There are a total of 112 listed companies in the A-share chemical pharmaceutical preparation industry, of which 110 have released their third quarter reports for 2024. According to the three core indicators of revenue, non-net profit and ROE, the Research Institute of Listed Companies of Caizhong Society launched the top 50 lists. After combing the list, it was found that the overall revenue and non-profit deduction of the top 50 chemical drugs both achieved growth, especially the non-net profit achieved a high growth of more than 40%. Among them, most individual stocks have also achieved performance growth, but profitability has been differentiated, and ROE performance has been uneven.

From the perspective of individual stocks, Huadong Medicine, Hengrui Pharmaceutical, and Baili Tianheng-U respectively won the top position in the three indicators of total revenue, total non-profit deduction, and ROE, while the corresponding bottom rankings were Anglikang, Lisheng Pharmaceutical, and Northeast Pharmaceutical. From the perspective of revenue growth rate and non-profit deduction growth, Baili Tianheng-U occupies the top position in the two indicators, and the bottom is poinsettia and Dongcheng Pharmaceutical.

Most companies have increased their revenues, with a leading scale of more than 30 billion

Table 1: Revenue Ranking

As shown in Table 1, in the first three quarters of 2024, the top 50 fortified drug preparation companies in terms of revenue achieved a total operating income of 293.537 billion yuan, a year-on-year increase of 5.57%, achieving steady development. The year-on-year revenue growth rate of the entire chemical drug preparation industry during the reporting period was 4.51%, and the growth rate of the top 50 was higher than that of the entire industry, indicating that the competitive advantage of leading pharmaceutical companies was further strengthened.

The revenue of the top 50 pharmaceutical companies in the first three quarters was more than 1 billion yuan, of which 16 were more than 5 billion yuan and 7 were more than 11 billion yuan. Among them, Huadong Medicine, Fosun Pharmaceutical, and Hengrui Pharmaceutical won the top three positions on the list, with revenue of 31.478 billion yuan, 30.912 billion yuan, and 20.189 billion yuan in the first three quarters respectively. These three are all leading enterprises in this field, East China Pharmaceutical's main business is pharmaceutical industry, medical cosmetology, and pharmaceutical business, Hengrui Pharmaceutical's main business includes innovative drugs and generic drugs, and Fosun Pharma's main business includes pharmaceuticals, medical devices and medical diagnosis, medical and health services, etc.

Among the top 50 pharmaceutical companies, the number of revenue growth and decline in the first three quarters was 31 and 19 respectively, indicating that most of them achieved growth. Among them, the two with the highest growth rate are Baili Tianheng-you and Allist, which increased by 1399.22 and 87.97% year-on-year respectively in the first three quarters. The former mainly received an irrevocable and non-deductible down payment of US$800 million from BMS based on the BL-B01D1 cooperation agreement; The latter is mainly due to the continuous increase in sales of the core product Furmetinib.

Overall, the revenue of the top 50 chemical pharmaceutical preparations in the first three quarters achieved steady growth, and the future performance is expected to continue to be consolidated and improved. On the one hand, a number of blockbuster varieties of innovative drugs have entered the commercialization stage, and the rapid volume has driven the high prosperity of the industry; On the other hand, some early centralized procurement varieties have achieved stable price increases, and most enterprises are crossing the impact of centralized purchasing.

The overall profit growth is high, and the growth rate of Baili Tianheng is more than 8 times

Table 2: Ranking of net profit deducted from non-attributable to the parent company

As shown in Table 2, the top 50 companies in terms of profit strengthened pharmaceutical preparations achieved a total non-net profit of 35.534 billion yuan in the first three quarters, a year-on-year increase of 41.25%, much higher than the revenue growth, indicating that the profitability has increased significantly during the reporting period.

Among the top 50 companies, the non-net profit deducted in the first three quarters was more than 100 million yuan, and 13 were more than 1 billion yuan. Among them, the top three are Hengrui Pharmaceutical, Baili Tianheng-U, and Huadong Medicine, with non-net profits of 4.616 billion yuan, 4.043 billion yuan, and 2.482 billion yuan respectively in the first three quarters. It is worth noting that Hengrui Pharmaceutical and Huadong Medicine are also among the top three in terms of revenue, indicating that they have both scale and profit advantages and have a solid leading position.

Compared with the leading volume of more than 4 billion yuan, Lisheng Pharmaceutical's non-net profit in the first three quarters was 106 million yuan. Lik Sang Pharmaceutical was founded in 1951 and has a history of 73 years, and was listed on the Shenzhen Stock Exchange in 2010. The company is engaged in the research and development, production and sales of pharmaceutical products, the main products are indapamide tablets, aminophen capapillin tablets, etc., the performance has stagnated since 2013, and the non-net profit deducted in 2023 is only 54% of that in 2012, and the non-profit deducted in the first three quarters of 2024 decreased by 22.5%.

From the perspective of performance changes, the number of companies that deducted non-net profit increased year-on-year and decreased in the first three quarters were 37 and 13 respectively, and the vast majority of companies achieved growth, and 20 companies achieved a rapid growth rate of more than 20%. Among them, the fastest growth rate is Baili Tianheng-U, with a year-on-year increase of 849.17% in non-net profit in the first three quarters. It is worth noting that Baili Tianheng-U is also the company with the fastest revenue growth, which means that the revenue and profit growth rate have both won the championship, and it is undoubtedly the most beautiful growth company in the sector.

The largest decline in non-net profit was Dongcheng Pharmaceutical, which fell by 40.04% year-on-year to 150 million yuan in the first three quarters. The decline was due to weak revenues and higher expenses. In terms of revenue, API revenue in the first three quarters decreased by 28.73% year-on-year to RMB960 million, mainly due to the decline in the selling price of heparin sodium, in addition to the FDG injection of nuclear medicine business decreased by 1.33% year-on-year to RMB312 million, and Yunke injection decreased by 3.65% year-on-year to RMB185 million. In terms of expenses, the total management and financial expenses during the reporting period were 277 million yuan, an increase of 48.13% year-on-year.

Profitability is differentiated, with the highest ROE approaching 90%, and Northeast Pharmaceutical is at the bottom

Table 3: ROE (ttm) ranking as of the end of Q3 2024

ROE, as the metric that Warren Buffett values most, is crucial to the study of corporate value. As shown in Table 3, the ROE50 fortified drug preparation enterprises generally show a differentiation trend, with 26 and 24 companies above and below 9%, respectively, which are comparable.

Among them, the three companies with the highest profitability are Baili Tianheng-U, Allist, and Xingqi Ophthalmology, with ROE of 88.86%, 25.43%, and 21.67% in the first three quarters, respectively. Among them, Baili Tianheng-U has the most beautiful performance, and its ROE far exceeds the level of its peers, which also means that it has won the top position in three aspects: revenue growth, profit growth and ROE.

The bottom three companies in terms of profitability are Northeast Pharmaceutical, Lukang Pharmaceutical, and Huaren Pharmaceutical, with ROE of 4.46%, 4.51%, and 4.72% respectively in the first three quarters. Among them, Northeast Pharmaceutical is a listed company under Fangda Group, with its main business covering chemical pharmaceuticals, pharmaceutical commerce, pharmaceutical engineering, biological diagnostic reagents and other sectors, with revenue and net profit of 6.134 billion yuan and 208 million yuan in the first three quarters of 2024, down 4.22% and 5.37% year-on-year respectively. During the reporting period, the net profit margin was only 3.59%, which was at a low level, which is the core reason for its profitability to be at the bottom.