However, times have changed and times have changed. The popular brands in the past have followed the times and gradually entered the dilemma of "I am old and honest, can I still make a living?" Livzon Pharmaceutical, which is in a state of turmoil, has yet to find a new “keystone” product.
For such a company that is in a period of transformation and has great uncertainty in the future, there is naturally only two words in the capital market: disgust.
In the past 10 months, Livzon Pharmaceutical’s share price has halved, with the largest drop reaching 62.3%. In the pharmaceutical industry, the drop is relatively large.
Star products no longer shine
Every company has its own periodic flagship products, and Livzon Pharmaceutical is no exception. For a long time in the past, as the company's exclusive product and flagship product, Shenqi Fuzheng Injection has had an irreplaceable position in the company.
According to the company's financial data, Caihuashe lists the company's total operating revenue in recent years, the segment revenue of Shenqi Fuzheng Injection, and the proportions between them.
In absolute terms, the company's Shenqi Fuzheng Injection's single product revenue in the first half of 2018 reached 546 million yuan, which was not as good as 714 million yuan in 2015, and fell 34.61% year-on-year in 2017H1. ; In terms of proportion, before 2016, the single product revenue of Shenqi Fuzheng Injection accounted for more than 1/5 of the company's total revenue. Since 2017, the proportion has gradually decreased, and in the first half of this year, there was a cliff-like decline. The proportion is only 12%.
Not only Shenqi Fuzheng Injection, but also mouse nerve growth factor in the field of nutritional nerves has also ended its previous continuous surge in revenue. From the high-speed growth of about 70% in previous years, it has declined all the way to the first half of this year. A year-on-year decline of nearly 20%.
Why did the sales of these two flagship products drop so suddenly? The root cause lies in policy changes. Driven by the policy of controlling medical insurance expenses, a large number of auxiliary drugs used in clinical practice have become an important target for controlling medical insurance expenses. Shenqi Fuzheng Injection and Mouse Nerve Growth Factor have been targeted because of their auxiliary properties, and there is no logic in further growth of their market space.
Even the injectable urinary follicle-stimulating hormone, which investors had high hopes for, did not achieve a surge in revenue as expected. As a key product in the field of gonadotropin and assisted reproduction, the market expects that with the liberalization of the two-child policy, the entire market size will continue to expand, and the company will also be able to enjoy industry dividends. However, the fact before us is that even if the country's population policy continues to be liberalized, contemporary Chinese people are no longer as enthusiastic about childbirth as the previous generation. The imagined baby boom has not arrived as expected, and various signs indicate that the total number of newborns in 2018 will plummet by about 20% year-on-year. Injectable follicle-stimulating hormone, used to stimulate follicle development and maturation, also has a bleak market prospect.
The revenue of several major products of the company has declined, and the impact on the company is undoubted. Judging from the semi-annual report data, the company achieved revenue of 4.565 billion yuan in the first half of 2018, a single-digit increase of 6.78% compared with the same period in 2017. If the data is further zoomed in, the company achieved revenue of 6.841 billion in the first three quarters of 2018. The growth rate further dropped to 4.9% from 6.522 billion in the same period of 2017, and the slowdown became more obvious.
Of course, once the matter is over, it is no longer a problem. After all, these single products have fallen for such a long time, and the marginal effect of their negative impact on the company will gradually weaken. What really makes investors panic is that looking into the future, the company's research and development progress of innovative drugs is too slow, and the launch of subsequent new products lags far behind those of its peers, and the company's prospects are worrying.
The progress of innovative drug research and development is too slow
Biopharmaceuticals are undoubtedly the most promising field in the pharmaceutical industry, and it is also the fastest growing sub-industry in the pharmaceutical industry. And monoclonal antibodies are the main theme on the biopharmaceutical stage.
All pharmaceutical companies realize: whoever gets monoclonal antibodies wins the world.
Livzon Pharmaceutical also keeps up with the forefront of the industry and has extensive layout in this field. According to Caihua News Agency, the company currently has 7 products under development with different progress.
After seeing this table, we have two intuitive feelings: 1. The R&D pipeline is well laid out and covers currently hot targets. 2. Compared with its competitors, Livzon Pharmaceutical’s research and development progress is too slow.
Take the company’s fastest-growing injectable recombinant humanized anti-human tumor necrosis factor α (TNF-α) monoclonal antibody as an example. Its original drug “Humira” adalimumab is in Everyone knows that he is the “King of Medicines” in the field of medicine and biology. In 2017, global sales reached US$18.4 billion, becoming the “sixth consecutive leader” in global drug sales. Although the drug sales rankings for 2018 have not yet been released, it should be a certainty that it will continue to top the list. For such a drug that has passed the patent protection period in Europe and the United States, it has undoubtedly aroused the covetousness of many pharmaceutical manufacturers. Currently, more than 20 domestic pharmaceutical manufacturers are developing similar products. Among them, Biotech has submitted the marketing application for adalimumab biosimilar (BAT1406) to the Center for Drug Evaluation (CDE) of the State Food and Drug Administration in August 2018, ranking first in the country; Innovent Biologics followed suit Subsequently, in November of the same year, it also submitted a marketing application for the adalimumab biosimilar (IBI303) it developed to CDE, becoming the second company in the industry; Henlius also entered the clinical phase III in the same month. The progress is much faster than that of Livzon Pharmaceutical.
Taking the more popular PD-1 target as an example, in the past 2018, four domestic companies’ PD-1 monoclonal antibody products have been approved for marketing. That is, O drug from international pharmaceutical giant Bristol-Myers Squibb, K drug from Merck & Co., as well as domestic biopharmaceutical newcomers Innovent Biologics' sintilimab injection and Junshi Biologics' toripalimab injection. In addition, Hengrui Pharmaceuticals and BeiGene have also submitted listing applications to CDE and are waiting for approval. It is expected that in 2019, the number of players in the entire PD-1 market will reach 6. The competitive pressure is evident.
Livzon Pharmaceutical’s PD-1 has just completed Phase I clinical trials in the United States and is currently undergoing Phase I clinical trials in China.
The market situation of other products under development is also similar. Although it is popular, competition is fierce, and the company is low in the R&D echelon and cannot show obvious competitiveness in the industry. It is also difficult to see hot products and explosive market prices in the later period.
Still able to maintain
Although the company’s prospects are not optimistic and investors cannot obtain excess returns, as a member of the “second-tier army” in the pharmaceutical industry, with the current product structure It seems that the company can still occupy a place in the huge pharmaceutical market.
1. There is huge room for growth in the use of drugs in the digestive field
For patients with stomach problems, "prazole" drugs are a common must-have at home. Whether it is omeprazole, esomeprazole, rabeprazole or pantoprazole, the core function of these drugs, collectively known as "proton pump inhibitors", is to inhibit gastric acid secretion.
Livzon Pharmaceutical started out as a gastrointestinal drug and has accumulated rich R&D experience and strong sales channels in this digestive field. In addition to rabeprazole products, the company also has second-generation proton pump inhibitor products: ilaprazole enteric-coated tablets and ilaprazona for injection. In the first half of 2018, ilaprazole enteric-coated tablets achieved sales revenue of 281 million yuan, a significant year-on-year increase of 34.49%. In the third quarter, with Ilaprazona for injection approved and finally available to end consumers, Ilaprazole enteric-coated tablets and Ilaprazona for injection achieved a total revenue of 451 million yuan, a year-on-year increase of 35.81 %.
According to the introduction of Mr. Yang Liang, secretary of the company’s board of directors, in 2018, the entire domestic proton pump inhibitor market capacity was more than 20 billion yuan, of which the injection market accounted for roughly 70%, or about 15 billion yuan. . It is foreseeable that relying on Livzon Pharmaceutical's strong terminal sales team, its just-launched Ilaprazonal for Injection will maintain last year's rapid growth in 2019.
2. Microsphere drugs also have room for growth
According to the company’s official introduction, Livzon Pharmaceutical has 4 varieties in the field of gonadotropins, including Leuprorelin Acetate for Injection Microspheres, urinary follicle-stimulating hormone, urinary gonadotropin, and chorionic gonadotropin.
Among them, leuprolide microspheres, which are used to treat endometriosis, uterine fibroids and prostate cancer, have experienced strong growth in the past year.
In the first half of 2018, leuprolide microspheres achieved sales revenue of 359 million yuan, a year-on-year increase of 27.43%; in the first three quarters of 2018, single product revenue achieved 590 million yuan, a year-on-year increase further increased to 35.38%, showing further strength in the third quarter.
As the revenue of single product leuprolide microspheres continues to grow rapidly, its proportion in the company's total revenue is also constantly increasing.
It can be seen that the proportion of leuprolide microspheres in the company's revenue has increased quarter by quarter from 6.35% in 2017, to 8.62% in the third quarter of 2018. There is a strong tendency to replace Shenqi Fuzheng Injection in the company's position.
Considering the increasing number of domestic cancer patients, the market’s incremental space is constantly opening up. At the same time, through the substitution of triptorelin and the substitution of the original drug of leuprorelin, the market penetration rate of leuprorelin microspheres will also be further improved. It is expected that the current rapid growth trend will be further continued.
Of course, it is a major trend in the pharmaceutical industry for biopharmaceuticals to replace small molecule pharmaceuticals - especially in the anti-tumor field. We cannot predict how long such a historic process will take. However, we confirm that in the face of such a rolling historical trend, most pharmaceutical companies will be eliminated by history. Only a few leading companies with a dominant position in the track can "hit the water in the middle and stop the flying boat." From such a longer-term perspective, the prospects of Livzon Pharmaceutical are not clear. Its huge decline does not mean that there are more excess returns. To a certain extent, we can understand that its halo is no longer and it has fallen into the world.
■ Author｜Chen Yong
■ Editor｜He Qiuxia