HUADONG MEDICINE(SZ:000963) Goldman Sachs·2025-07-02 03:15Investment Rating - The investment rating for Huadong Medicine Co. is Neutral, with a 12-month price target of Rmb41, indicating a potential upside of 1.5% from the current price of Rmb40.39 [7][11]. Core Insights - The company has shown slight growth in its business performance, particularly in innovative drugs and aesthetics, with expectations for improvement in H2 2025 driven by new product launches [2][6]. - Huadong Medicine anticipates additional revenue of Rmb1 billion from innovative drugs and new biosimilars in 2025, with hospital sales of ELAHERE and Arcalyst expected to start in Q3 2025 [6][7]. - The aesthetics segment is expected to launch new products such as MaiLi HA filler injection and V30 in H2 2025, aiming to support growth despite a weak consumption environment [6][7]. Summary by Sections Recent Business Performance - The company expects higher revenue growth from its manufacturing business and stable growth from aesthetics in Q2 2025 compared to Q1 2025, with optimism for H2 due to new product launches [2][6]. Innovative Drugs - Huadong Medicine plans to initiate hospital sales of ELAHERE and Arcalyst in Q3 2025, projecting an additional Rmb1 billion in revenue from innovative drugs and new biosimilars in 2025 [6][7]. - The company is cautious about the development of its oral GLP-1 asset (HDM1002) due to concerns over liver toxicity, although no adverse events have been observed in over 800 enrolled patients [6]. Aesthetics - The company aims to launch several new aesthetic products in China in H2 2025, including MaiLi HA filler injection and Preime DermaFacial, to drive growth in a challenging consumption environment [6][7]. Industrial Microbiology - Huadong Medicine is developing APIs for pharmaceutical and biotech companies, expecting sales ramp-up following the launch of these assets [10]. Policy Impact - The company is actively engaging with national healthcare insurance to include its innovative drugs in the National Reimbursement Drug List (NRDL) and anticipates limited impact from potential volume-based procurement (VBP) on certain products due to patent protections [10].