Core Viewpoint - Tianyu Co., Ltd. identifies non-sartan active pharmaceutical ingredients (APIs) such as sitagliptin and ezetimibe as core growth drivers, with expectations for continued rapid growth through 2026 and potential for further gross margin improvement due to economies of scale [1] Group 1 - Non-sartan APIs are expected to be a significant growth driver for the company [1] - The company anticipates maintaining rapid growth in the non-sartan API segment through 2026 [1] - There is potential for further improvement in gross margins as economies of scale become more pronounced [1]

Group 1: R&D and Client Collaboration - The company focuses on serving large multinational pharmaceutical companies and original research drug companies, aiming to provide raw materials for 8 original drug varieties and plans to add 1-2 new commercialized raw materials annually [2] - Established long-term strategic partnerships with renowned pharmaceutical companies such as Novartis and Sanofi, expanding collaboration from sartan raw materials to non-sartan raw materials, patent-expired drugs, and innovative drug projects [2] Group 2: CDMO Business Strategy - The company has built a solid service foundation and professional competitiveness in the generic drug raw material field, leveraging a comprehensive GMP system and compliance capabilities [3] - The CDMO business focuses on strategic clients, prioritizing high-potential projects during patent periods and late-stage development, ensuring significant scale benefits and customer loyalty [3] Group 3: Business Growth Outlook for 2026 - Raw material segment: Sartan raw materials' revenue share is expected to decline, while non-sartan raw materials (e.g., sitagliptin, ezetimibe) are projected to be core growth drivers, maintaining rapid growth and potential margin improvement [4] - CDMO business: Revenue may face pressure due to changing client demands, but the company is actively pursuing new project opportunities to maintain stability [4] - Formulation business: Expected to continue rapid growth due to expanding market channels, despite a small revenue base [4] - Acetonitrile project: The annual production capacity of 20,000 tons has passed acceptance in January 2026, targeting high-end fields such as peptides and small nucleic acids [4] Group 4: Profitability and Cost Management - Sartan raw materials maintain a gross margin above 30% despite competitive pricing pressures, with expectations for stable margins as prices stabilize [5] - Non-sartan raw materials' gross margin is expected to improve as production increases and costs decrease, aiming to align closer to sartan products [5] Group 5: R&D and Sales Expenses - The company's overall R&D investment will remain stable at approximately 2.5-2.8 billion annually, with a rising proportion allocated to raw materials and CDMO R&D [5] - Sales expenses are increasing rapidly in the formulation business due to its growth, with the company enhancing marketing control through digital systems [5]

Group 1: Financial Performance - The company's CDMO business revenue for 2025 is projected at 136 million yuan, showing a decline of approximately 4% compared to the previous year, indicating stable market demand [2] - The company has invested 105 million yuan in formulation R&D for 2024, with capitalized expenditures amounting to 23.9 million yuan [3] - The formulation business is expected to reduce losses by approximately 40 million yuan in 2024 compared to 2023 [3] Group 2: Market Position and Growth - The company achieved a sales volume of 1,744 tons for sartans in 2024, capturing about 24% of the global market demand of 7,233 tons [7] - Non-sartan revenue reached 559 million yuan in 2024, reflecting a growth of 45.5% compared to 2023, indicating a strong upward trend [7] - The company has obtained 63 formulation approvals, enhancing its product pipeline and market presence [8] Group 3: Customer Concentration - The combined sales from the top five customers accounted for 40.18% of total sales in 2024, a decrease from 44.97% in 2023, with no significant change exceeding 10 percentage points [6] Group 4: Strategic Initiatives - The company has not introduced third-party platform traffic resources for e-commerce channels [4] - Continuous investment in CDMO R&D is planned for 2024, with projected revenue of 366 million yuan primarily serving original drug companies during patent periods [5]