,045,618[77] - The major shareholder, Ren Yong, holds 1,847,347,913 shares, representing 69.34% of the total shares[74] - The company has a family trust structure involving multiple stakeholders, including Ren Yong and Li Shimon[77] - The company has maintained compliance with the Corporate Governance Code throughout the reporting period[86] Legal and Compliance Matters - The company remains vigilant regarding potential legal claims, with a current litigation involving a subsidiary amounting to approximately RMB 200 million, but does not anticipate a negative court ruling[65] - The company is currently facing a legal claim for approximately RMB 200,000,000 related to a raw material supply arrangement, but management does not anticipate a negative ruling[168] Dividend and Share Repurchase - The board has decided not to declare any interim dividend for the six months ended June 30, 2023[92] - The company declared a dividend distribution of RMB 419,218 thousand during the reporting period[107] - The company repurchased a total of 7,043,000 shares at a total cost of HKD 53,079,460, representing 10% of the issued shares as of the 2022 Annual General Meeting[90] Other Financial Metrics - The company reported a significant increase in inventory, which rose to RMB 673,442 thousand from RMB 302,373 thousand, indicating potential growth in sales[100] - The company recognized a tax expense of RMB 51,346,000 for the six months ended June 30, 2023, compared to a tax benefit of RMB 9,398,000 in the same period of 2022[121] - The company reported a net cash outflow from financing activities of RMB (484,364) thousand, compared to RMB (293,446) thousand in the same period last year[108]

Financial Performance - The company reported revenue of approximately RMB 3.379 billion for the six months ended June 30, 2023, representing a growth of about 25.2% compared to RMB 2.700 billion in the same period of 2022[2]. - The profit attributable to equity shareholders for the period was approximately RMB 2.275 billion, a significant increase from RMB 64 million in the same period of 2022[3]. - Basic earnings per share were approximately RMB 0.87, a substantial increase from RMB 0.02 in the same period of 2022[3]. - The group achieved a revenue growth of approximately 25.2% year-on-year, with innovative drug revenue reaching RMB 2.413 billion, an increase of about 36.6% compared to the same period in 2022[8]. - The company recorded a total comprehensive income of RMB 2,340,212 thousand for the period, significantly higher than RMB 8,858 thousand in the previous year[77]. - Net profit for the period was RMB 2,273,837 thousand, compared to RMB 61,921 thousand in the same period last year, showcasing strong growth[76]. - The company reported a significant increase in inventory, which rose to RMB 673,442 thousand from RMB 302,373 thousand, reflecting a growth of approximately 122%[80]. - The company recorded a one-time pre-tax gain of approximately RMB 789 million from the disposal of a subsidiary in the first half of 2023[54]. Research and Development - R&D expenses were approximately RMB 776 million, an increase of about 19.1% from RMB 652 million in the same period of 2022, representing 23.0% of revenue[3]. - The company has established R&D innovation centers in Shanghai, Nanjing, Beijing, and Boston, with around 1,000 R&D personnel, including approximately 160 PhDs and 500 Master's degree holders[4]. - The group has over 60 innovative drug candidates in the pipeline, with three NDAs, three new PCC molecules, and three new IND approvals achieved recently[10]. - The innovative drug pipeline includes various forms such as monoclonal antibodies, bispecific antibodies, ADCs, and small molecule drugs, indicating a rich reserve of potential treatments[14]. - The company has three candidates in NDA/critical clinical stages and 11 candidates in Phase I/II, showcasing a robust development strategy[14]. Product Development and Market Expansion - The company has six innovative drugs approved for sale and over 40 products included in the National Reimbursement Drug List (NRDL) as of June 30, 2023[4]. - The innovative drug portfolio has expanded to six products, with the new sublingual formulation of Xianbixin® receiving NDA acceptance on June 28, 2023[9]. - The company is actively exploring strategic partnerships for collaborative R&D and has established a Scientific Advisory Board (SAB) to guide early drug discovery and clinical development[5]. - The company aims to enhance its marketing capabilities and improve drug accessibility, with approximately 4,700 personnel in its marketing departments as of June 30, 2023[5]. - The company entered into a collaboration agreement with Taizhou Maibotai Pharmaceutical Co., Ltd. on August 18, 2023, acquiring exclusive commercial rights for CMAB009 in mainland China[13]. Financial Position and Investments - As of June 30, 2023, the company had cash and cash equivalents of approximately RMB 2.446 billion, up from RMB 1.658 billion as of December 31, 2022[55]. - The company's bank loan balance was approximately RMB 910 million as of June 30, 2023, down from RMB 1.292 billion as of December 31, 2022[55]. - The asset-liability ratio was approximately 28.7% as of June 30, 2023, compared to 33.7% as of December 31, 2022[55]. - The company holds a significant investment in 3D Medicines Inc., with a fair value of approximately RMB 2.055 billion, representing about 16.2% of the company's total assets as of June 30, 2023[59]. - The group has filed 158 new patent applications in the first half of 2023, including 153 invention patents, enhancing its intellectual property portfolio[51]. Clinical Trials and Approvals - The group has received NMPA approval for clinical trials of Daridorexant for insomnia, with rapid development progress noted[10]. - The company achieved a significant milestone by obtaining NMPA approval for clinical trials of the insomnia drug Doral (DORA) on July 20, 2023, aimed at treating adults with insomnia lasting at least three months[13]. - The clinical trial for the sublingual formulation of Xianbixin for acute ischemic stroke showed significant improvement in neurological function recovery compared to placebo, achieving the expected efficacy endpoint[29]. - The NDA for the sublingual formulation of Xianbixin was accepted by NMPA on June 28, 2023, aimed at improving neurological symptoms and daily activity capabilities in acute ischemic stroke patients[29]. - The company has established a collaboration with Hainan Boao Research Hospital for the application of Darilorex in the Hainan Boao Lecheng International Medical Tourism Pilot Zone[32]. Market Presence and Sales - The marketing network covers over 2,800 tertiary hospitals and approximately 17,000 other hospitals and medical institutions across 32 provinces, cities, and autonomous regions in China[5]. - Xianbixin® injection has covered approximately 560,000 patients and holds a market share of about 22% in the stroke injection market, with over 4,200 medical institutions involved[9]. - The company aims to enhance market share and accessibility of existing products through professional promotion and multi-channel development during the fiscal year[53]. - Pharmaceutical sales amounted to RMB 3,060,125,000 for the six months ended June 30, 2023, up from RMB 2,436,754,000 in 2022, reflecting a growth of about 25.6%[87]. Employee and Corporate Governance - As of June 30, 2023, the group had a total of 7,661 full-time employees, with employee costs amounting to approximately RMB 1.252 billion[63]. - The board has resolved not to declare any interim dividend for the six months ending June 30, 2023[65]. - The audit committee has reviewed the financial reporting process and confirmed compliance with applicable accounting standards and regulations[72].

Financial Performance - The company's revenue for the year ended December 31, 2022, was approximately RMB 6.319 billion, an increase of about 26.4% compared to RMB 5.000 billion in 2021[8]. - Revenue from innovative drug business was approximately RMB 4.128 billion, accounting for 65.3% of total revenue, representing a growth of about 32.3% from RMB 3.120 billion in 2021[8]. - Revenue from the neurology sector was approximately RMB 2.267 billion, accounting for 35.9% of total revenue, with a growth of about 41.0% compared to 2021[8]. - The profit attributable to equity shareholders for the year was approximately RMB 933 million, a decrease of about 38.1% from RMB 1.507 billion in 2021[8]. - Basic earnings per share were approximately RMB 0.36, down about 37.9% from RMB 0.58 in 2021[8]. - The net cash generated from operating activities was approximately RMB 1.355 billion, compared to a net cash outflow of RMB 202 million in 2021[8]. Research and Development - Research and development expenses were approximately RMB 1.728 billion, an increase of about 21.9% from RMB 1.417 billion in 2021, representing 27.3% of total revenue[8]. - The company is committed to enhancing its research and development capabilities to drive future growth[8]. - The company has approximately 1,100 R&D personnel, including about 150 PhDs and 520 Master's degree holders, enhancing its research capabilities[9]. - The company is focusing on developing a pipeline of early-stage self-researched products with global development potential, having achieved overseas licensing for the first time in 2022[11]. - The company plans to continue investing heavily in R&D to maintain a differentiated and effective product portfolio, aiming for sustainable growth[11]. Product Development and Pipeline - The company has nearly 60 innovative drug candidates in its pipeline, with 17 undergoing registration clinical studies, including 5 already marketed drugs[14]. - The company achieved 6 new Investigational New Drug (IND) applications and 4 First-in-Human (FIH) trials during the reporting period[15]. - The company successfully reached primary endpoints in 3 Phase III clinical trials, with 2 supporting product launches[16]. - The product "先必新®" (依達拉奉右莰醇注射用濃溶液) achieved strong year-on-year revenue growth, benefiting approximately 880,000 patients and covering around 3,440 medical institutions[14]. - The product "恩維達®" (恩沃利單抗注射液) contributed significantly in its first full year post-launch, benefiting about 20,000 patients as the world's first subcutaneous PD-(L)1 antibody drug[14]. Market Strategy and Expansion - The company plans to continue focusing on innovative drug development and expanding its market presence in therapeutic areas[8]. - The company aims to strengthen commercialization capabilities and promote differentiated innovative drugs to achieve high growth, with a focus on international market exploration[20]. - The company has established a marketing network covering over 2,700 tertiary hospitals and approximately 17,000 other medical institutions across China[9]. - The company has invested in five production bases that comply with China's GMP requirements, with some production lines passing EU GMP certification or FDA inspections[9]. Financial Position and Investments - The group had cash and cash equivalents of approximately RMB 1.658 billion as of December 31, 2022, compared to RMB 973 million as of December 31, 2021[65]. - The bank loan balance as of December 31, 2022, was approximately RMB 1.292 billion, down from RMB 1.530 billion as of December 31, 2021, with all loans due within one year[65]. - The asset-liability ratio as of December 31, 2022, was approximately 33.7%, a decrease from 36.4% as of December 31, 2021[65]. - The company held a significant investment in 3D Medicines Inc., valued at approximately RMB 875 million, representing about 8.1% of the group's total assets as of December 31, 2022[68]. Corporate Governance - The company adheres to strict corporate governance principles, promoting effective internal controls and transparency in operations[163]. - The board of directors is responsible for overseeing the company's governance functions, including the review of governance policies and compliance with legal regulations[164]. - The company has established a robust internal control and risk management system to ensure effective oversight of operations and financial performance[166]. - The independent non-executive directors have confirmed their independence according to the Listing Rules, ensuring compliance with governance standards[122]. Risks and Challenges - The company faces intense competition in the industry, which may hinder its ability to compete effectively with current and future competitors[92]. - The development and commercialization of the company's pipeline products, especially innovative drugs, are time-consuming and costly, with uncertain outcomes[93]. - The ongoing COVID-19 pandemic may have a significant negative impact on the group's business performance and financial condition[101]. - The group may face challenges in obtaining necessary licenses or permits for the development, production, promotion, and distribution of its products[98]. Shareholder Structure - As of December 31, 2022, Mr. Ren Junsheng held 1,840,102,913 shares, representing approximately 69.17% of the company's total issued shares[144]. - The ultimate controlling shareholders collectively hold 1,839,610,913 shares, representing approximately 69.15% of the total issued shares as of December 31, 2022[149]. - The shareholding structure indicates significant concentration of ownership among a few key individuals and entities[149]. - The company has maintained a lower public float of 15.45% as accepted by the Stock Exchange[156].

Financial Performance - The group's revenue for the year ended December 31, 2022, was approximately RMB 6.319 billion, an increase of about 26.4% compared to RMB 5.000 billion in 2021[2] - The profit attributable to equity shareholders for the year was approximately RMB 933 million, a decrease of about 38.1% from RMB 1.507 billion in 2021[2] - Gross profit for 2022 was RMB 4,996,850 thousand, up from RMB 3,919,735 thousand in 2021, reflecting a gross margin improvement[1] - Operating profit decreased to RMB 862,505 thousand in 2022 from RMB 1,448,544 thousand in 2021, showing a decline in operational efficiency[1] - Net profit for the year was RMB 928,632 thousand, down from RMB 1,498,921 thousand in 2021, representing a 38% decline[71] - Basic and diluted earnings per share for 2022 were both RMB 0.36, compared to RMB 0.58 in 2021[71] - The company reported a total comprehensive income of RMB 949,099 thousand for 2022, down from RMB 1,455,937 thousand in 2021[72] - Cash and cash equivalents increased to RMB 1,657,600 thousand in 2022 from RMB 973,139 thousand in 2021, indicating improved liquidity[75] - The company’s total equity increased to RMB 7,142,823 thousand in 2022 from RMB 6,462,757 thousand in 2021, indicating a stronger financial position[76] Revenue Breakdown - Revenue from innovative drug business reached approximately RMB 4.128 billion, accounting for 65.3% of total revenue, representing a growth of about 32.3% from RMB 3.120 billion in 2021[2] - The revenue from the nervous system segment was approximately RMB 2.267 billion, a growth of about 41.0% compared to 2021, while the oncology segment generated RMB 1.430 billion, growing by 15.5%[2] - In 2022, revenue from innovative drug business was approximately RMB 4.128 billion, accounting for 65.3% of total revenue, which was a 32.3% increase from RMB 3.120 billion in 2021[17] - Total revenue for the company in the reporting period was approximately RMB 6.319 billion, a 26.4% increase from RMB 5.000 billion in 2021[17] Research and Development - R&D expenses were approximately RMB 1.728 billion, an increase of about 21.9% from RMB 1.417 billion in 2021, with an R&D expense ratio of 27.3%[2] - The company has nearly 60 innovative drug candidates in its R&D pipeline, with 17 undergoing registration clinical studies[5] - The company aims to accelerate R&D investments and advance late-stage projects, focusing on self-developed candidates with FIC/BIC potential and new indications for already marketed products[14] - The company has established a national key laboratory for neuro and oncology drug research, with approximately 1,100 R&D personnel, including around 150 PhDs and 520 Masters[11] - The company has approximately 40 preclinical candidates focusing on differentiated targets with FIC and BIC potential, supporting long-term sustainable growth[40] Product Development and Innovation - The company launched two new innovative drugs in 2022, expanding its commercialized innovative drug portfolio to six[4] - The innovative drug revenue reached a historical high of RMB 4.128 billion, with significant contributions from products like Xianbixin and Envidat[4][5] - The clinical trial for Xianbixin for ES-SCLC patients achieved its primary endpoint, supporting its market approval[6] - The company is advancing clinical research for three innovative drug candidates outside of China, indicating substantial progress in its global expansion strategy[6] - The candidate drug "Xianbixin Sublingual Tablet" has shown significant clinical value in treating acute ischemic stroke (AIS), with a successful Phase III trial completing enrollment of 914 participants in just 10 months[28] Strategic Collaborations and Licensing - The company achieved a License-Out agreement for its self-developed drug SIM0278, receiving up to $492 million in milestone payments, including a $15 million upfront payment[7] - The company signed multiple strategic collaborations to expand its product pipeline, including exclusive commercialization rights for a selective JAK1 inhibitor for rheumatoid arthritis and ankylosing spondylitis in China[8] - The company signed a tripartite cooperation agreement for Envidat® with two pharmaceutical companies, securing exclusive marketing rights in mainland China[21] - The company has established a clinical development collaboration with Merck to explore the potential of "SIM0235" in combination with the PD-1 antibody KEYTRUDA[33] Market Presence and Commercialization - The company has a marketing network covering over 2,700 tertiary hospitals and approximately 17,000 other medical institutions across China[12] - The innovative drug business is expected to continue its robust growth, driven by the clinical efficacy of products and a highly efficient commercialization team[17] - The company plans to strengthen commercialization capabilities and explore international market registrations and marketing for its innovative drugs, including expanding digital marketing efforts[13] Financial Position and Cash Flow - The net cash generated from operating activities for 2022 was approximately RMB 1.355 billion, a significant increase from a net cash outflow of RMB 202 million in 2021[49] - As of December 31, 2022, the company had cash and cash equivalents of approximately RMB 1.658 billion, up from RMB 973 million in 2021[49] - The company's debt-to-asset ratio was approximately 33.7% as of December 31, 2022, down from 36.4% in 2021[49] - The company reported a net loss from foreign exchange of RMB (57,215,000) for 2022, compared to a gain of RMB 116,009,000 in 2021[84] Corporate Governance and Compliance - The audit committee reviewed the financial reporting process and the annual performance for the year ended December 31, 2022, confirming compliance with applicable accounting standards and regulations[64] - The company emphasizes strict corporate governance principles to ensure ethical standards and transparency in operations[60] - The audit committee consists of three independent non-executive directors, ensuring a strong independent element in governance[63] Employee and Operational Metrics - Employee costs, including salaries and benefits, amounted to approximately RMB 2.137 billion for the year ended December 31, 2022, with a total of 7,832 full-time employees[53] - The company has established a restricted share unit plan to attract and retain skilled personnel, enhancing its future development and business expansion[53]

Financial Performance - For the six months ended June 30, 2022, the company recorded revenue of approximately RMB 2.7 billion, an increase of about 27.3% compared to the same period last year[15]. - The company’s profit for the period was approximately RMB 62 million, a decrease of about 88.8% compared to the same period last year[15]. - The company’s basic earnings per share were approximately RMB 0.02, a decrease of about 90.5% year-on-year[15]. - Total revenue for the six months ended June 30, 2022, was RMB 2,699.65 million, an increase from RMB 2,120.00 million in the same period of 2021, representing a growth of approximately 27.3%[86]. - Gross profit for the same period was RMB 2,142.28 million, compared to RMB 1,663.03 million in 2021, reflecting a gross margin improvement[86]. - Operating profit decreased significantly to RMB 41.11 million from RMB 556.11 million year-on-year, indicating a decline of approximately 92.6%[86]. - Net profit for the period was RMB 61.92 million, down from RMB 554.90 million in the previous year, a decrease of about 88.8%[87]. - The company reported a basic earnings per share of RMB 0.02, down from RMB 0.21 in the previous year[86]. Revenue Breakdown - Revenue from innovative drugs reached RMB 1.767 billion, accounting for 65.4% of total revenue, with a year-on-year growth of approximately 44.8%[14]. - Revenue from the neurology product portfolio was approximately RMB 1.04 billion, representing about 38.5% of total revenue[20]. - The group’s oncology product revenue reached approximately RMB 457 million, accounting for about 16.9% of total revenue for the six months ended June 30, 2022[22]. - Revenue from the autoimmune product portfolio reached approximately RMB 495 million for the six months ended June 30, 2022, accounting for about 18.4% of the total revenue[28]. - As of June 30, 2022, sales revenue from other pharmaceutical products, including Shufutan® and Zailin®, reached approximately RMB 444 million, accounting for about 16.5% of the total revenue[31]. Research and Development - Research and development expenses were approximately RMB 652 million, representing about 24.1% of total revenue, and increased by approximately 3.9% year-on-year[15]. - The company has nearly 60 innovative drug candidates in its pipeline, with 20 ongoing registration clinical trials for 16 potential innovative drugs[14]. - The company achieved 5 new IND approvals in the first half of 2022, including SIM0235 for advanced solid tumors and SIM0417 for COVID-19 prevention[33]. - The company has developed advanced research platforms, including AI-assisted drug discovery and PROTAC technology, enhancing its innovative drug development capabilities[32]. - The company has established R&D innovation centers in Shanghai, Nanjing, Beijing, and Boston, employing around 1,100 R&D personnel[11]. Clinical Trials and Approvals - The company launched one new innovative drug, Kexaila® (injection of Trastuzumab), which received conditional approval in July 2022[14]. - The company is actively advancing its clinical trials for the COVID-19 candidate drug SIM0417 (3CL), which is currently in Phase III trials[14]. - The NMPA approved SIM0417 for clinical trials in COVID-19 patients on March 28, 2022, and for post-exposure prophylaxis on May 13, 2022[18]. - The group achieved several milestones, including the FDA approval for clinical trials of SIM0235 (TNFR2) for advanced solid tumors and CTCL on January 29, 2022[17]. - The Phase III clinical trial for Xianbixin sublingual tablets achieved First Patient In (FPI) on June 28, 2021, enrolling 914 participants within 10 months, and is now in the follow-up and data analysis phase[37]. Market Presence and Strategy - The company has a marketing network covering over 2,700 tertiary hospitals and approximately 17,000 other hospitals and medical institutions across China[11]. - The company’s strategic focus remains on neurology, oncology, and autoimmune diseases, with revenue primarily derived from drug sales and promotional services[19]. - The innovative pharmaceutical business has become the main driver of continuous growth for the company, with a focus on unmet clinical needs and differentiated innovative drugs[56]. - The company plans to accelerate the development of anti-COVID drug SIM0417 due to the ongoing impact of the pandemic on public health and the economy[56]. - The company will focus on differentiated innovation and global pharmaceutical research trends, enhancing collaboration with partners to create more effective drugs[56]. Financial Position - As of June 30, 2022, the company had cash and cash equivalents of approximately RMB 1.865 billion, an increase from RMB 973 million as of December 31, 2021[50]. - The company reported a bank loan balance of approximately RMB 1.293 billion as of June 30, 2022, down from RMB 1.530 billion as of December 31, 2021[50]. - The company's asset-liability ratio was approximately 38.1% as of June 30, 2022, compared to 36.4% as of December 31, 2021[50]. - The company’s total equity attributable to shareholders decreased to RMB 6,152,312 thousand from RMB 6,128,415 thousand at the beginning of the year[96]. - The company’s bank loans decreased to RMB 1,292,935 thousand from RMB 1,530,085 thousand, reflecting a reduction of approximately 15.5%[89]. Shareholder Information - As of June 30, 2022, the company had a total of 2,646,907,618 shares issued, with major shareholders holding significant stakes[60]. - The largest shareholder, Ren Junsheng, holds approximately 77.06% of the company's shares through various controlled entities[60]. - The company has granted a total of 38,300,000 restricted share units under the 2021 Restricted Share Unit Plan, equivalent to about 1.447% of the total shares issued as of June 30, 2022[68]. - The company aims to attract and retain skilled personnel through the 2021 Restricted Share Unit Plan, which is effective for ten years[68]. - The company granted 3,000,000 restricted stock units to Mr. Tang Renhong, with 1,000,000 shares vesting on August 27, 2022[58]. Governance and Compliance - The audit committee, consisting of three independent non-executive directors, has reviewed the financial reporting process and confirmed compliance with applicable accounting standards[76]. - The group has maintained strict adherence to the corporate governance code since January 1, 2022, ensuring transparency and accountability[74]. - The chairman and CEO positions are held by the same individual, which the board believes does not compromise the balance of power within the board[73]. - The group has no significant events to disclose after the reporting period[73]. - The company reported no cancellations of restricted share units during the reporting period[71].

Financial Performance - For the fiscal year ending December 31, 2021, the company reported total revenue of approximately RMB 5.00 billion, an increase of about 10.9% compared to the previous year[12]. - The company achieved a net profit of approximately RMB 1.50 billion, a significant increase of about 125.6% compared to the previous year[12]. - The total revenue for the year ended December 31, 2021, was approximately RMB 5.00 billion, with innovative drug revenue reaching RMB 3.12 billion, a 53.8% increase from RMB 2.03 billion in 2020[23]. - Revenue from the top five customers accounted for 14.1% of total revenue, with the largest customer contributing 3.9%[93]. - Sales revenue from the oncology product portfolio reached approximately RMB 1.2 billion, accounting for about 24.0% of the total revenue for the year ended December 31, 2021[29]. - Sales revenue from the autoimmune product portfolio amounted to approximately RMB 892 million, representing about 17.8% of the total revenue for the year ended December 31, 2021[37]. - The sales revenue from other pharmaceutical products, including Shufutan® and Zailin®, reached approximately RMB 958 million, accounting for about 19.2% of the total revenue for the year ended December 31, 2021[40]. Innovative Drug Development - The revenue from innovative drugs reached approximately RMB 3.12 billion, representing a growth of about 53.8% year-over-year, and accounted for 62.4% of total revenue, a historical high[10]. - The company is currently conducting 20 registration clinical studies for 17 potential innovative drugs, with 6 new Phase III trials initiated in 2021[10]. - The innovative drug pipeline continues to expand, with more clinical candidates entering trials and achieving encouraging progress[17]. - The company has established R&D innovation centers in Shanghai, Nanjing, and Boston, with a pipeline of nearly 60 innovative drugs under development[13]. - The company successfully launched the innovative drug Envidat® in November 2021, contributing to new business growth[10]. - The innovative drug "Xianbixin" received widespread recognition for its efficacy and safety in its first full year post-launch[17]. - The company achieved significant milestones in 2021, including the approval of clinical trials for multiple drugs, such as "Xianbixin" and "Endu," which is the world's first subcutaneous PD-(L)1 injection[19]. Research and Development - Research and development expenses were approximately RMB 1.42 billion, accounting for about 28.3% of total revenue, which is an increase of approximately 24.1% year-over-year[12]. - The company has nearly 60 innovative drug development projects in its pipeline, with 20 projects in clinical stages, including 7 in Phase III, 5 in Phase II, and 8 in Phase I as of December 31, 2021[42]. - The company filed 223 new patent applications during the year, including 210 invention patents, and has accumulated 199 granted invention patents as of December 31, 2021[48]. - The company is committed to maintaining high-intensity and sustainable R&D investments to support its growth strategy[17]. - The company aims to enhance its core competitiveness in strategic execution, innovative drug projects, and commercialization efforts[17]. Market and Strategic Focus - The Chinese pharmaceutical market has been rapidly developing due to a large patient base and unmet clinical needs, with regulatory accelerations and expanded medical insurance coverage driving innovation[19]. - The company plans to focus on differentiated innovation in 2022, emphasizing both operational performance and organizational capabilities[17]. - The company aims to enhance its commercialization capabilities and product coverage through continuous training and professional development of its marketing team[13]. - The group aims to increase the proportion of revenue from innovative drugs and enhance its R&D capabilities and overall competitiveness[76]. - The group will continue to focus on the development of COVID-19 treatment drugs, accelerating the R&D process in response to the pandemic[76]. Financial Position and Capital Management - As of December 31, 2021, the company had cash and cash equivalents of approximately RMB 973 million, down from RMB 3.27 billion in 2020, and bank loans of approximately RMB 1.53 billion, reduced from RMB 3.07 billion in 2020[68]. - The company's debt-to-asset ratio improved to approximately 36.4% as of December 31, 2021, compared to 51.2% in 2020, indicating a stronger financial position[68]. - The group plans to allocate 60% of the net proceeds from its IPO, approximately HKD 2,107.85 million, towards ongoing R&D in strategic therapeutic areas by 2027[86]. - The board declared a final dividend of RMB 0.15 per share, totaling approximately RMB 394.244 million, subject to shareholder approval[80]. - The company has not issued any debt securities during the fiscal year ending December 31, 2021[90]. Employee and Governance - As of December 31, 2021, the group had a total of 6,182 full-time employees, with employee costs amounting to approximately RMB 1.465 billion[73]. - The group has established a training academy to provide regular training for employees, including onboarding and skills training[73]. - The board of directors includes a mix of executive, non-executive, and independent non-executive members, ensuring diverse governance[131]. - The company has confirmed the independence of all independent non-executive directors according to the listing rules, reinforcing governance standards[135]. - The company has purchased liability insurance for its directors and senior management, ensuring protection against potential claims[129]. Related Party Transactions - The actual transaction amount under the property lease and comprehensive service framework agreement for the year ended December 31, 2021, was approximately RMB 49 million, against an annual cap of RMB 56 million[144]. - The actual transaction amount under the sales and distribution framework agreement with Xiansheng Jiangsu for the year ended December 31, 2021, was approximately RMB 3 million, against an annual cap of RMB 22 million[145]. - The actual transaction amount under the Xiangrui promotion service framework agreement for the year ended December 31, 2021, was approximately RMB 57 million, against an annual cap of RMB 110 million[147]. - Independent non-executive directors confirmed that the ongoing related party transactions were conducted in the ordinary course of business and on normal commercial terms[154]. - The auditor issued an unqualified opinion regarding the ongoing related party transactions, confirming compliance with the company's pricing policy and regulatory agreements[155]. Risks and Challenges - The company faces significant risks related to competition and the rapidly changing pharmaceutical industry[98]. - The development of innovative drugs is time-consuming and costly, with uncertain outcomes, which may hinder the achievement of product development milestones and regulatory approvals[101]. - The company may encounter challenges in maintaining sales volume, pricing levels, and profit margins for its main products[99]. - Supply chain risks exist due to reliance on certain raw materials and pharmaceuticals, which may face shortages or price increases[103]. - The ongoing COVID-19 pandemic may continue to adversely affect the company's business performance and financial condition[111].