Financial Performance - Cumulative revenue for the first three quarters of 2025 is 2.826 billion, a decrease of 12.71% compared to the same period last year [2] - Single-quarter revenue for Q3 2025 is 956 million, down 13% year-on-year from 1.099 billion [3] - Cumulative net profit after deducting non-recurring items is 363 million, a decline of 30.3% from 521 million in the previous year [3] - Single-quarter net profit for Q3 2025 is 96 million, down approximately 21% from 123 million in Q2 2025 [3] - Gross margin for the first three quarters is approximately 62.3%, up from 54.6% in the same period last year [3] Asset and Liability Overview - Total assets as of the end of Q3 2025 are 7.263 billion, with net assets of 6.025 billion [3] - Asset-liability ratio is approximately 17.04% [3] Sales and Profit Decline Analysis - Sales revenue decline is attributed to factors such as centralized procurement, price fluctuations in raw materials, and intensified market competition [3] - Prices of raw materials have shown a downward trend, affecting both revenue and profit margins [3] - The company aims to enhance production efficiency and innovate to adapt to the changing market landscape [3] Sales Expense Increase - Increase in sales expenses is primarily due to the market introduction phase of several new products [4] - The company is preparing a professional sales team to support the commercialization of new products [4] R&D Strategy - The company has completed the consistency evaluation of existing products and is actively exploring new targets based on clinical needs [5] - Focus on innovative development, including steroid-based innovations and exploring new attractive products beyond steroid limitations [5] Export Situation - The company's export of formulation products is in its early stages, with limited sales primarily in the U.S. market [6] - The company is strategically planning its export products based on various factors including market demand and entry barriers [6] Market Performance by Product Category - Gynecological products generated 310 million in sales, down from 340 million last year, with a notable decrease in sales of progesterone capsules [7] - Respiratory products achieved 600 million in sales, a 15% increase year-on-year, while sales of tiotropium bromide inhalation powder declined by 32% [8] Company Collaboration - Italian Newchem company reported stable revenue of approximately 434 million in the first quarter, maintaining collaboration with Xianju [9] - The company is enhancing production processes and exploring new markets to support future growth [9] Product Approval Status - The company submitted a New Drug Application for Omecamtiv Mecarbil injection in September 2024, currently in the review process [10]

Investment Rating - The report assigns a "Strong Buy" rating to the company, Heng Rui Medicine [1][9]. Core Views - Heng Rui Medicine is positioned as a leading domestic innovative pharmaceutical company, leveraging innovation and internationalization to achieve rapid growth. The company is expected to see significant revenue from external licensing, which is anticipated to become a normalized business practice [6][9]. Financial Projections - Total revenue is projected to reach 27,985 million in 2024, with a year-on-year growth rate of 22.6%. By 2027, revenue is expected to grow to 43,314 million, reflecting a growth rate of 14.8% [2]. - Net profit attributable to shareholders is forecasted to be 6,337 million in 2024, increasing to 12,821 million by 2027, with growth rates of 47.3% and 15.4% respectively [2]. - Earnings per share are expected to rise from 0.95 in 2024 to 1.93 in 2027 [2]. Company Overview - Heng Rui Medicine, established in 1970, focuses on the research, production, and promotion of high-quality drugs, particularly in oncology, metabolism, cardiovascular diseases, immunology, respiratory diseases, and neuroscience [6][13]. - The company has experienced significant growth, with revenue increasing from 364 million in 1998 to 27,985 million in 2024, representing a compound annual growth rate of 18% [13]. Market Position and Growth Potential - Despite concerns about future growth, the company has substantial room for expansion based on the proportion of innovative drug revenue, market share in covered areas, and international revenue [14][15]. - The company’s innovative drug revenue is projected to grow significantly, with estimates of 153 billion, 192 billion, and 240 billion for the years 2025 to 2027, respectively, indicating a compound annual growth rate exceeding 20% [8][9]. Internationalization and Licensing - The company is making strides in internationalization, having initiated 20 clinical trials overseas by mid-2025. External licensing is expected to become a regular business practice, enhancing the company's global influence [6][9]. - Revenue from external licensing is projected to reach 61.1 billion in 2025, with 19.5 billion confirmed in the first half of 2025 [9]. Risk Mitigation and Stability - The peak impact of centralized procurement on the company’s generic drug business has passed, with current risks being minimal. The company is also actively pursuing export opportunities for its formulations, which are expected to become new growth points [6][8][41].

Core Viewpoint - The company, Jiutian Pharmaceutical, is actively engaged in the research, development, and sales of pharmaceutical products, with a focus on expanding its product offerings and market presence through innovation and internationalization efforts [1][8]. Group 1: Product Development and Market Strategy - Jiutian Pharmaceutical is currently in the information reporting phase for the 11th batch of centralized procurement for its drug, Loxoprofen Sodium Gel Patch, and cannot estimate the price reduction at this stage [2]. - The company has six external preparations already on the market and expects to gain approval for additional products, including Indomethacin Gel Patch and Flurbiprofen Gel Patch, by 2025, with further products anticipated in 2026 [3]. - The company has developed a new sales strategy for Ketoprofen Gel Patch, which was approved in 2023 and has entered the national medical insurance directory, focusing on increasing resources for the outpatient market and enhancing internal sales team assessments [5]. Group 2: International Expansion and Innovation - Jiutian Pharmaceutical has made progress in exporting its formulations, having developed 46 international clients, with successful exports to Ecuador and preparations for registration in Costa Rica [4]. - The company is also focusing on innovation, with a new product, Pepper Seven Pain Relief Gel Patch, classified as a Class 1 innovative drug, and has entered into a technology transfer agreement for antimicrobial peptides to enhance its drug development capabilities [6]. Group 3: Financial Performance and R&D Investment - In the first quarter of 2025, Jiutian Pharmaceutical reported a main revenue of 696 million yuan, a year-on-year increase of 17.79%, and a net profit of 126 million yuan, reflecting a slight increase of 0.08% [8]. - The company plans to invest 261 million yuan in R&D in 2024, which represents 8.91% of its operating income, and aims to maintain this investment ratio to ensure continuous output and enhance its competitive edge [7]. Group 4: Earnings Forecast - Recent earnings forecasts indicate that Jiutian Pharmaceutical's net profit is expected to reach approximately 677 million yuan in 2025, with projections of 775 million yuan in 2026 and further growth anticipated in 2027 [11].