We are a leading innovative global pharmaceutical company rooted in China. In addition, as a strong validation of our innovation results, we had a leading position among Chinese pharmaceutical companies, in terms of revenue from new molecular entity (“NME”) drugs in 2023 and the number of NME drug candidates in clinical or later stages of development as of the Latest Practicable Date, according to Frost & Sullivan.
These achievements have been enabled by Hengrui’s ecosystem, comprising great talent, organization, and culture, which underlies our research, clinical, manufacturing, and commercialization capabilities. Through decades of efforts, we have substantially transformed into a leading global pharmaceutical company focused on innovative therapies to address immense unmet medical needs worldwide. Our persistent R&D investments and dedicated innovation, especially since our initial public offering (IPO) of A Shares in 2000, have contributed to the establishment of a large portfolio of differentiated innovative drugs, including several potential blockbusters. Our commitment to innovation is evidenced by our capital allocation, with our R&D investments (comprising R&D expenses and capitalized R&D expenditures) as a percentage of our total revenue being 29.4% in 2024. We are also committed to delivering attractive shareholder returns. For example, we have distributed cumulative cash dividends of approximately RMB8,029 million since our A Share IPO, representing 16.8 times of our A Share IPO proceeds, which was the only occasion we raised funds from the capital markets.
Focus on Immense Unmet Medical Needs
We strategically focus on comprehensive therapeutic areas with significant unmet medical needs and growth potential. These mainly include: (i) oncology, (ii) metabolic and cardiovascular diseases, (iii) immunological and respiratory diseases, and (iv) neuroscience. According to Frost & Sullivan, the aggregate global pharmaceutical market of these major therapeutic areas in 2023 was US$845.8 billion, accounting for 57.4% of the overall global pharmaceutical market for the same year; and it is expected to grow at a CAGR of 6.4% from 2023 to 2028, surpassing the CAGR of 5.7% for the overall global pharmaceutical market growth during the same period.
Differentiated Innovative Product Matrix
We have developed an industry-leading and highly differentiated matrix of innovative products, including several potential blockbusters. Our oncology portfolio has strategically expanded from solid tumors to hematological malignancies and provides a comprehensive coverage of neoadjuvant, adjuvant and later lines of treatment. We also provide therapeutics for prevention and treatment of major chronic diseases. As of the Latest Practicable Date, we had a portfolio of 19 commercialized NME drugs and a pipeline of over 90 NME drug candidates in clinical or later stages of development. We expect to maintain strong growth momentum in the rollout of innovative products. To demonstrate our R&D efforts and productivity, from 2022 to 2024, research and clinical studies investigating our products and product candidates resulted in 1,019 peer-reviewed papers in international academic journals, including high- impact journals such as The Lancet, British Medical Journal, JAMA, Nature Medicine, and Journal of Clinical Oncology, with a cumulative impact factor of approximately 7,173 across these publications.
Leading R&D Capabilities
Multi-pronged Approach and Advanced Technology Platforms. We strategically employ a multi-pronged approach to researching and developing drug assets with varying properties for identified druggable targets. Over the decades, we have extended our research beyond small molecules to encompass a wide range of additional modalities, including proteolysis-targeting chimeras (PROTACs), peptides, monoclonal antibodies (mAbs), bispecific antibodies (BsAbs), multi-specific antibodies, antibody-drug conjugates (ADCs), radioligand therapies (RLTs), and oligonucleotide. This multi-pronged approach supported by our advanced technology platforms allows us to significantly shorten the lead times for identifying and validating potentially first-in-class or best-in-class compounds. Leveraging our industry foresight and 14 R&D centers strategically located around the world, we have built each of our technology platforms with robust, differentiated functionalities and capabilities across the entire process of innovative drug R&D.
We make modular evolutions to our platforms and capitalize on platform synergies to rapidly iterate and optimize our conjugates as potential drug candidates. For example, through our ADC platform, we have successfully extended our research to construct a new series of “AXC” drugs, where X can be a peptide, oligonucleotide, or small molecule protein degrader. We have also pioneered the development of degrader-antibody conjugates (DACs) and antibody-oligonucleotide conjugates (AOCs). In contrast to molecular glue degraders, DACs, with protein degraders as payloads carried by antibodies, have demonstrated favorable efficacy and safety profiles and the potential to overcome drug resistance in preclinical settings. AOCs, by combining the targeting capabilities of antibodies with the gene regulatory potential of oligonucleotides, precisely modulate disease-causing proteins.
End-to-end Clinical Development. We have built strong end-to-end clinical development capabilities to ensure the superior efficiency and quality of our drug development process. We pursue a patient-oriented clinical strategy—which involves fast proof of concept, patient stratification, adaptive trial designs, and modular evolution in combination therapies—to efficiently bring differentiated high-quality therapeutics to the global market. As of December 31, 2024, our in-house clinical development team covered approximately 5,000 clinical investigators, and we were conducting approximately 400 clinical trials for over 90 innovative drug candidates. In 2024, we enrolled nearly 20,000 participants in our clinical studies. From 2018 to the Latest Practicable Date, we had obtained 60 facilitated regulatory pathways in China, the U.S., the EU, and other overseas markets. Our in-house clinical development capabilities allow us to efficiently expedite regulatory timelines while ensuring the robust quality of our clinical trials.
In addition to our superior efficiency, under the “patient first” guidepost, our pharmacovigilance professionals continuously monitor drug safety data to ensure patients’ well-being and the integrity of our clinical development. Furthermore, we maintain robust quality assurance for the entire process of our clinical trials through a dedicated team of highly experienced clinical quality professionals. During the Track Record Period and up to the Latest Practicable Date, our clinical programs achieved a 100% pass rate with zero critical deficiencies in over 90 GCP inspections conducted by the NMPA and the U.S. FDA.
Talent and Culture of Innovation. To maintain our competitive strengths in the areas described above, we have made significant investments in and place great emphasis on first-tier talent and a culture of innovation. Our all-round, top-notch R&D team is at the core of our superior R&D and chemistry, manufacturing and controls (CMC) capabilities. Nearly 60% of our over 5,500 R&D team members as of December 31, 2024 hold a master’s or higher degree. Many of them have years of experience at leading multinational pharmaceutical companies and renowned research institutes. Moreover, over 30% of our mid-level or above management members as of December 31, 2024 have overseas education or work experience. We benefit from their cross-disciplinary expertise that spans a variety of fields, such as chemistry, biology, pharmacology, toxicology, pharmacovigilance, and translational and clinical research. Leveraging our great talent and culture, we are able to efficiently and swiftly develop highly differentiated innovative pharmaceutical products.
Global-standard Manufacturing System
Leveraging our over 50 years of manufacturing experience, we have established a global-standard manufacturing system to ensure quality excellence, supply stability, and cost efficiency. Our quality management system is designed in accordance with applicable GMP standards, and our exported products comply with or exceed global quality standards including the EU GMP, the U.S. cGMP, and the ICH Quality Guidelines. In addition, we have extensive compliance experience under the manufacturing and quality-related requirements of overseas regulators such as the EMA and the U.S. FDA. Moreover, in line with our global expansion and to address the increasingly stringent regulatory scrutiny, we have further reinforced our CMC system and strengthened our quality team. In particular, we have recently hired our Chief Quality Officer, an industry veteran with over 30 years of global experience (including experience working at the U.S. FDA) in the pharmaceutical industry. At the same time, our manufacturing infrastructure is industry-leading among Chinese pharmaceutical companies in terms of site area, annual designed production capacity, and range of pharmaceutical products produced.
Robust Commercialization Capabilities
We have established industry-leading commercialization capabilities to propel our sustainable growth. This is demonstrated by our comprehensive and tiered channel coverage enabled by our robust sales force. Our highly specialized sales force has been carefully curated into complementary functions to effectively market and promote our products. As of December 31, 2024, we had a dedicated in-house sales and marketing team of approximately 9,000 employees, which was an industry-leading scale among Chinese pharmaceutical companies, according to Frost & Sullivan. As of the same date, our sales network covered over 22,000 hospitals and over 200,000 offline retail pharmacies across over 30 provincial-level regions in China, which was an industry-leading coverage among Chinese pharmaceutical companies, according to Frost & Sullivan. In addition, we focus on academic promotion to enhance the market awareness of our brand and innovation, including collaborating with clinical investigators and key opinion leaders, publishing our R&D results in high-impact journals and presenting at renowned medical conferences.
Accelerated Global Expansion
In recent years, we have been accelerating our global expansion to unlock and maximize the potential of our product matrix and technology platforms. As of the Latest Practicable Date, we had initiated over 20 overseas clinical trials, including in the U.S., Europe, Australia, Japan, and South Korea, and had commercialized our products in over 40 countries. In addition, since 2018, we have carried out 14 out-licensing transactions with global partners, involving 17 molecular entities. The aggregate deal value of these transactions was approximately US$14 billion, with total upfront payments of approximately US$600 million, in addition to equity interest in certain collaboration partners. Among these transactions, our transaction with Kailera Therapeutics, with a total deal value of approximately US$6 billion, was a landmark partnering transaction in China’s pharmaceutical industry. In addition, these transactions included our out-licensing to a fully owned subsidiary of Merck KGaA, Darmstadt, Germany (“MRKDG”), IDEAYA Biosciences, and Aiolos Bio Inc. (“Aiolos Bio”) (later acquired by GSK).
Solid Financial Performance
Through continuous innovation, we have achieved solid financial performance. Specifically, our total revenue was RMB28.0 billion in 2024, representing an approximately 14% CAGR from 2014, compared to an approximately 4% CAGR for the global pharmaceutical market during the same period. Moreover, innovative drugs have become a major source of our revenue. Our revenue from sales of innovative drugs as a percentage of our total revenue increased from 38.1% in 2022 to 43.4% in 2023 and further to 46.3% in 2024. Our revenue from sales of generic drugs as a percentage of our total revenue decreased from 60.3% in 2022 to 53.4% in 2023 and further to 42.0% in 2024. In addition, our healthy profitability and strong cash flows enable us to continue investing in R&D activities to propel long-term sustainable growth, thus supporting a virtuous cycle. Our net profit margin increased from 17.9% in 2022 to 18.7% in 2023 and further to 22.6% in 2024. Over these same respective periods, we generated operating cash inflows of RMB1,265.3 million, RMB7,643.7 million, and RMB7,422.8 million.
We are also committed to good corporate governance, social responsibility, and the environmental sustainability of our business. Our achievements in this respect are highlighted by an ESG rating of “A” that we have received from MSCI for two consecutive years since 2023.
Source: Hengrui Pharma (01276) Prospectus (IPO Date : 2025/05/15) |