Core Viewpoint - CICC has downgraded the net profit estimates for Lianbang Pharmaceutical (03933) for 2025 and 2026 by 8.9% and 1.1% to CNY 2.92 billion and CNY 2.62 billion respectively, due to pressure on raw material and intermediate prices [1] Group 1: Financial Performance - The company's 1H25 performance met CICC's expectations, with revenue of CNY 7.519 billion, a year-on-year increase of 4.8%, and a gross profit of CNY 3.924 billion, corresponding to a gross margin of 52.2%, up 5.6 percentage points year-on-year [2] - The pre-tax profit was CNY 2.420 billion, a year-on-year increase of 27.24%, and the net profit was CNY 1.894 billion, up 27.02% year-on-year, primarily benefiting from a one-time contribution from the UBT251 licensing fee and the volume increase of insulin series products [2] Group 2: Innovation and R&D - The company is entering a harvest period in innovation and has strategically focused on the GLP-1 sector, having reached an overseas rights licensing agreement with Novo Nordisk for UBT251 [3] - In 1H25, the company recognized licensing income of CNY 1.434 billion from UBT251, which completed its Phase II clinical enrollment for obesity indications in April 2025 and for diabetes indications in May 2025 [3] - The company has 43 human drug projects in development, including 22 first-class new drugs, and R&D expenses in 1H25 were CNY 499 million, a year-on-year increase of 11.7% [3] Group 3: Product Segments - In 1H25, the revenue from formulation products (excluding external licensing) was CNY 2.54 billion, a year-on-year increase of 6.1%, while segment profit was CNY 156 million, down 35.4% [4] - The insulin series revenue reached CNY 961 million, a year-on-year increase of 74.5%, with insulin analog sales up 90.4%, benefiting from increased domestic market share and overseas expansion [4] - The company has made progress in export business, with insulin products winning bids from the Brazilian Ministry of Health and antibiotics winning bids in the Malaysian market [4] Group 4: Raw Materials and Intermediates - In 1H25, intermediate revenue was CNY 1.011 billion, down 23.1% year-on-year, and segment profit was CNY 635 million, down 40.6% [5] - Raw material revenue was CNY 2.530 billion, a year-on-year decrease of 27.0%, with segment profit at CNY 251 million, down 52.0%, primarily due to price declines of products like 6-APA and a temporary drop in antibiotic demand [5] - The company expects the production capacity of its raw material projects in Zhuhai and Inner Mongolia to commence in October 2025 [5]

Core Viewpoint - The company reported its 1H25 performance, showing a revenue of 7.519 billion yuan, a year-on-year increase of 4.8%, driven by one-time contributions from licensing fees and insulin series sales [1] Group 1: Financial Performance - Revenue for 1H25 reached 7.519 billion yuan, up 4.8% year-on-year [1] - Gross profit was 3.924 billion yuan, with a gross margin of 52.2%, an increase of 5.6 percentage points year-on-year [1] - Pre-tax profit amounted to 2.420 billion yuan, reflecting a year-on-year growth of 27.24% [1] - Net profit was 1.894 billion yuan, also up 27.02% year-on-year [1] Group 2: Development Trends - The company is focusing on the GLP-1 sector, having reached an overseas licensing agreement with Novo Nordisk for UBT251 [1] - In 1H25, the company recognized licensing income of 1.434 billion yuan from UBT251, which is undergoing clinical trials for obesity and diabetes in China [1] - R&D expenses in 1H25 were 499 million yuan, a year-on-year increase of 11.7%, with 43 drug projects in development, including 22 first-class new drugs [1] Group 3: Product Segments - Insulin product revenue (excluding external licensing) was 2.54 billion yuan, up 6.1% year-on-year, with insulin series revenue reaching 961 million yuan, a significant increase of 74.5% [2] - The company has successfully expanded its export business, securing contracts for insulin products with the Brazilian Ministry of Health and antibiotics in Malaysia [2] - Revenue from intermediates was 1.011 billion yuan, down 23.1% year-on-year, while raw material drug revenue was 2.530 billion yuan, down 27.0% year-on-year [2] Group 4: Profit Forecast and Valuation - Due to pricing pressures on raw materials and intermediates, the company has lowered its net profit forecasts for 2025 and 2026 by 8.9% and 1.1% to 2.920 billion yuan and 2.621 billion yuan, respectively [3] - The current stock price corresponds to a price-to-earnings ratio of 9.5 times for 2025 and 10.4 times for 2026 [3] - The company maintains an outperform rating and a target price of 19.00 HKD, indicating a potential upside of 23.9% from the current stock price [3]

Core Viewpoint - Federal Pharmaceutical (03933) has seen a stock increase of over 4%, currently trading at HKD 17.61, with a transaction volume of HKD 147 million. The company anticipates a net profit of approximately RMB 1.85 billion for the first half of the year, representing a year-on-year growth of about 24.06% compared to RMB 1.49 billion in the same period last year [1]. Financial Performance - The increase in net profit is primarily attributed to a rise in licensing fee income from Novo Nordisk, amounting to approximately RMB 1.1 billion [1]. - However, there has been a decline in segment profits for intermediates by approximately RMB 430 million and for active pharmaceutical ingredients by about RMB 270 million, partially offsetting the net profit growth [1]. Product Development - In March of this year, Federal Pharmaceutical granted exclusive overseas rights (excluding Greater China) for UBT251 to Novo Nordisk. UBT251 is noted as the first domestic three-target weight loss drug licensed to a multinational corporation at a high price [1]. - Currently, UBT251 has initiated four clinical trials in China, with expectations for significant progress in overweight/obesity indications by the second half of 2025. Phase II clinical trials are anticipated to be completed by the first half of 2026, with a potential market approval in China by 2028 [1]. - The conservative sales peak for UBT251 in the domestic market is projected to be RMB 7.7 billion, while the overseas sales peak is estimated at USD 6 billion. Assuming a 50% success rate for market approval, the risk-adjusted sales peak is expected to be RMB 3.8 billion domestically and USD 3 billion overseas [1].

消息面上，联邦制药发布公告，预期上半年净溢利约为18.5亿元人民币，去年同期为14.91亿元，同比增 长约24.06%。公告称，净利润上升主要由于来自诺和诺德股份（600110）有限公司的许可费收入增 加，约为11亿元。然而，与2024年同期相比，中间体产品的分部利润下降约4.3亿元，原料药的分部利 润下降约2.7亿元，部分抵消了净利润的增长。 据悉，今年3月，联邦制药将UBT251的海外权益(除大中华区外)独家授权给诺和诺德。国投证券指出， UBT251为国内首个以较高对价授权MNC的三靶点减重药物，目前UBT251在国内已开启四项临床试 验，从进度上来看，预计超重/肥胖适应症有望于2025年下半年取得关键进展，2026年上半年有望完成 国内二期临床，并预计有望于2028年国内获批上市。该行预计UBT251仅在减重适应症上，保守有望实 现国内销售峰值77亿元、海外销售峰值60亿美元，假设50%的上市成功率，国内风险调整后的销售峰值 为38亿元、海外风险调整后的销售峰值为30亿美元。 联邦制药(03933)再涨超4%，截至发稿，涨3.59%，报17.61港元，成交额1.47亿港元。 ...

据悉，今年3月，联邦制药将UBT251的海外权益（除大中华区外）独家授权给诺和诺德。国投证券指 出，UBT251为国内首个以较高对价授权MNC的三靶点减重药物，目前UBT251在国内已开启四项临床 试验，从进度上来看，预计超重/肥胖适应症有望于2025年下半年取得关键进展，2026年上半年有望完 成国内二期临床，并预计有望于2028年国内获批上市。该行预计UBT251仅在减重适应症上，保守有望 实现国内销售峰值77亿元、海外销售峰值60亿美元，假设50%的上市成功率，国内风险调整后的销售峰 值为38亿元、海外风险调整后的销售峰值为30亿美元。 智通财经APP获悉，联邦制药(03933)再涨超4%，截至发稿，涨3.59%，报17.61港元，成交额1.47亿港 元。 消息面上，联邦制药发布公告，预期上半年净溢利约为18.5亿元人民币，去年同期为14.91亿元，同比增 长约24.06%。公告称，净利润上升主要由于来自诺和诺德股份有限公司的许可费收入增加，约为11亿 元。然而，与2024年同期相比，中间体产品的分部利润下降约4.3亿元，原料药的分部利润下降约2.7亿 元，部分抵消了净利润的增长。 ...

Investment Rating - The report maintains an investment rating of "Outperform" [4] Core Insights - Novo Nordisk's semaglutide has received FDA approval for a new indication for the treatment of Metabolic Dysfunction-associated Steatotic Liver Disease (MASH), which is expected to increase the sales scale of GLP-1 drugs beyond diabetes and weight loss indications [21][24] - The report highlights the significant market potential for GLP-1 drugs and the deep positioning of domestic companies in this field, particularly regarding overseas licensing opportunities for domestic GLP-1 products [25] Summary by Sections Weekly New Drug Market Review - From August 11 to August 17, 2025, the top five gainers in the new drug sector were: Beihai Kangcheng (+35.6%), Basilea Pharmaceutica (+32.6%), Deqi Pharmaceuticals (+30.2%), Heyu Biotech (+30.1%), and Gilead Sciences (+29.7%). The top five losers were: Boan Biologics (-11.6%), Laika Pharmaceuticals (-3.9%), Ailis (-3.2%), Nossland (-1.2%), and CanSino Biologics (-1.1%) [16][18] Recommended Stocks - The report suggests focusing on domestic GLP-1 products for overseas licensing, including: 1. RAY1225 from Zhongsheng Pharmaceutical for GLP-1/GIP dual weekly administration 2. ASC30 from Gilead Sciences for oral GLP-1 small molecules 3. BGM0504 from Borui Pharmaceuticals and ZX2021 from Kangyuan Pharmaceuticals for multi-target GLP-1 receptor agonists 4. UBT251 from Lianfa Pharmaceuticals and HS-10535 from Hansoh Pharmaceutical for already licensed MNC products [20][25] Key Analysis of the New Drug Industry - The approval of semaglutide for MASH marks it as the first GLP-1 therapy approved for this condition, expanding treatment options for patients and potentially increasing market size [21][24] New Drug Application Approvals and Acceptances - This week, there were 6 new drug applications accepted, including semaglutide injection from Huisheng Biopharmaceutical and others [29][31] Clinical Application Approvals and Acceptances - This week, 18 new drug clinical applications were approved, and 39 new drug clinical applications were accepted [32][35]

Group 1 - Xinda Biologics announced the official launch of its dual receptor agonist, Masitide, for weight management, which is the first GCG/GLP-1 dual receptor agonist approved for long-term weight control in adults in China [1] - Clinical data shows that Masitide can achieve a weight reduction of 21%, over 80% reduction in liver fat content, and significant improvements in cardiovascular and metabolic indicators [1] - The GLP-1 weight loss drug market has seen significant growth, with Novo Nordisk's semaglutide generating $16.5 billion in revenue and Eli Lilly's tirzepatide generating $14.7 billion in the first half of 2025 [1] Group 2 - The trend in GLP-1 weight loss drug development is shifting towards multi-target, long-acting, and oral formulations, with many domestic innovative pharmaceutical companies actively participating [2] - The popularity of GLP-1 drugs has been fueled by endorsements from high-profile individuals, leading to increased public interest and demand for these medications [3] - The market for GLP-1 drugs in China is estimated to be between 40 billion to 50 billion yuan, with significant potential for generic drugs as original patents expire [5] Group 3 - The competitive landscape for GLP-1 weight loss drugs is evolving, with various products entering the market, and companies need to adapt their commercialization strategies to succeed [6][9] - Regulatory requirements for GLP-1 products in China are stringent, necessitating large-scale clinical trials, which poses challenges for many companies [7] - Partnerships and business development (BD) opportunities are emerging as companies seek to expand their market presence internationally, with notable agreements already in place [8]

Core Viewpoint - The company is positioned as a leader in the antibiotic industry, with a diversified business model that includes intermediates, active pharmaceutical ingredients (APIs), and formulations, which is expected to drive a new growth cycle through business synergies [1] Group 1: Business Overview - The company has developed a comprehensive business structure encompassing intermediates (6APA, G potassium salt), APIs (Amoxicillin, Ampicillin), and formulations (animal health, insulin, generic formulations) [1] - The company is expected to see resilient growth in its core business driven by the removal of capacity constraints in animal health, increased coverage from insulin contract renewals, and the market launch of hard-to-copy biosimilars [1][2] - The stable cash flow from core businesses is anticipated to support ongoing innovation and transformation efforts, potentially leading to a new performance growth cycle [1] Group 2: Innovation and Clinical Development - The company successfully partnered with Novo Nordisk for its innovative product UBT251, a self-developed GLP/GIP/GCG tri-target drug, which has shown promising results in clinical trials [2] - UBT251 has completed Phase Ib clinical trials in overweight/obese patients, demonstrating a weight loss of 15.1% in the highest dosage group over 12 weeks [2] - The company has initiated Phase II clinical trials for UBT251 in China, with expectations for domestic approval by 2028, and has a pipeline of other products in the metabolic and autoimmune fields [2] Group 3: Revenue Projections - The company's formulation business is projected to achieve a CAGR of 8.0% from 2024 to 2027, driven by the establishment of new production bases and the introduction of new products [3] - The animal health business is expected to benefit from new production bases in Henan and Zhuhai, while insulin products are anticipated to see significant growth due to contract renewals and new product approvals [3] - The intermediate and API segments are forecasted to experience a CAGR of -7.0% from 2024 to 2027, with price stabilization expected in the medium to long term due to oligopolistic market conditions [3] Group 4: Financial Outlook - The company is projected to achieve net profits of 2.78 billion, 2.13 billion, and 2.27 billion yuan from 2025 to 2027, with year-on-year growth rates of 4.5%, -23.4%, and 6.9% respectively [4] - Corresponding PE multiples are expected to be 10, 13, and 12 times for the same period, with an initial recommendation of "buy" [4]

Investment Rating - The report gives a "Buy" rating for the company, with a target price of 16.16 HKD [6]. Core Insights - The company is positioned as a leader in the antibiotic industry, with a diversified business model that includes intermediates, active pharmaceutical ingredients, and formulations, which is expected to drive a new growth cycle [1][10]. - The innovative pipeline is showing promising results, particularly with UBT251, which has successfully partnered with a global leader in diabetes treatment, Novo Nordisk, indicating strong potential for future revenue [2][23]. - The company is expected to achieve a compound annual growth rate (CAGR) of 8.0% in its formulation business from 2024 to 2027, driven by various factors including the expansion of its animal health business and the approval of new insulin products [3][4]. Summary by Sections 1. Antibiotic Industry Leadership - The company has over 30 years of experience in the pharmaceutical industry, starting with antibiotic formulations and expanding into a fully integrated business model covering intermediates, active ingredients, and formulations [10]. - The company has established a strong cash flow from its core business, which supports its innovative transformation strategy [1][14]. 2. Innovative Pipeline - UBT251, a self-developed GLP-1/GIP/GCG three-target drug, has shown significant weight loss results in clinical trials, with a 15.1% reduction in weight over 12 weeks in the highest dosage group [22][40]. - The partnership with Novo Nordisk includes a potential total income of up to 2 billion USD, with an upfront payment of 200 million USD and milestone payments [23][24]. 3. Formulation Business - The formulation business is expected to grow steadily, with a projected CAGR of 8.0% from 2024 to 2027, supported by the expansion of animal health production and new insulin product approvals [3][4]. - The company’s insulin products have achieved significant market presence, with a 52.5% growth rate in basic volume [3]. 4. Intermediates and Active Pharmaceutical Ingredients - The intermediates and active pharmaceutical ingredients business is expected to see a CAGR of -7.0% from 2024 to 2027, primarily due to price fluctuations in key products [3]. - Despite short-term price declines, the long-term outlook remains stable due to a consolidated market structure [3]. 5. Financial Forecast - The company is projected to achieve net profits of 2.78 billion, 2.13 billion, and 2.27 billion RMB from 2025 to 2027, with corresponding growth rates of 4.5%, -23.4%, and 6.9% [4][5].

Summary of Federal Pharmaceuticals Conference Call Company Overview - Federal Pharmaceuticals is a publicly listed company established in 1990 and listed on the Hong Kong Stock Exchange in 2007. The company primarily operates in the pharmaceutical sector, focusing on APIs and formulations, including 6APA, penicillin, semi-synthetic penicillin, and cephalosporin antibiotics, as well as animal health products and human insulin [6][16]. Key Points and Arguments Product Development and Pipeline - **UBT251**: A GLP-1/GCG tri-target drug licensed to Novo Nordisk, showing significant weight loss results comparable to semaglutide over 24 weeks. Expected peak domestic sales by 2032 are projected to reach 4.3 billion yuan [2][3]. - **UBT37,034**: A neuropeptide Y2 receptor ligand that demonstrated a 13.6% weight loss effect in DIO mouse models when combined with tirzepatide. If clinical data is favorable, commercialization is anticipated [2][3]. - **TUR01,101**: A JAK1 inhibitor for atopic dermatitis, showing excellent efficacy and safety, expected to become a significant product in the future [2][5]. Financial Performance and Growth - Revenue growth from 2019 to 2024 is projected at a compound annual growth rate (CAGR) of 10.31%, increasing from 8.424 billion yuan to 13.759 billion yuan, driven by strong 6APA prices and the inclusion of recombinant human insulin in national medical insurance [2][6]. - The company anticipates a main business profit of 1.9 to 2 billion yuan in 2025, with total net profit expected to reach approximately 3.1 billion yuan, including an 1.1 billion yuan upfront payment from the UBT251 licensing deal [4][16]. Market Trends and Challenges - **6APA Pricing**: Prices have been on the rise from 2021 to 2024 but are expected to decline starting in the second half of 2024, stabilizing by the second half of 2025. Demand-side pressures remain a concern [9]. - **Penicillin Market**: Prices are projected to decline by about 10% in 2025, with a significant drop of approximately 20% in the first quarter of 2025 compared to the previous year [12]. - **Human Antibiotics**: Demand for human antibiotics has decreased due to lower flu incidence, with specific products like semi-synthetic penicillins and cephalosporins experiencing notable declines [13]. Animal Health Business - The animal health segment is expected to maintain good growth, benefiting from partnerships with major clients like Muyuan and New Hope. The market for veterinary antibiotics is projected to grow significantly, although growth may slow in 2025 due to new capacity coming online [4][14]. Future Outlook - The overall revenue growth for the company is expected to reach 14% in 2025, driven by insulin and animal health business growth, despite some pressure on raw materials and intermediates [16][17]. - The company’s low PE valuation suggests potential for an increase in market value as innovative drugs progress and existing business lines expand [17]. Additional Important Insights - The GLP-1 market is projected to reach 68 billion yuan domestically and 100 to 150 billion USD globally, with significant competition from products like semaglutide and tirzepatide [7][8]. - The company has successfully secured a bid for human insulin from the Brazilian Ministry of Health, which is expected to contribute significantly to revenue [6][15].