East Sunshine medicine: can the epidemic help the company "Davis double click"

Introduction: it focuses on the opportunities and challenges faced by dongyangyao The epidemic of pneumonia in Wuhan not only affects the hearts of the whole country, but also affects the global capital market Since the beginning of 2020, pharmaceutical stocks have been affected by this event In turn, those offline consumption industries, such as leisure services, restaurants and hotels, have suffered a very significant negative impact In a large number of pharmaceutical stocks, many companies are sought after by the main funds because of their products related to the epidemic, and the share price has also increased in turn Among them, as the leading manufacturer of oseltamivir phosphate (trade name: corway) in China, dongyangyao (HK: 01558) listed in Hong Kong has the company's key participation in the outbreak of influenza virus in previous years, in addition to benefiting from the Wuhan epidemic So, can the "Wuhan pneumonia epidemic" help the company realize "Davis double click"? Today, I come to in-depth study and analysis 01 daichan, formerly known as Yichang Changjiang Pharmaceutical Co., Ltd., was founded on August 8, 2001 and restructured into a joint stock limited company in 2015 It was listed on the main board of Hong Kong Stock Exchange on December 29, 2015, with its headquarters in Yidu City, Hubei Province Dongyangyao is a pharmaceutical enterprise specializing in the development, production and sales of antiviral, endocrine and metabolic diseases, cardiovascular diseases and other treatment fields As of June 30, 2019, the company has produced, promoted and sold a total of 38 pharmaceutical products in China, produced 11 kinds of APIs (most of which are for its own use), and established a huge product distribution network in China The company's first major business is antiviral drugs Antiviral products are used to treat and prevent virus infection (including avian influenza) At present, 7 antiviral products are produced and sold in China, of which the most important and best-selling product is oseltamivir phosphate Dongyangyao is the only manufacturer of oseltamivir phosphate granules in China The company's sales area is mainly in the Chinese market In China, oseltamivir phosphate has been recommended by the national health and Family Planning Commission as the first choice drug for the treatment of H1N1 and h7n9 influenza As early as 2014, the company ranked among the top four pharmaceutical companies in China's anti influenza product market The company's core product, Kewei, ranked first in sales in China in 2013 and 2014 At the same time, the company will expand its products to other treatment areas, such as digestive system diseases, especially insulin series products (used to treat diabetes), which is expected to promote the further growth of the company's business and profitability Up to now, there are 34 generic drugs reported for production, 25 of which have been approved for listing in the United States or the European Union, 5 of which have been approved for production, and they are deemed to have passed the consistency evaluation according to the rules The company has previously said that it expects to add 2-4 new drugs, 3-5 biological drugs, 3-6 us first generic drugs and 70-100 domestic and foreign high-end generic drugs to the market by 2020 In addition, the company is also gradually implementing the research and development of innovative drugs In September 2019, the company's independently developed new anti hepatitis C Class 1 drug, imitavir phosphate, was accepted by the State Food and drug administration This means that dongyangyao has entered the business model of "combination of imitation and creation" 02 how is the performance? First of all, let's look at the performance of Xiadong sunshine pharmaceutical since 2014 (click to see the big picture) from the above two figures, we can see that the operating revenue and net profit of dongyangguang pharmaceutical keep a steady rise, especially the growth rate of total revenue is very fast During the five years from 2014 to 2018, the company's annual average compound growth rate of total revenue reached 41.59%, and the CAGR of net profit was as high as 47.51% The rapid growth of the company's performance is mainly due to the continuous high growth of sales volume of the company's core product "Kewei" On January 2, 2020, dongyangyao announced that "it is expected that the company's turnover of the group for the year ended December 31, 2019 will be about 6.22 billion yuan, an increase of about 145% compared with that of 2018, and the company's turnover of the group for the fourth quarter of 2019 will be about 1.78 billion yuan, an increase of about 125% compared with the same period of last year." According to the announcement, the expected growth of the company's turnover is mainly due to the continuous growth of the company's core product sales volume, the continuous expansion of the company's product portfolio, the continuous improvement of the company's product penetration in the national medical institutions and the company's continuous strengthening of the promotion of products in the professional academic market According to the current growth rate of the company's performance, it will be soon to break through the revenue scale of 10 billion yuan At present, dongyangyao has core products such as corway, ertongshu, omeetin, xinhaining and Xining By the end of 2018, the sales of these products accounted for 89.50%, 3.93%, 2.27%, 1.20% and 1.70% of the total revenue respectively Since 2015, the operating revenue of "Kewei" series products has accounted for more than 60% of the company's total revenue By the first half of 2019, the sales revenue of this product has reached 2.93 billion yuan, with a year-on-year growth of 116.5%, accounting for more than 95% of the total revenue, with a year-on-year growth of 116.5%, which also means that the sales revenue in the half year has exceeded the whole year of 2018 (2.247 billion yuan), which shows that its growth momentum is very strong As we all know, the "Kewei" products independently developed by dongyangyao belong to generic drugs The original research drug, oseltamivir, was initially developed by Gilead Science Co., Ltd., but due to its inability to bear the huge investment in clinical research and development in the later stage, it is necessary to transfer the patent to Roche pharmaceutical, a world-famous multinational pharmaceutical company, and the latter is responsible for the global commercial promotion Oseltamivir phosphate, whose trade name is "Tamiflu", was approved to be listed in China in 2002 It has therapeutic and preventive effects on influenza caused by influenza A, B, H5N1, H9N2 and other subtypes But because influenza virus is a global problem, if Roche is the only manufacturer of Tamiflu, it will form a monopoly patent At the time of the global outbreak of avian influenza in 2005, Roche authorized the production and sales of oseltamivir to Shanghai Pharmaceutical Group Co., Ltd and Shenzhen dongyangguang Industrial Development Co., Ltd (the parent company of dongyangyao) in 2005 and 2006, respectively, when the patent did not expire under the dual pressure of insufficient production capacity and the government's compulsory production license Since then, dongyangyao has begun to improve the production process of oseltamivir, becoming the first approved non azide route production of oseltamivir phosphate in the world, and the third enterprise in the world to produce oseltamivir At present, it has developed into the world's largest production base of oseltamivir API Under the premise that the efficacy and safety of "Kewei" is equal to that of Tamiflu, the company has created a unique global granule type, including 15mg and 25mg specifications, while Tamiflu only has 75mg specifications As influenza virus not only affects the health of middle-aged and elderly people, but also the market development space of children's influenza drugs is very large, the particles developed by dongyangyao are more convenient for children to take The most important thing is that corway's price is only 60% of Tamiflu's price, which can be described as good quality and low price After that, corway has been continuously included in the national essential drugs catalogue of 2017 and 2018, causing a large increase in sales According to the data of minenet, in 2018, the sales volume of terminal corway (oseltamivir phosphate capsules / granules) in public medical institutions in China was 2.2 billion yuan, an increase of 46.7% over the previous year In recent years, corway's sales volume has grown rapidly In 2013, the sales volume was less than 100 million yuan In the first half of 2019, the sales volume reached 2.93 billion yuan In less than eight years, the sales volume has increased nearly 30 times In addition, according to the competition pattern of oseltamivir phosphate terminal in China's public medical institutions in 2018, "Covey" accounted for 85.16% of the market share At the same time, it also means that at present, the domestic market of oseltamivir has formed a competition pattern of "tripartite confrontation" among dongyangyao, Roche and Shangyao Why does Roche pharmaceutical "teach apprentices to die of starvation"? This is mainly because compared with the original research drug, "Kewei" has advantages in price, and also has a strong sales team Moreover, the latter can be reimbursed about 80% when entering the medical insurance category B directory, which makes oseltamivir in a dominant position in the market (click to see the big picture) from the expenditure since 2015, we can see that as a typical pharmaceutical enterprise, dongyangyao, like other peers, has a very high expenditure on sales As of June 30, 2019, the company has a nationwide product distribution network and professional sales staff of 3123 This is 433 more than 2690 at the end of 2018 A large number of professional sales personnel are divided into four sales teams In addition to the public relations level II and above hospitals, they also strengthen the marketing of level I medical institutions, community clinics, pharmacies, etc But at the same time, the proportion of the company's management expenses and financial expenses in the sales revenue is decreasing year by year, which also ensures the high growth of the company's overall performance On February 20, 2019, the company announced that its core product, oseltamivir phosphate capsule (75mg), had been approved by the State Food and Drug Administration and passed the consistency evaluation, becoming the first and exclusive product in China to pass the evaluation The company's product is a single brand with the largest market share of oseltamivir phosphate in the Chinese market The success of the drug through the consistency evaluation is an authoritative recognition of the company's R & D capacity, production, drug quality and drug efficacy, and also enables the drug to gain advantages in future market expansion, medical insurance payment and other aspects In addition, the company's R & D team is fully promoting the consistency evaluation of oseltamivir phosphate granules In addition, benbromarone tablet (trade name: ertongshu) is also one of the key products of dongyangyao, and it is one of the main schemes for clinical treatment of hyperuricemia According to the data of minenet, in 2018, the sales volume of terminal anti gout preparations of public medical institutions in China was 1.639 billion yuan, an increase of 83.55% year on year At present, benbromarone tablet of dongyangyao is the only anti uric acid drug reviewed in China, which is likely to become a new growth point of the company's future performance It can be seen that the products developed by the company have certain market foresight, which is also due to the accurate positioning of the management on market sensitivity We see that since 2014, with the continuous high growth of "Kewei" sales volume, the company's overall gross profit margin has shown a steady rise In the middle of 2019, the gross profit of "Kewei" is about 2.499 billion yuan, accounting for 95.4% of the total gross profit of the company, while the gross profit rate of dongyangyao is 85.33% in the same period (click to see the big picture) before going public in 2014, the gross profit margin of dongyangyao was 72.82% Since its listing, the company has increased the sales volume of the core product "Kewei" independently researched and developed through continuous financing and expansion On the basis of the annual increase of the sales cost, the management cost and financial cost have been reduced year by year On the other hand, with the stimulation of the external factors of the large-scale outbreak of influenza virus in recent years, the performance of the company's antiviral drug business has increased It grows very fast Thus, under the influence of double factors, the gross profit margin of the company's overall sales growth is very high But at the same time, the product structure of dongyangyao has not changed much, and there is still the risk of a single large variety From 2016 to now, the company's main source of revenue is antiviral drugs, that is, the sales of corway Although it has other products, it accounts for a small proportion This also means that the company still takes the world's business model with large single products, which undoubtedly gives the company