The time for the “first strain of growth hormone” to slow down has arrived.

On March 20, Changchun Hi-Tech (000661.SZ) released its 2023 financial report, showing that current revenue and net profit to mother were 14.566 billion yuan and 4.532 billion yuan respectively, up 15.35% and 9.47% year-on-year respectively.

This net profit growth rate to mother hit a record low since 2014.

On March 20, Changchun Hi-Tech closed down 2.57%.

Specifically, the current revenue and net profit growth rates of Changchun Jinsai Pharmaceutical Co., Ltd. (“Jinsai Pharmaceutical”), the core subsidiary responsible for growth hormone under Changchun Hi-Tech, were only 8.48% and 7.04% respectively, down 16.15 percentage points and 7.43 percentage points from 2022.

Moreover, with the increase in the number of entrants to the growth hormone circuit and the advancement of collection, the growth hormone living environment of Jinsai Pharmaceutical is deteriorating day by day.

As a core subsidiary of Changchun Gaoxin, whether Jinsai Pharmaceutical is expected to find the next growth point has attracted much attention.

Is growth hormone “difficult to grow”?

As a core subsidiary of Changchun Hi-Tech, Jinsai Pharmaceutical has the most comprehensive portfolio of growth hormones on the market.

According to the time of administration, Jinsai Pharmaceutical's growth hormone products cover long-acting injections that can be given once a week and short-acting injections that can be given once a day; according to the different forms of injections, growth hormone can be divided into water needles and powder needles. Among them, water needles are more convenient to use and have gradually replaced powder injections.

According to Changchun Hi-Tech's disclosure at an investor conference on March 20, sales of long-term growth hormone products are currently being promoted. In 2023, long-acting water needles, pink needles, and water needles will account for about 29%, 11%, and 59% of growth hormone product revenue, respectively.

Among them, the share of growth hormone in long-acting water injections increased by 5 percentage points compared to 2022.

Despite a complete product portfolio, the growth of Jinsai Pharmaceuticals has been sluggish.

In 2023, Jinsai Pharmaceutical's revenue was 11.084 billion yuan, up 8.48% year on year, down 16.15 percentage points from 2022. Net profit to mother during the same period was 4.514 billion yuan, up 7.04% year on year, up 7.43 percentage points from the previous year.

What is behind the deceleration may also indicate that the growth ceiling for growth hormone products is approaching.

In fact, Kinsey Pharmaceuticals' growth hormone still has many challenges to face.

On the one hand, China's growth hormone market has always been basically occupied by Jinsai Pharmaceutical. This is related to insufficient competition in the domestic growth hormone market.

According to public information, currently only Jinsai Pharmaceutical, Anke Biotech (300009.SZ), Kexing Pharmaceuticals (688136.SH), unnamed Haiji, and Cellbiotech have obtained registration certificates for short-acting growth hormone among domestic producers. However, since Kinsai Pharmaceuticals' growth hormone was marketed early, mainly water injections, and has a certain price advantage, it currently occupies most of the market share; in terms of long-acting water needle growth hormone, only one domestic manufacturer of Jinsai Pharmaceutical has obtained a registration certificate for this category.

However, the price of long-term growth hormone is much higher than that of short-acting growth hormone. There may be more market space in the future, which is also the market's expectation for Changchun Gaoxin.

But the number of entrants to long-lasting growth hormone is increasing.

On January 11 of this year, Tebao Biotech (688278.SH) announced that its long-acting human growth hormone marketing application has been accepted by the Drug Administration and is mainly used to treat growth disorders in children caused by insufficient secretion of endogenous growth hormone.

On March 8 of the same year, the Hong Kong Stock Exchange IPO project VISEN Pharmaceuticals (Weisheng Pharmaceutical) announced that the FDA had accepted the marketing license application for longpeitin. According to the announcement, this product is a weekly injection of long-lasting growth hormone, which is also used to treat growth hormone deficiency in children.

According to Weisheng Pharmaceutical, the mechanism of action of longpene growth hormone is different from other long-acting growth hormone analogues. After weekly administration, it can slowly release unmodified human growth hormone in a controlled manner in the body. The structure is consistent with endogenous growth hormone secreted by the human body, and the biological activity, mechanism of action, and physiological distribution are all the same as currently widely used daily growth hormone preparations.

In addition to this, some pharmaceutical companies are also promoting research and development of long-acting growth hormone.

On March 21 of this year, Kexon Pharmaceuticals announced that the clinical trial application for its Fc fusion protein long-acting growth hormone “GB08 injection” has been approved by the Drug Administration. The indication is also growth hormone deficiency in children.

Growth hormone, on the other hand, is gradually being incorporated into collection.

In February 2022, Jinsai Pharmaceutical won the bid for short-acting growth hormone powder in a collection process led by Guangdong Province. Since powder needles account for a relatively small share of revenue, this collection did not have a major impact on performance; however, water needles did not “escape” collection. In July 2023, Jinsai Pharmaceutical's short-acting water needle growth hormone won the bid for the fourth batch in Zhejiang Province.

“The company's single product is vulnerable to risk. As the number of competitors for growth hormone increases, if the collection area continues to expand, there is great uncertainty about whether the company can achieve 'price for volume' at that time.” An investor in the pharmaceutical industry in Beijing pointed out.

In this context, Changchun Hi-Tech's business structure that relies on growth hormone is being challenged.

Where to find the next growth point

Despite weak performance growth, Changchun Hi-Tech presented the market with the most impressive dividend plan in the past 3 years.

According to the profit distribution plan, Changchun Hi-Tech plans to distribute a cash dividend of 4.50 yuan per share to all shareholders based on 402 million shares. The total amount of dividends will reach 1,809 billion yuan, accounting for 39.92% of the current net profit returned to mother.

In 2022 and 2023, Changchun Hi-Tech will pay 0.80 yuan per share and 1 yuan per share to all shareholders.

Even so, the secondary market's reaction to Changchun Hi-Tech was not positive, and the closing price fell 2.57% on March 20.

Where is the next growth point of Changchun Hi-Tech has become a question for the market.

In response, Changchun Hi-Tech said it is expanding five major businesses: comprehensive pediatric medicine, women's health, adult endocrinology, dermatology, and oncology.

“Looking at 2023, Jinsai Pharmaceutical's product line layout in the non-pediatric sector mainly includes follicle-stimulating products, children's nutrition products, Jin Funing, and some new dermatological anesthetic cream varieties introduced last year, as well as the application of growth hormone products in the fields of assisted reproduction and adult anti-aging.” Changchun Hi-Tech said.

Changchun Hi-Tech is indeed increasing investment in R&D. In 2023, R&D expenses reached 1,724 billion yuan, accounting for 11.84% of revenue, an increase of 26.85% over the previous year.

However, looking at it now, it is difficult to replace the status of growth hormone in the research pipeline in the future.

Changchun Gaoxin already has 3 products approved for phase 3 clinical trials: recombinant human follicle-stimulating hormone-CTP fusion protein injections to promote multiple follicle development in women, leuprorelin injection emulsion for advanced prostate cancer, and quintuximab injections for advanced gastric or gastroesophageal adenocarcinoma.

However, as the birth rate declines, there is still uncertainty about whether the assisted reproduction business can become an “evergreen tree.”

At the same time, some products under development are not scarce. Take leuprorelin as an example. Currently, three companies have obtained registration certificates for similar products: Beijing Boente Pharmaceutical Co., Ltd., Lizhu Group (000513.SZ), and China Peptide Biochemical Co., Ltd. on the market.

The test facing Changchun Hi-Tech has only just begun.