Ophthalmic drugs, the golden track of the pharmaceutical industry.
From the perspective of industry data, the global ophthalmology market size increased from $32.4 billion in 2018 to $38.7 billion in 2022 and is expected to reach $57 billion in 2027. In 2022, the size of China's ophthalmic drug market has reached US$3.1 billion, and it is expected to reach US$9 billion in 2027.
It can be seen that with the growth of the global population, the intensification of aging and the change of lifestyle, the number of patients with eye diseases in the world will continue to grow, and the ophthalmic drug market has also ushered in a stage of rapid development.
However, due to the characteristics of high technical barriers, difficult research and development, and long cycle of innovative drugs, the successful launch of an innovative drug will bring earth-shaking changes to the performance of enterprises. Hengrui Pharmaceutical, Innovent Biologics, CSPC Pharmaceutical Group, BeiGene and other innovative drug leaders have driven their performance to rise through strong R&D capabilities.
In the domestic ophthalmic drug industry, Xingqi ophthalmology is a typical example of bringing dividends to enterprises through strong research and development.
Let's take a look first, how is the company's performance?
Judging from the data, from 2019 to 2023, Xingqi Ophthalmic Medicine's revenue will continue to rise, increasing from 542 million yuan to 1.468 billion yuan, a year-on-year increase of 17.42%; The company's net profit also increased from 36 million yuan in 2019 to 240 million yuan in 2023, a year-on-year increase of 13.39%.
It can be seen that Xingqi Ophthalmology's revenue and net profit have both increased significantly, indicating that the company has not been affected by cyclical factors in the industry, and its performance is outstanding.
The brilliant performance of Xingqi eye medicine relies on outstanding product advantages.
From the perspective of business structure, in 2023, the revenue of Xingqi Ophthalmic's eye drop business will be 663 million yuan, accounting for 45.17% of the total revenue; the revenue of eye ointment business was 373 million yuan, accounting for 25.46% of the total revenue; At the same time, the revenue of medical service business was 351 million yuan, accounting for 23.91% of the total revenue.
It can be seen that the total revenue of these three businesses accounts for nearly 95% of the company's total revenue, which is the company's core source of profit.
So, what is the gross profit margin of these three main businesses?
From 2016 to 2023, the gross profit margin of Xingqi Ophthalmology's ophthalmic ointment business has always remained above 80%, and the gross profit margin of the company's eye drops and medical services is also close to 80%.
It can be seen that the gross profit margin of Xingqi Ophthalmic Medicine's main products is at a high level, even far exceeding that of leading pharmaceutical companies such as Pien Tze Huang, Tong Ren Tang, Dong E Ejiao, etc., and the high gross profit of the products promotes the company's profitability.
From the perspective of industry comparison, from 2019 to 2023, the gross profit margin of Xingqi Ophthalmology and Optek has always been at the forefront of the industry, reaching about 80%, far exceeding that of Shapu Aisi and Aier Ophthalmology. It can be seen that in the ophthalmic drug industry, the profitability of Xingqi ophthalmic medicine is among the best.
Next, let's explore the company's expense control.
From 2019 to 2023, the sales expense rate, management expense rate and financial expense rate of Xingqi Ophthalmic Medicine have all decreased to varying degrees overall. Among them, the sales expense ratio decreased from 40.43% in 2019 to 36.46% in 2023; Administrative expenses also decreased from 13.41 in 2019 to 10.52% in 2023. It can be seen that the company's control of the period expenses is increasing year by year.
In 2023, the company's net profit will be as high as 16.4%, indicating that the gross profit margin of its main products and the effective control of expenses during the period have effectively promoted the company's profitability to continue to rise.
It is expected that the company's future performance is expected to grow rapidly for the following reasons:
1. Low-concentration atropine exclusive dividend period
On March 11, 2024, Xingqi Ophthalmic 0.01% atropine sulfate eye drops were officially approved for marketing, which is mainly used for the prevention and control of myopia in children and adolescents aged 5-16 years.
In recent years, myopia among children and adolescents in mainland China has been on the rise, and it is expected to continue to increase in the future. Data show that the myopia rate of children and adolescents in mainland China is the first in the world, with a total of nearly 100 million myopic people. It can be seen that in the context of the rising number of myopia in mainland China, the demand for atropine will also increase, which is expected to drive the company's performance to increase significantly.
At present, the annual cost of mainstream atropine in-hospital preparations is about 3,600 yuan, and it is expected that the company will monopolize the product dividend period in the next 2-3 years, which is extremely scarce. In the long run, the product has the logic of price increase, and is expected to achieve both volume and price rise in the future and become a large single product of 10 billion yuan.
2. Cyclosporine is expected to continue to increase in volume
Judging from the data in the above figure, it is expected that the number of people suffering from dry eye disease in mainland China will continue to expand in the future, among which the number of people suffering from moderate to severe dry eye syndrome will even exceed the number of people with mild dry eye syndrome, and the company's main cyclic roe deer disease is the first choice for the treatment of moderate to severe dry eye disease.
It can be seen that with the increase in the number of moderate to severe dry eye diseases in the future, the demand for dry eye drugs will also rise, and cyclic roe deer is expected to continue to increase.
From the perspective of the market size of dry eye medicine in mainland China, due to the increase in the number of moderate to severe dry eye syndrome in recent years, the market size of cycloroe deer will gradually surpass that of artificial tears, and it is expected to occupy more market share in the future, with broad development prospects.
In addition, at present, cycloroe deer eye drops have been included in the national medical insurance category B, although the price of the product has dropped from 799 yuan/box to 165 yuan/box, but it is also through the help of medical insurance to achieve rapid volume, which is expected to contribute to the company's performance.
3. Strong R&D capabilities
From 2019 to 2023, the R&D expenses of Xingqi Ophthalmic Medicine showed a sharp upward trend, increasing from 54 million yuan to 167 million yuan, a year-on-year increase of 14.89%. The number of R&D personnel in the company has also increased from 191 in 2022 to 239 in 2023, a year-on-year increase of 25.13%.
It can be seen that Xingqi Ophthalmic has continued to increase R&D investment in recent years, and its R&D capabilities have been continuously enhanced, which is conducive to giving full play to the advantages of product technology and promoting the company's performance.
Judging from the annual report, in 2023, in addition to the fields of myopia and dry eye syndrome, Xingqi Ophthalmology is also actively conducting research and development in fundus neovascularization, fundus macular and fungal keratitis, and constantly expanding the company's ophthalmology product line, so as to improve the market competitiveness of products and the company's influence, and promote the company's performance.
Finally, to sum up.
As a leading ophthalmic drug company in mainland China, Xingqi Ophthalmology continues to focus on ophthalmic research and development, and its future performance is expected to grow rapidly by virtue of the exclusive dividend period of atropine, coupled with its leading industry position and product advantages.
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