CSPC Pharmaceutical Group (1093) Q3 2024 earnings summary

Executive summary

• Revenue for the first nine months of 2024 was RMB 22.69bn, down 4.9% year-over-year, mainly due to lower finished drug sales.

• Underlying profit attributable to shareholders fell 15.2% to RMB 3.999bn, and reported profit dropped 15.9% to RMB 3.778bn year-over-year.

• R&D expenses increased 5.5% to RMB 3.88bn, representing 20.8% of finished drug revenue, with over 60 key drug candidates in clinical or registration stages.

• Four new drugs and seven generics were approved YTD, with significant progress in clinical trials and licensing deals.

• Strategic licensing agreements were signed with AstraZeneca and Alphamab in 2024, expanding the global and domestic pipeline.

Financial highlights

• Finished drugs revenue: RMB 18.67bn (-3.5% year-over-year); bulk products: RMB 2.73bn (-5.2%); functional food and others: RMB 1.29bn (-21.9%).

• Gross profit margin remained stable at 70.4%, a slight decrease of 0.1pp.

• Basic EPS (underlying): 33.90 RMB cents, down 14.6% year-over-year; reported EPS: 32.03 RMB cents, down 15.4%.

• R&D expenses rose 5.5% to RMB 3.88bn, supporting a robust innovation pipeline.

• Selling and distribution expenses decreased to RMB 6.63bn.

Outlook and guidance

• 20 generic drugs are expected to be approved in 2024-2025, with about 30 more in research for approval by 2027.

• Multiple innovative products are in late-stage clinical development, with several NDAs and BLAs planned through 2025.

• Strategic licensing deals, including a major out-licensing agreement with AstraZeneca for Lp(a) inhibitor, expected to generate significant milestone and royalty income.

• Continued focus on internationalization and external innovation through licensing and partnerships.