Core Viewpoint - Sino Biopharm is undergoing a significant transformation focused on innovation, with a robust pipeline in key therapeutic areas and strong financial support from biosimilars and generics [1][2] Group 1: Innovation and R&D - Sino Biopharm has increased its R&D investment to 17.6% of total revenue in 2024, up from 9.9% in 2019 [1] - By the end of 2024, 17 innovative drugs, including biosimilars, are expected to contribute 42% of total revenue, compared to only 11% in 2015 [1] - The company has completed more than 3 deals on average annually from 2019 to 2024 to enhance its innovative pipeline [1] Group 2: Key Therapeutic Areas - The company focuses on four core therapeutic areas: oncology, liver/metabolism, respiratory, and surgery/analgesia [1][2] - In oncology, Anlotinib has 9 approved indications and 4 under review, with potential for first-line treatment combinations [3] - The PDE3/4 inhibitor TQC3721 is positioned as a potential blockbuster for COPD and is a candidate for overseas licensing [4] Group 3: Sales and Market Performance - The combined sample-hospital market size for seven approved biosimilars reached RMB24 billion in 2024, with rapid sales expected, particularly for pertuzumab [4] - The generics business has shown resilience, with revenue growth of 3.1% YoY in 2024, despite policy shifts in China [4] - The impact of volume-based procurement has been minimized, with only 1% of total revenue affected in 2024 [4] Group 4: Financial Projections - The company is initiated with a BUY rating and a target price of HK$9.40, forecasting revenue growth of 11.4%/10.5%/9.6% YoY for 2025E/2026E/2027E [5] - Adjusted net profit is projected to grow by 12.2%/11.5%/10.5% YoY for the same periods [5] - The target price implies a 37x 2026E adjusted P/E based on a 10-year DCF model [5]