Core Viewpoint - The National Healthcare Security Administration (NHSA) has initiated the 11th round of national drug procurement, focusing on 55 generic drugs, emphasizing quality over price, which indicates government support for industry innovation and rational competition [1][2] Group 1: Procurement Details - The procurement period is set from July 16 to July 31, during which hospitals must report their purchasing volumes [1] - The current round of procurement excludes innovative drugs and aims to optimize bidding rules to better match clinical needs and avoid excessive competition [1] - Key changes in bidding rules include allowing hospitals to report purchasing volumes by brand rather than generic names and adjusting the commitment purchasing volume based on clinical needs [1] Group 2: Impact on Major Pharmaceutical Companies - The expected sales impact on major pharmaceutical companies is limited, with estimated effects being less than 3% [1] - Specific companies and their affected products include: - Hengrui Medicine's product under JDB, contributing less than 0.5% to 2024 expected sales [2] - Hansoh Pharmaceutical's products, including Agomelatine and others, accounting for approximately 3% of 2024 expected sales [2] - CSPC Pharmaceutical's products, including Dagagliflozin and others, making up about 1% of 2024 expected sales [2] - China Biologic Products' drugs, including Olaparib and others, also representing around 1% of 2024 expected sales [2] - Shijiazhuang Yiling Pharmaceutical's products, contributing approximately 1.5% to 2024 expected sales [2] - Fosun Pharma's products, including Apalutamide, accounting for about 2% of 2024 expected sales [2]

Investment Rating - The report maintains a "Strong Buy" rating for the company, expecting it to outperform the benchmark index by over 20% in the next six months [4][22]. Core Views - The company is entering a growth cycle driven by new product launches, despite facing profit pressure in 2024. The revenue for 2024 is projected at 759 million yuan, a 5.09% increase, with a net profit of 107 million yuan, reflecting a 0.57% growth [1][2]. - In Q1 2025, the company reported a revenue of 187 million yuan, down 9.47%, and a net profit of 21 million yuan, down 52.30% [1][2]. - The non-contract custom business saw a robust growth of 17.27% in 2024, reaching 676 million yuan, while the contract custom business declined by 43% due to early contract terminations by some clients [2][3]. Financial Summary - The total revenue for 2024 is 759 million yuan, with a projected growth rate of 5.1% for the following years, reaching 850 million yuan in 2025 and 982 million yuan in 2026 [3][9]. - The net profit for 2024 is 107 million yuan, with expected growth rates of 14.8% in 2025 and 21.2% in 2026, leading to 122 million yuan and 148 million yuan respectively [3][9]. - Earnings per share (EPS) is projected to increase from 0.25 yuan in 2024 to 0.29 yuan in 2025 and 0.35 yuan in 2026 [3][9]. - The target price for the stock is set at 10.55 yuan, with the current price at 7.09 yuan, indicating a potential upside [3][4].