Core Insights - The recent clinical study of Yuan Da Pharmaceutical's product, Chen Nuo (Eucalyptus Oil Enteric Capsules), has been recognized by an international journal, marking a significant milestone in its evidence-based medical validation [1][3][10] - The study demonstrated the safety and efficacy of Chen Nuo in treating chronic rhinosinusitis over an 8-week period, reinforcing the company's research capabilities in the respiratory field [3][5][7] Product and Market Position - Chen Nuo is a core product in Yuan Da Pharmaceutical's respiratory and critical care segment, recognized for its mucolytic properties and has been included in China's national medical insurance and essential drug lists since 2017 and 2018 respectively [4][10] - The clinical trial involved over 300 patients across 13 hospitals, comparing the efficacy of Chen Nuo combined with Budesonide nasal spray against Budesonide alone [4][5] Clinical Study Results - Results indicated that the combination therapy group showed a statistically significant improvement in symptom control rates compared to the control group, particularly in nasal congestion and discharge by the 8th week [5][7] - The study also highlighted the advantages of the combination therapy for chronic rhinosinusitis patients with a history of smoking, showing greater improvement in CT Lund-Mackay scores [5][7] Future Market Potential - The research supports the inclusion of Chen Nuo in standardized treatment pathways for chronic rhinosinusitis, potentially benefiting over 100 million patients in China, especially those with smoking histories [7] - The global respiratory drug market is projected to reach approximately $99.9 billion by 2024, with the Chinese market expected to grow from about $11.6 billion to $13.8 billion by 2028, at a compound annual growth rate of 4.5% [7][8] Product Pipeline and Innovation - Yuan Da Pharmaceutical has developed a comprehensive product portfolio in the respiratory and critical care sectors, including treatments for various respiratory diseases and conditions [11][12] - The company is advancing multiple innovative products, including Ryaltris for allergic rhinitis and STC3141 for sepsis, which are expected to enhance its competitive position in the market [12][16] Strategic Development - The company emphasizes innovation and advanced technology in its R&D strategy, aiming to establish a full-cycle management product cluster for chronic respiratory diseases and critical care [16]

Financial Performance - In 2024, the company achieved a revenue of CNY 4.0 billion, a year-on-year decline of 2.98%. The net profit attributable to shareholders was CNY 397 million, down 29.46% year-on-year [3] - In Q1 2025, the company reported a revenue of CNY 1.01 billion, a decrease of 2.86% year-on-year, with a net profit of CNY 144 million, down 4.7% year-on-year [3] - The formulation business generated CNY 2.42 billion in revenue in 2024, a growth of 6.0%, while the raw material business revenue was CNY 1.55 billion, down 13.4% [3] Product Performance - In Q1 2025, the sales revenue of the formulation segment was CNY 535 million, a decline of 6.6% [4] - Key product sales by therapeutic area included: - Gynecology and family planning: CNY 100 million, down 20% - Anesthesia and muscle relaxants: CNY 36 million, up 20% - Respiratory products: CNY 210 million, up 16% - Dermatology products: CNY 55 million, up 8% - Generic drugs: CNY 116 million, down 28% [4] R&D and Innovation - The company has established a comprehensive R&D system, increasing R&D investment from CNY 80 million in 2015 to CNY 265 million in 2024, with a R&D intensity rising from 3.5% to 6.6% [6][7] - New drug applications include: - Omalizumab sodium: submitted for approval in September 2024 - Improved new drug CZ1S: entered Phase III clinical trials in February 2025 [5] - The company is focusing on high-barrier complex formulations and has multiple key R&D projects in this area [5] Market Strategy - The company is implementing a "five-in-one" strategy for internationalization, focusing on macroeconomic conditions, market demand, entry barriers, competitive landscape, and its own advantages [11] - The company anticipates growth in foreign sales despite price fluctuations, aiming to expand market share and sales of new products [12] - The sales strategy is divided into three phases: stabilize, expand, and innovate, with a focus on maintaining market presence and exploring new fields [13] Future Outlook - The company plans to enhance its product lines in the steroid hormone sector, emphasizing long-term value creation and sustainable development [9][10] - The respiratory product, Mometasone nasal spray, is expected to be a significant revenue source, with continued growth anticipated in the coming years [8] - The company aims to strengthen its supply chain by extending upstream to optimize costs and enhance market competitiveness [17]

Investment Rating - The report maintains a "Recommended" rating for the company [6][8]. Core Views - The company experienced a decline in revenue and net profit in 2024, with total revenue of 4.0 billion yuan, down 3.0% year-on-year, and a net profit of 0.4 billion yuan, down 29.5% year-on-year. However, the adjusted net profit increased by 2.2% year-on-year to 0.55 billion yuan [3]. - The company's formulation business showed steady growth, with revenue of 2.42 billion yuan, up 6.0% year-on-year, while the raw material drug segment faced a decline in revenue of 1.55 billion yuan, down 13.4% year-on-year [4]. - The report highlights the potential for growth in the company's unique and innovative products, which are expected to drive the formulation business to new heights [5]. Summary by Sections Financial Performance - In 2024, the company achieved total revenue of 4.0 billion yuan, with a net profit of 0.4 billion yuan. The first quarter of 2025 saw revenue of 1.01 billion yuan, down 2.9% year-on-year, and a net profit of 0.14 billion yuan, down 4.7% year-on-year [3]. - The company forecasts a recovery in net profit from 0.64 billion yuan in 2025 to 0.77 billion yuan in 2027, with corresponding growth rates of 61.2%, 7.0%, and 11.7% [6][7]. Business Segments - The formulation business is the main growth driver, with significant contributions from respiratory and dermatological products, while the raw material drug segment is under pressure due to price declines [4][5]. - The report notes that the company is focusing on upgrading its product offerings and increasing its share in high-end markets, which is expected to stabilize the raw material drug business in the long term [6]. Future Outlook - The company is expected to benefit from the launch of innovative products and the growth of unique products, which will likely enhance its market position and drive revenue growth [5][6].