On May 12, BeiGene (Beijing) Biotechnology Co., Ltd. (hereinafter referred to as "BeiGene") announced its first quarter performance report for 2023. Judging from the data, the good growth trend in 2022 has continued, with operating income of 3.066 billion yuan, an increase of 57% year-on-year. With the acceleration of the product's global expansion, sales revenue has been 2.808 billion yuan, a year-on-year increase of 69%.
On the day when the financial report was released, the stock price of BeiGene (688235.SH) rose against the trend when the biological products in the concept sector fell by 0.24%, and closed with a 0.71% increase. Huaxi Securities and many other brokerages maintained a "buy" rating on the stock.
Behind the growth rate of BeiGene is the continuous approval of new indications around the world and the rapid increase in volume after approval. The company's long-term growth is undoubtedly certain, and with the accelerated release of the escort product strength of the research pipeline, BeiGene has achieved profitability The speed of the jump is expected to be further accelerated.
Revenue, production and sales have increased significantly, and BeiGene has accelerated its growth in the global market
The medical track, which has a long cycle, sufficient toughness, and long slopes and thick snow, will accelerate its recovery in 2023. In the first quarter of 2023, a total of 166 financings occurred in the global innovative drug field, with an amount of US$4.74 billion. There were 61 financings in the field of domestic innovative drugs, with an amount of 7.56 billion yuan. According to Wind data, as of the first quarter of 2023, the Shenwan Pharmaceutical Index has increased by more than 20% compared with October last year.
The confidence of the capital market comes from the excellent performance of pharmaceutical companies. In the first quarter, the international pharmaceutical giant Johnson & Johnson’s revenue increased by 5.6% year-on-year to US$24.7 billion, Roche’s sales in China increased by 4%, and Novartis’ net sales reached US$13 billion, an increase of 8% year-on-year. As the leader of domestic innovative drugs, BeiGene will also continue its excellent performance in 2022, achieving a substantial increase in overall revenue and product sales.
The financial report shows that in the first quarter of 2023, the company achieved a total revenue of 3.066 billion yuan, a year-on-year increase of 57.4%. Among them, product sales revenue reached 2.808 billion yuan, a year-on-year increase of 69%. The net profit attributable to the parent was -2.447 billion yuan, a year-on-year decrease of 14.64%. It can be seen from the above data that the "endogenous growth" of the company's core products is full of bright spots.
The reason why the company can achieve endogenous growth is that the excellent efficacy of core products such as tislelizan and baiyueze are favored in the global commercial market.
In April this year, BeiGene announced that the global RATIONALE 305 clinical phase 3 trial in gastric cancer successfully met its primary endpoint. Showed higher overall survival (OS), prolonging the lifespan of patients. Previously, in the global clinical phase III ALPINE study, compared with ibrutinib, Baiyueze showed better overall efficacy in the treatment of adult patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL). remission rate. The excellent product efficacy has helped BeiGene obtain approval for multiple indications in more than 65 markets including the United States and the European Union, and has established an extensive clinical development layout around the world.
The efficacy of products is the core competitiveness of innovative pharmaceutical companies. On this basis, BeiGene has expanded its multi-indications and expanded the scope of medical insurance reimbursement in various markets, which has also brought considerable market share growth to the company.
Specifically, the continued growth in the number of prescriptions in the United States and the increase in the use of clinicians in approved indications have helped Baiyueze’s sales in the US market to grow. In the first quarter of 2023, sales in the United States will be 950 million yuan, compared with the previous year. During the same period, it was 431 million yuan, an increase of more than double. Another core anti-cancer drug, tislelizan, achieved sales of 786 million yuan in the domestic market in the first quarter, a year-on-year increase of 31%, which is closely related to the demand for new patients brought about by the expansion of medical insurance reimbursement scope. At present, there are five domestic Indications included in medical insurance.
On the whole, BeiGene is on the road to upward development by virtue of its product advantages, but how is this advantage formed? Can it help accelerate the release of the company's product power in the future?
R&D creates long-term determinism, the pipeline under research is escorting products, and the release of power is accelerated
In fact, the company's product advantages mainly come from its high R&D investment model. BeiGene has always launched more innovative drug products with the strategy of holding high and "burning money" for research and development. In the first three quarters of 2018-2022, BeiGene’s research and development expenses in the past five years have accumulated as high as 37.683 billion yuan, while the research and development expenses in the first quarter of 2023 will continue to grow, increasing by 12% year-on-year to reach 2.818 billion yuan.
From the perspective of the characteristics of innovative drugs, it is necessary to strengthen research and development. High-tech pharmaceutical technology is the backbone of pharmaceutical companies, and research and development activities are one of the main sources of technological achievements. Therefore, compared with other industries, the pharmaceutical industry will have more intensive research and development activities. R&D investment should also be greater. Even international pharmaceutical giants with established market positions dare not be stingy with investment in research and development. For example, Merck, a well-known international pharmaceutical company, will spend US$4.276 billion on research and development in the first quarter of 2023, a year-on-year increase of 66%.
However, the contradiction between high R&D investment and product market expectations makes innovative pharmaceutical companies "walk on thin ice". Huge research and development costs have been invested, so the expected product may not be able to be developed, and the market acceptance of the product is also difficult to predict. In order to avoid high-cost research and development "in vain", innovative pharmaceutical companies have been working hard to improve their conversion rate of results. Judging from the ratio of R&D investment to revenue in the first quarter, the conversion rate of BeiGene’s achievements is improving significantly. In the first quarter of 2023, the company’s R&D investment accounted for 91.9% of total revenue, a decrease of 37.3 percentage points, indicating that the company has grown. From a capital-driven development model to a growth-driven model that relies on products.
Due to the long R&D cycle of biopharmaceuticals and certain risks, the R&D investment required by companies is often greater than their own revenue. Therefore, most domestic innovative pharmaceutical companies are currently mainly driven by capital and policies, while BeiGene’s revenue has been able to Covering its R&D investment shows that the company's "burning money" R&D has created deterministic growth in the growth period to a certain extent, and the rich pipeline under research will continue to escort the accelerated release of BeiGene's product power.
Currently, BeiGene has about 50 products or clinical candidates in the clinical development or commercialization stage, and its diversified R&D pipeline covers more than 80% of cancer types worldwide (in terms of incidence). The financial report shows that the company's self-developed clinical drugs have differentiated competitiveness, including the anti-TIGIT antibody ospolimab that is already in the third phase of clinical trials, and the potential "first-of-its-kind" HPK1 inhibitor, etc. Among them, the BCL-2 inhibitor BGB-11417 is expected to become another "best-in-class" drug of the company.
It is worth noting that the field of BTK inhibitors in which Baiyueze is located may usher in a major explosion at the product level. According to incomplete statistics, as of the end of January 2023, there are about 46 BTK inhibitor drugs under development in the world. According to CDE data, there are 30 BTK inhibitors under development in China, and many large multinational companies are also actively promoting BTK in China. Research and development of inhibitor products. As one of BeiGene's core products, Baiyueze's global sales in the first quarter of 2023 will reach 1.447 billion yuan, contributing nearly half of its revenue. In the face of competition at the market level, BeiGene is also actively expanding the scope of application of Baiyueze to continue to expand the leading edge of its core products.
BeiGene expects that in the first half of this year, it is expected to obtain the regulatory decision on the new indications for the first-line treatment of CLL/SLL and WM patients with Baiyueze, which will further increase the penetration rate of Baiyueze. At the same time, Baiyueze is currently the only BTK inhibitor in the world that is more effective than ibrutinib, and combination therapy is also an effective way to further exert its excellent efficacy. BeiGene is promoting the launch of other products with the combined treatment of "Baiyueze + other drugs under its umbrella". According to reports, the company will launch "Baiyueze + self-developed BCL-2 inhibitor BGB-11417" in the second half of the year for the treatment of A global registry clinical trial of first-line therapy in patients with CLL. At a time when many BTK inhibitors are still in the research and development stage or are in the process of commercialization, these moves by BeiGene will undoubtedly bring its core product market position to a higher level.
In addition, judging from the narrowing of losses, BeiGene's cost control capabilities are being significantly enhanced. Shenyin Wanguo Securities predicts that in the next few quarters and the next few years, the trend that BeiGene's operating expenses will grow lower than the growth of product revenue is expected to continue. This means that the pressure on the company's profit side will be further eased, and greater growth is just around the corner.
epilogue
Compared with other domestic innovative drug companies, BeiGene already has a considerable lead in the layout of the global market. BeiGene's product revenue in the first quarter of this year can continue its growth momentum in 2022, mainly due to its strong commercialization capabilities. As of March 31, 2023, the company's international commercialization team has more than 3,500 people, covering the Asia-Pacific region, North America and Europe, and its scale is comparable to AbbVie, the top ten giant in the list of large pharmaceutical companies.
In addition, BeiGene's highly competitive core products and rich pipeline under research have also brought long-term stability to the company's performance. According to Frost & Sullivan's analysis, the global anti-tumor drug market is expected to reach US$304.8 billion by 2025, and further grow to US$482.5 billion by 2030, with a compound annual growth rate of 9.6% from 2025 to 2030. Although the market prospect is promising, the commercialization of innovative drugs is an "endurance run", and BeiGene still needs to maintain a catch-up attitude.
Author: Good blue is not good
Article source: Songguo Finance