Against the backdrop of a weak economic environment in 2023, the medical and aesthetic industry showed a strong growth momentum. The latest financial data from the Hong Kong stock Sihuan Pharmaceutical also confirms this. In 2023, Sihuan Pharmaceutical's medical and aesthetic business revenue both achieved high growth, with revenue of 450 million yuan, up 200% year on year, and segment profit of 90 million yuan, up 2450% year on year.
However, the company not only shines on the high-growth medical and aesthetic circuit, but its innovative drug business will also usher in an intensive harvest period for various products during the year, showing the dual characteristics of high growth and high value.
Furthermore, from an investment perspective, Sihuan Pharmaceutical currently has a significant margin of safety, and its diversified layout of medical aesthetic+innovative drugs+generic drugs also satisfies investors' dual needs for diversified growth and risk diversification.
Medical Aesthetics | Comprehensive layout, card position, botulinum toxin first-mover advantage, and combination with hyaluronic acid to expand the blue ocean of medicine and beauty
The company's medical and aesthetic platform “Beauty Space” has a broad product layout. It has more than 40 self-developed and exclusive agent products, including more than 10 self-developed products of three types of devices and more than 20 self-developed second-class products.
Specifically, it includes a variety of high-quality medical and aesthetic products, including fillers, contouring, supplements, optoelectronic equipment, body sculpting, and skin care, providing beauty lovers with medical and aesthetic solutions covering the entire life cycle.
Source: Company information, compiled by Gelonghui
Among them, in the filling field, the hyaluronic acid product Boanrun, the company's exclusive agent for Hugel, has been successfully marketed. The compound collagen filler, baby face needle, and teen needle developed by the company have each entered the clinical end and pre-registration stage, and the clinical progress of Korean collagen products is also progressing steadily; in the field of wrinkle removal, the company's exclusive agent Hughel's Botox Lebo has also been successfully marketed; the nursing product Baby Face Hydrating Gel Jialeyan has also been successfully marketed for anti-aging and maintenance needs.
Furthermore, in March of this year, the company's exclusive agent, Sylfirm X, was approved. It is the world's first dual-wave radiofrequency treatment device approved by the FDA and NMPA. It has multiple effects including facial and body tightening and lifting, stretch marks, acne scars, melasma, and hair regeneration.
The diversified matrix formed by various listed products has become a new engine for the growth of corporate value. Moreover, new trends show that the medical and aesthetic industry is upgrading in the three directions of collagen, botulinum toxin, and diet pills. Sihuan Pharmaceutical has a layout, and progress is at the forefront.
Good products require good channels, and the promotion and sale of medical and aesthetic products must first be carried out to B-side doctors and medical and aesthetic institutions, and then influence C-side consumers through them.
In terms of channels, the company comprehensively strengthens cooperation with leading group hospitals and leading regional institutions through the optimization of direct management and agency marketing strategies. The city covers 350+, and medical institutions cover 4700+, achieving full coverage in the top 500 medical institutions, and reaching strategic cooperation with 680 large and medium-sized medical and aesthetic hospitals and chain institutions.
Source: Company information, compiled by Gelonghui
Through active adjustments in sales models and channels, the medical and aesthetic division's performance exploded in 2023, and the overall revenue share also increased by 17.3 percentage points, further highlighting the strategic position of medicine and aesthetics.
Source: Company information, compiled by Gelonghui
Pharmaceutical business|Multiple generic drugs were launched within the year, and innovative drugs gradually gained prominence
In addition to the medical and aesthetic business under the spotlight, the upgrading and transformation of the company's pharmaceutical sector business is also progressing steadily. Among them, the generic drug business is the company's steady “cash cow” business, which continues to provide a stable basic market for the company, and the company's innovative drug business focusing on long-term value is also gradually gaining momentum.
During the year, 13 generic drugs were approved for listing, and 8 products were included in the national health insurance catalogue. These products injected new vitality into the company's pharmaceutical business revenue and further consolidated its position as a stable profit and cash flow.
In addition, the innovative business is operated by its two major innovative drug platforms, Huisheng Biotech and Xuanzhu Biotech. There are more than 60 innovative drugs/biopharmaceutical pipelines, covering various high-potential fields such as diabetes, weight loss, breast cancer, and tumors.
Source: Company information, compiled by Gelonghui
As mentioned earlier, the layout of simeglutide was developed by Huisheng Biotech.
Huisheng Biotech is currently one of the few companies in China that has achieved full product coverage and integrated R&D, production and marketing in the field of diabetes and complications.
In addition to laying out targets such as simeglutide and innovative SGLT-2 inhibitors, the company also has a number of generic drugs for diabetes. In 2023, Huisheng Biotech successfully approved 7 drugs, including Mendon insulin injection, Mendong insulin 30 injection, and Mendong insulin 50 injection. In addition, a total of 5 drugs, including Degumendon double insulin injections, were also declared for marketing.
Source: Company information, compiled by Gelonghui
Xuanzhu Biotech is one of the companies with the most comprehensive layout on the domestic breast cancer circuit, and also has the ability to develop small and large molecule biopharmaceuticals.
In 2023, the company's self-developed proton pump inhibitor (PPI) amneprazole sodium enteric tablets were approved for marketing, and successfully included in the national medical insurance catalogue in the same year. The PPI domestic market is large. According to statistics, in the first half of 2023, 4 PPI products sold more than 1 billion yuan in grade hospitals and retail markets. Among them, PPI's innovative drug iprazole sold first, with sales reaching 1,726 billion yuan. Aneprazole sodium is a new generation PPI innovative drug, which is expected to bring a larger market;
Pirosinib (CDK4/6 inhibitor) is used in patients with HR+/HER2- advanced breast cancer and advanced prostate cancer, and has BIC potential. Among them, NDA applications for the treatment of advanced breast cancer have been accepted by the NMPA (China State Drug Administration) for the treatment of advanced breast cancer, the single drug terminal and the second line of injection combined with fluvirizin. After marketing, it is expected to become the first and only single-drug terminal effective product in China for patients with HR+/HER2- advanced breast cancer, and will be one of the major varieties for treating breast cancer in the future.
Source: Company information, compiled by Gelonghui
Precisely because of the company's high potential in the field of innovative drugs, the innovative drug business has been favored by investors in recent years. Xuanzhu Biotech, a subsidiary of the company, completed 2 rounds of financing from 19 to 21, with post-investment valuations of 4.5 billion yuan and 7 billion yuan respectively, which is a significant increase, and the company also has plans for future spin-off and listing; in 2023, Huisheng Biotech completed 580 million yuan A+ financing, with an overall post-investment valuation of 5.58 billion yuan.
Judging from the valuation of the company's innovative pharmaceutical subsidiaries, any valuation has already exceeded the overall market value of Sihuan Pharmaceutical, and there is an obvious inversion.
epilogue
In addition, the company's accounts have a total of 4.611 billion dollars in cash and cash equivalents, wealth management products, and time deposits, and net assets of 5.14 billion yuan, all exceeding the current market value of the company, providing sufficient margin of safety for investors.
Using generic drugs as the cornerstone, stabilizing the basic market, as the company's high-growth medical and aesthetic business continues to grow and the high-value innovative drug business accelerates, the company will usher in a profit inflection point. In the current situation where the company's market value is undervalued, investors are concerned at the right time.