Many biopharmaceutical companies on the Science and Technology Innovation Board fell into losses again after “picking U”
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The 2023 annual report and performance bulletin show that as of press time, 18 of the 21 biotech companies listed on the Science and Technology Innovation Board in accordance with the fifth set of listing standards will have negative net profits attributable to their parent companies in 2023. Among them, CanSino and Biotech, as the first companies to turn losses into profits, have suffered losses for two consecutive years after “picking the U”. For these companies, whether they can continue to make profits and have the ability to make their own blood is still facing a test.
Some pharmaceutical companies have suffered losses for consecutive years after “picking the U”
As the first batch of biotechnology listed companies to “pick the U”, the innovative vaccine company CanSino and the innovative pharmaceutical company Biotech have suffered consecutive losses in the past two years after their “performance highlight moments” in 2021.
CanSino, which has experienced a surge in performance in 2021, has become the first biotechnology company to be listed on the Science and Technology Innovation Board. That year, the company achieved revenue of 4.300 billion yuan, a year-on-year increase of 17174.82%; net profit attributable to the parent company was 1.914 billion yuan, a year-on-year increase of 582.65%; net profit after deducting non-attributable shares to the parent company was 1.797 billion yuan, a year-on-year increase of 451.44%.
However, CanSino continued to lose money in the following two years after the “U”, and the losses showed an increasing trend. The financial report shows that in 2022 and 2023, CanSino’s operating income will be 1.035 billion yuan and 357 million yuan respectively, a year-on-year decrease of 75.94% and 65.49% respectively; the net profit attributable to the parent company will be -909 million yuan and -1.483 billion yuan respectively; excluding non-profit Net profits attributable to parent companies were -1.033 billion yuan and -1.611 billion yuan respectively.
Another company, Biotech, which also announced its “U-picking” in early 2022, has also suffered losses year after year. The financial report shows that in 2022 and 2023, Biotech will achieve operating income of 455 million yuan and 705 million yuan respectively, a year-on-year decrease of 45.60% and an increase of 54.85% respectively; the net profits attributable to the parent company are -480 million yuan and -395 million yuan respectively. ; Net profits after deducting non-attributed profits were -523 million yuan and -472 million yuan respectively. Biotech stated in its 2022 annual report that changes in financial data such as net profit attributable to the parent company and net profit after deducting non-attributed profits to the parent company that year were mainly due to the decrease in licensing revenue and the increase in operating costs and R&D expenses. The 2023 annual report shows that the company’s revenue increase for that year was due to the increase in sales or new sales revenue of some drugs, as well as the increase in sales commission income and sales milestone income of some drugs.
In contrast to the above two companies, Ellis and Shanghai Yizhong, which announced their “U” picks early last year, will both achieve a double increase in revenue and net profit in 2023. The annual report disclosed by Shanghai Yizhong on the evening of April 7 shows that the company achieved operating income of 360 million yuan in 2023, a year-on-year increase of 52.68%; it achieved a net profit attributable to shareholders of listed companies of 162 million yuan, a year-on-year increase of 13.09%; Shareholders’ net profit after deducting non-recurring gains and losses was 161 million yuan, a year-on-year increase of 56.70%.
The performance report disclosed by Ellis shows that in 2023, the company achieved total operating income of 2.012 billion yuan, a year-on-year increase of 154.42%; the net profit attributable to the owners of the parent company was 645 million yuan, a year-on-year increase of 394.07%; The net profit after excluding non-recurring gains and losses was 600 million yuan, a year-on-year increase of 655.79%. Mainly due to the fact that the company’s product Fumetinib Mesylate Tablets achieved sales revenue of 1.972 billion yuan during the reporting period.
Unprofitable listed pharmaceutical companies generally have not gotten rid of losses
At present, there are still more than a dozen unprofitable listed pharmaceutical companies on the Science and Technology Innovation Board that have not yet escaped from losses.
For example, the annual report of Junshi Biotech, which was listed in July 2020, shows that the company achieved operating income of 1.503 billion yuan in 2023, a year-on-year increase of 3.38%, mainly due to the increase in drug sales revenue; the net profit attributable to shareholders of the listed company was -2.283 billion yuan, The net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was -2.298 billion yuan, a decrease in losses compared with the same period last year. This was mainly due to the company’s increase in operating income while strengthening the control of various expenses, optimizing resource allocation, and focusing on more Potential R&D pipeline.
Wind data shows that Junshi Biotech’s net profits attributable to the parent company from 2016 to 2023 were -135 million yuan, -317 million yuan, -723 million yuan, -747 million yuan, -1.669 billion yuan, -721 million yuan, -2.388 billion yuan, respectively. billion and -2.283 billion yuan, with a cumulative loss of nearly 9 billion yuan in eight years.
InnoCheng Jianhua, which will be listed in September 2022, has also not yet made a profit. The company’s recently disclosed annual report shows that the company achieved operating income of 739 million yuan in 2023, a year-on-year increase of 18.09% from the previous year, and product sales revenue of 672 million yuan, a year-on-year increase of 18.50% from the previous year; the net loss attributable to shareholders of listed companies – 631 million yuan, and the net loss attributable to shareholders of the listed company after deducting non-recurring gains and losses was -626 million yuan. The net profit after deducting non-recurring gains and losses was still negative, mainly because most of the company’s product pipeline is still in the new drug research and development stage and has not yet been formed. The amount of sales and R&D expenditures is relatively large. This situation is in line with the industry characteristics of new drug R&D enterprises, and the sales revenue of the products during the reporting period cannot cover all costs and expenses.
Wind data shows that according to data disclosed in annual reports and performance reports, 17 unprofitable listed pharmaceutical companies that have not “picked the U” will still be in the red in 2023, which means that there may be no listed companies in this field “picking the U” this year.
Dizhe Pharmaceutical stated in its performance report that 2023 is the first fiscal year in which the company has achieved product sales revenue, with product sales revenue of 91.2886 million yuan. However, the company’s net loss attributable to the owners of the parent company in 2023 will be as high as 1.123 billion yuan. Wind data shows that the company’s net profits attributable to the parent company from 2019 to 2022 were -446 million yuan, -587 million yuan, -670 million yuan and -736 million yuan respectively, with losses expanding year by year.
Baili Tianheng’s losses in 2023 will also increase significantly compared with the previous two years. The 2023 annual performance report released by the company shows that during the reporting period, the company achieved total operating income of 562 million yuan, a year-on-year decrease of 20.11%; the net profit attributable to the owners of the parent company was -764 million yuan, a year-on-year decrease of 482 million yuan; Net profit attributable to owners of the parent company after deducting non-recurring gains and losses was -795 million yuan, a year-on-year decrease of 458 million yuan. The financial report shows that in 2021 and 2022, the company’s net profit attributable to the parent company will be -100 million yuan and -282 million yuan respectively.
Although Microelectrophysiology will achieve a net profit of 5.6885 million yuan attributable to the owners of the parent company in 2023, the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses is negative and has not yet achieved profitability.
The ability to “self-produce blood” still faces tests
“Picking U” is undoubtedly an important milestone for unprofitable listed companies. For biopharmaceutical companies that are not yet profitable, profitability is always the Sword of Damocles hanging over their heads.
“An important feature of the biopharmaceutical industry is that the profit cycle is long. Biopharmaceutical companies in the research and development stage generally take a long time to make profits.” Junshi Biological said in its 2023 annual report that future profitability depends on the drugs under development. The launch progress and post-market drug sales, and high R&D investment, business promotion costs and operating costs further bring uncertainty to profitability. Therefore, the company has the risk of not being profitable in the short term.
InnoCare also reminded in its annual report that the market recognition of the company’s products under development is affected by many factors such as the competitive advantages of the products under development compared with other alternative therapies, treatment costs, marketing effects, etc. Products on the market and products under development Pipelines also face many risks from market competition.
For companies that have “picked the U”, whether they can continue to make profits and have the ability to make their own blood is still facing the test.
Biotech stated in its 2023 annual report that the company’s business prospects and profitability depend on the commercialization capabilities of the products under development. Products already on the market may face greater market competition and may face the risk of being unable to maintain and grow market share, resulting in profitability that does not meet expectations. At the same time, the company cannot ensure that other products under development can obtain drug marketing approval. Even if the company’s drugs under development are approved for marketing and gain market recognition in the future, the commercialization prospects of the company’s products under development will still be uncertain. Sales expectations may not be met.
From the perspective of the secondary market, during the valuation adjustment process of the innovative drug industry in the past two years or so, the stock prices of some biopharmaceutical companies have plummeted.
Wind data shows that CanSino’s stock price has fallen by more than 90% since the second half of 2021, and Yahong Pharmaceutical, Junshi Biotech, Frontier Biotech, etc. have also fallen by more than 60%. Ping An Securities said that innovative pharmaceutical companies have already commercialized their products, and it is recommended to pay attention to the status of drugs being included in medical insurance and the volume expansion; no products have yet been commercialized, and they should continue to track the progress of the company’s pipeline, which is in the late stages, and the project plans of overseas licensors.
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