Jiangsu Hengrui Pharmaceuticals (SHA: 600276), a China-based pharmaceutical company, has released its 2022 financial report, recording RMB 21.275 billion (USD 3.08 billion) in revenues, marking a 17.87% year-on-year (YOY) decrease. Innovative drugs contributed RMB 8.116 billion (USD 1.77 billion) to the total revenues. The net profit attributable to the owners of the parent company was RMB 3.906 million (USD 566.6 million), down 13.77% YOY, and the net profit attributable to the company’s shareholders after deducting non-recurring gains and losses was RMB 3.41 billion (USD 494.6 million), down 18.83% YOY.
Factors Contributing to Revenue Drop
The revenue decline is attributed to several factors:
① Since 2018, 35 of Hengrui’s products have been involved in the national volume-based procurement (VBP) tendering, with 22 winning bids and an average 74.5% price reduction. The 5th VBP round, effective from late-September, included eight drugs that generated only RMB 610 million (USD 88.48 million) in 2022 sales, down 79% YOY. The 7th round, implemented from November 2022, included five products, with sales falling 48% to RMB 980 million (USD 142.1 million).
② Apatinib, pyrotinib, PEGylated recombinant human granulocyte stimulating factor, remimazolam, fluzoparib, and herombopag have been marketed at National Reimbursement Drug List (NRDL) prices since January 1, 2022, following an average 33% price cut.
③ The daily diagnosis and treatment business in certain medical institutions declined, affecting product sales (such as anesthetic products), with the most significant issues in Zhengzhou, Shanghai, and Xi’an. Additionally, export orders were impacted.
Continued Focus on Research and Development (R&D)
Despite the revenue decline, Hengrui continues to invest in research and development (R&D), with investment reaching RMB 6.346 billion (USD 920.5 million) in 2022, up 2.29% YOY and accounting for 29.83% of sales revenue. Overseas R&D expenditure was RMB 1.272 billion (USD 184.5 million), making up 20.04% of total R&D investment.
Positive Growth in Q1 2023
A separate announcement shows that the company achieved RMB 5.492 billion (USD 796.8 million) during the first quarter of 2023, up 20.04% YOY, indicating a positive start to the year.-Fineline Info & Tech
