Cullen, zoom in! In the first half of the year, net profit tripled, and two class 1 new drugs challenged the global market of $1 billion

Highlights recently, Kelun pharmaceutical released the semi annual performance express in 2018 The company realized a net profit of 774 million yuan attributable to shareholders of listed companies, an increase of 202.17% over the same period In the first half of this year, five new drugs were approved for clinical application in Kelun pharmaceutical Up to now, 10 products are applying for conformity evaluation As a leading infusion company, what are the potential profit growth points of Kelun pharmaceutical in 2018? Let's dig deep   none="shifuMouseDownStyle('shifu_bus_002')" style="margin: 1em auto; padding: 0px; max-width: 100%; font-family: -apple-system-font, Bl inkMacSystemFont, "Helvetica Neue", "PingFang SC", "Hiragino Sans GB", "Microsoft YaHei UI", "Microsoft YaHei", Arial, sans-serif; font-size: 17px; letter-spacing: 0.544px; widows: 1; line-height: 25.6px; Color: rgb (62, 62, 62); border style: none none solid; text align: Center; border bottom width: 1px; border bottom color: rgb (0, 0, 0); box sizing: border box! Im assistant; word wrap: break word! Im assistant; "> blind! Net profit tripled in the first half of 2018 Figure 1: performance of Kelun pharmaceutical in the same period of 2015-2018 (unit: RMB 100 million) (data source: semi annual report of listed companies, semi annual performance express of 2018) According to the 2018 semi annual performance express of Kelun pharmaceutical, the company's operating revenue in the first half of the year was 7.792 billion yuan, up 57.68% year on year, and the net profit attributable to shareholders of listed companies was 774 million yuan, up 202.17% year on year The main factors for the rapid growth of performance include: in the first half of 2018, the company strengthened market development and continued optimization of product structure, sales volume and sales revenue of infusion and non infusion preparations continued to grow; the production capacity of Ili CHUANNING was released, and it gradually reached full capacity in the first half of 2018; and the investment income of joint venture shisiyao group increased   In addition, with the further implementation of the "two vote system" policy, the company's marketing has reduced the intermediate links, increased the development of sales end customers, and increased the market maintenance costs; the company has continued to vigorously promote the "innovation driven" strategy, with the increase of R & D costs; the expansion of business scale, the increase of depreciation, wages, repair costs, etc.; the increase of net financing, the change of exchange rate, and the continuous rise of market interest rate and other factors The result is an increase in financial expenses Figure 2: net profit of Ili CHUANNING in the same period of 2015-2018 (unit: 100 million yuan) (data source: semi annual report of listed companies) Ili CHUANNING is a subsidiary invested and established by Kelun pharmaceutical in Yining Industrial Park, Horgos Economic Development Zone, Xinjiang in December 2010 It is the main unit of the construction project of 10000 tons of antibiotic intermediates The construction of the project started on April 22, 2011 The erythromycin thiocyanate production line and supporting public system of the first phase of the project have been completed and officially put into production The trial production of the second phase of the project was carried out at the end of 2015 According to the data of semi annual report, Ili CHUANNING has carried out phased production suspension and production restriction since late January 2015, resulting in an increase of temporary operating loss of Ili CHUANNING project, with a net profit loss of RMB 60.56 million in the first half of 2015 In the first half of 2016, the overall production and sales of CHUANNING phase I sulfur red project was stable and profitable, with a net profit of 11.37 million yuan after stamp tax, real estate tax and land use tax were paid In the first half of 2017, Ili CHUANNING phase I sulfur red production line maintained continuous full load production The penicillin production line of phase II project from January to April was periodically full load production, and the cephalosporin (7-ACA) production line was adjusted and changed at 50% of the production capacity However, due to the failure to receive the corresponding EIA change approval in time, the production of phase II project was relatively low, with a loss of 78.06 million yuan in the first half of 2017 In the first half of 2018, the production capacity of CHUANNING in Ili was released and gradually reached full capacity The operating revenue was 1.645 billion yuan, an increase of 69.69% year on year, and the net profit was 350 million yuan, an increase of 548.06% year on year none="shifuMouseDownStyle('shifu_bus_002')" style="margin: 1em auto; padding: 0px; max-width: 100%; font-family: -apple-system-font, Bl inkMacSystemFont, "Helvetica Neue", "PingFang SC", "Hiragino Sans GB", "Microsoft YaHei UI", "Microsoft YaHei", Arial, sans-serif; font-size: 17px; letter-spacing: 0.544px; widows: 1; line-height: 25.6px; Color: rgb (62, 62, 62); border style: none none solid; text align: Center; border bottom width: 1px; border bottom color: rgb (0, 0, 0); box sizing: border box! 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Two new drugs of category 1 will impact the global $1 billion market Table 1: the application of new drug clinical products by Kelun pharmaceutical in the first half of 2018 (data source: Med China drug review database 2.0, as of August 6, 2018) A166 for injection is the world's first third generation anti her2adc with innovative linker and high activity toxin small molecule through the quantitative coupling of lysine It is intended to be used in the treatment of HER2 positive breast cancer, gastric cancer and other malignant tumors In the world, only kadcyla (ADO trastuzumab), a Roche company, is an ADC drug targeting HER2 It was approved by FDA in 2013 and used to treat HER2 positive metastatic breast cancer patients It has not been listed in China yet According to the performance database of MNCs on midnet, Roche's global sales of kadcyla (ADO trastuzumab) in 2015-2017 were CHF 769 million, CHF 831 million and CHF 914 million, respectively As of May 2018, Kelun pharmaceutical has invested about 32 million yuan in the research and development project of a166 for injection Kl130008 capsule, as a small molecule JAK inhibitor, realizes immune regulation through JAK-STAT signal pathway and is intended to be used in the treatment of rheumatoid arthritis JAK inhibitor is the only approved small molecule targeted drug for the treatment of rheumatoid arthritis in the world Compared with traditional treatment drugs and biological anti rheumatic drugs, it has the advantages of improving the condition, good safety and convenient oral medication It has the same therapeutic status as biological preparation in the authoritative foreign guidelines The global JAK inhibitors for rheumatoid arthritis treatment are currently available in Pfizer's xeljanz (tofetinib citrate) and Lilly's lumiant (barketinib) According to the performance database of MNCs on midnet, the global sales of Pfizer's xeljanz (tofatinib citrate) in 2015-2017 were US $523 million, US $927 million and US $1.345 billion, respectively; the global sales of Lilly's lumiant (barricatinib) in 2017 were US $45.9 million As of June 2018, Kelun pharmaceutical has invested about 7.6 million yuan in the R & D project Kl280006 injection is a selective peripheral κ opioid receptor agonist developed by Kelun Pharmaceutical Co., Ltd with independent intellectual property rights It can achieve effective analgesia while avoiding the adverse reactions of central analgesic drugs It is intended to be used for the treatment of acute pain (such as postoperative pain) At present, there is no peripheral selective kappa receptor agonist drugs approved for marketing in the world According to the data of minenet, in 2017, the market scale of terminal chemical opioids in China's urban public hospitals, county-level public hospitals, urban communities and township health centers (referred to as China's public medical institutions) rose to 8.57 billion yuan, an increase rate of 26.05% As of July 2018, the company has invested about 8 million yuan in the research and development project of kl280006 injection   none="shifuMouseDownStyle('shifu_bus_002')" style="margin: 1em auto; padding: 0px; max-width: 100%; font-family: -apple-system-font, Bl inkMacSystemFont, "Helvetica Neue", "PingFang SC", "Hiragino Sans GB", "Microsoft YaHei UI", "Microsoft YaHei", Arial, sans-serif; font-size: 17px; letter-spacing: 0.544px; widows: 1; line-height: 25.6px; color: rgb(62, 62, 62); border-style: none none solid; text-align: center; border-bottom-width: 1px; border-bottom-color: rgb(0, 0, 0); box-sizing: border-box !im portant; word-wrap: break-word !im portant; "> one product has passed the conformity assessment, and 10 products are in the process of approval Table 2: product situation of conformity assessment application of Kelun pharmaceutical industry (data source: Med China drug review database 2.0, as of August 6, 2018) Figure 3: brand pattern of escitalopram oxalate tablet, the terminal chemical of public medical institutions in China in 2017 (data source: terminal competition pattern of China's public medical institutions on the Internet) escitalopram oxalate tablet is the first product that has passed the consistency evaluation in the Kelun pharmaceutical industry According to the data from the Internet, the terminal sales of this product in China's public medical institutions in 2017 was 1.5 billion yuan In recent years, the market share of Lingbei, the leading enterprise, has gradually declined, from 54.01% in 2013 to 44.38% in 2017 Domestic enterprises are following the trend and the market share is rising, among which Shandong Jingwei pharmaceutical and Sichuan Kelun pharmaceutical have more than 10% market share Table 3: application for conformity assessment of escitalopram oxalate tablets (data source: Med China drug review database 2.0, as of August 6, 2018) At present, except Sichuan Kelun Pharmaceutical Co., Ltd and Hunan Dongting Pharmaceutical Co., Ltd., the three acceptance numbers of Shandong Jingwei Pharmaceutical Co., Ltd are under review and approval If Shandong Jingwei pharmaceutical can also successfully pass the consistency evaluation, the product will also lock in the "1 + 3" pattern Figure 4: brand pattern of amoxicillin capsule, a terminal chemical drug for public medical institutions in China in 2017 (data source: minenet China public medical institutions terminal competition pattern) The application for conformity assessment of amoxicillin capsule of Kelun pharmaceutical is under review and approval According to the data of minenet, the sales volume of the product in the terminals of public medical institutions in China in 2017 was 978 million yuan There are more than 140 enterprises with production approval documents for this product, with fierce competition The enterprises with market share of more than 10% include Sinopharm (Shijiazhuang), UL and Huabei pharmaceutical Table 4: application for conformity assessment of amoxicillin capsule (data source: medchina drug review database 2.0, as of August 6, 2018) Currently, only UL has passed the conformity assessment of amoxicillin capsule, and 5 enterprises in the review and approval need to work harder Another product worthy of attention is Parecoxib Sodium for Injection According to the data of miintranet, the sales volume of the product in the terminals of public medical institutions in China in 2017 was 885 million yuan, and Pfizer firmly grasped the main market At present, only Hunan Kelun Pharmaceutical Co., Ltd has applied for the consistency evaluation of parixib sodium for injection, and the processing status is "under review and approval" Source: semi annual report, announcement and intranet database of listed companies