Hansoh Pharma: Innovation Powerhouse Backed by Billionaire Controlling Shareholders Files for New Listing

When it went public on the Hong Kong Stock Exchange in 2019, Hansoh Pharma set itself the goal of becoming "an innovation-driven pharmaceutical company."Hansoh Pharma, which has been making frequent moves in innovative drug development this year, seems to have fully delivered on its promise from back then.

At that time, Hansoh Pharma only had one innovative drug that could generate cash flow — the anti-infective drug Milex. Now, its innovative drug pipeline has expanded to eight products, covering multiple fields such as oncology, autoimmune diseases, chronic illnesses, and anti-infectives. In 2023, Hansoh Pharma achieved a revenue of 10.104 billion yuan, with its innovative drug business contributing 6.865 billion yuan in revenue, accounting for 67.9% of total revenue.

Figure: An overview of Hansoh Pharma's marketed innovative drugs, Source: Jinduan Research Institute

Hansoh PharmaHansoh Pharma is regarded by many investors as a typical example of "innovative transformation" in traditional pharmaceutical enterprises. From a major generic drug manufacturer to a pioneer in innovative drugs, Hansoh Pharma took five years.

Hansoh Pharma was founded in 2015 and listed on the Hong Kong Stock Exchange in 2019. The company's chairman and chief executive officer is Zhong Huishan. As of the end of 2023, Zhong Huishan and her daughter Sun Yuan collectively hold 65.73% of the company's shares.

In addition to being the actual controller of Hansoh Pharma, Zhong Huijuan also holds another key identity—she is the wife of Sun Piaoyang, the actual controller of A-share listed company Hengrui Medicine. With their equity in the listed companies, Sun Piaoyang and Zhong Huijuan frequently appear on wealth rankings. The Hurun Global Rich List released in March 2024 showed that Sun Piaoyang and Zhong Huijuan ranked 291st and 370th on the list with fortunes of 61 billion yuan and 53 billion yuan, respectively.

In 1995, Sun Piaoyang and a Hong Kong investor, Cen Junda, co-founded Hansoh Pharma (the operating entity of Hansoh Pharmaceutical Group Company Limited). However, since Sun Piaoyang was still working at Lianyungang Pharmaceutical Factory (the predecessor of Hengrui Medicine) and had too much on his plate, his wife, Zhong Hujuan, joined Hansohn Pharma in 1996 to assist him with management.

Mr. Lü Aifeng has over twenty years of technical and management experience in research and development as well as product quality control systems in the pharmaceutical industry.

The company's overall senior management team structure is stable, with extensive relevant experience.

At its inception, Hansoh Pharma mainly adopted a "fast-follow" strategy, which involved imitating overseas drugs and quickly launching generic versions after the original product patents expired. With this strategy, Hansoh Pharma rapidly grew into one of the leading generic drug manufacturers in China. For instance, in 2013, the company launched "Xinwei," a generic version of the leukemia treatment drug Gleevec, which gained attention due to the movie"Dying to Survive"And has drawn widespread market attention.

However, due to factors such as the impact of centralized procurement and intensified competition in the generic drug sector, Hansoh Pharma is also planning a transformation and has begun to expand into the innovative drug business. In 2014, the company's first innovative drug, Metronidazole and Sodium Chloride Injection (brand name "Mailingda"), was successfully launched. In 2019, the company’s innovative drug business experienced a "boom."

In 2019, Hansoh Pharma had two innovative drugs launched on the market, including the GLP-1 class drug Pegloprazole Injection (brand name "Fu Laimei") and the second-generation BCR-ABL inhibitor Haosen Xinfu. Subsequently, Amelotinib, the oral anti-hepatitis B virus drug Tenofovir Amibufenamide Tablets (brand name "Hengmu"),XPO1 InhibitorSelinexor (trade name "Xpovio") and other products have been successively launched.

Currently, Hansoh Pharma has a comprehensive pipeline layout. Years of innovative drug development and clinical translation have enabled the company to possess multiple competitive products in the fields of oncology, central nervous system, anti-infectives, and metabolism.Among them, there are eight marketed products (including collaborative products), covering the aforementioned disease areas, and laying a solid foundation for the company's innovative R&D.

As the number of innovative drug products continues to grow, the revenue generated by Hansoh Pharma from these innovative drugs has also risen significantly. From 2019 to 2023, the company's operating income increased from 8.696 billion yuan to 10.105 billion yuan, and net profit rose from 2.557 billion yuan to 3.278 billion yuan. During the same period, the proportion of revenue from innovative drugs in Hansoh Pharma’s total revenue increased from 6.1% to 67.9%.

Hansoh Pharma, after several years of "silence," has finally come out on top. Barring any unforeseen circumstances, it is set to return to double-digit growth starting this year.

In 2023, the revenue from Hansoh Pharma's innovative drugs and collaboration products reached approximately RMB 6.865 billion, increasing by about 37.1% year-on-year. The proportion of such revenue to the total income rose to 67.9%. It can be said that,Hansoh has completely transformed into an innovation-driven enterprise.。

As shown in the table below, from 2019H1 to 2023H1, Hansoh Pharma's performance appears to have remained largely unchanged, showing little fluctuation. Whether it is revenue or net profit, there seems to be no significant difference between 2023H1 and 2019H1—time seems to have stood still for the company.

But in fact, the internal structure has undergone earth-shaking changes.

In 2020, innovative drugs accounted for only 18% of Hansoh Pharma's revenue structure, but by the first half of 2023 (2023H1), this figure had soared to 61.8%. In other words, over the years, Hansoh has been relying on the growth of innovative drugs to offset the shortfall caused by generic drugs. By 2023H1, this gap has largely been filled. Barring any unforeseen circumstances, its performance is expected to "take off at any time" in the future.

Sure enough, by the second half of 2023 (H2),Hansoh PharmaThe performance suddenly accelerated, driving the company to achieve annual revenue of 10.104 billion yuan, a year-on-year increase of 7.69%; net profit was approximately 3.278 billion yuan, an increase of about 26.9% compared to the same period last year. Looking at the chart below, by the time of the 2023 annual report, Hansoh Pharma clearly ended the situation of "treading water" that had persisted for several years.

In 2023, Hansoh Pharma's revenue broke through the 10 billion yuan mark for the first time. Anti-tumor drugs accounted for the largest share, generating 6.169 billion yuan in revenue, representing 61.0% of total revenue; the anti-infective field brought in 1.269 billion yuan, accounting for 12.6% of total revenue; the central nervous system disease area earned 1.367 billion yuan, making up 13.5% of total revenue; and the metabolism and other fields contributed 1.299 billion yuan, comprising 12.9% of total revenue. Innovative drug products have been launched and sold across all therapeutic areas.

Revenue from innovative drug business continues to rise, and Hansoh Pharma's R&D capabilities have also gained recognition from multinational pharmaceutical companies. In October and December 2023, Hansoh Pharma...ADC DrugsThe overseas exclusive license rights for HS-20089 and HS-20093 have been granted to GlaxoSmithKline (GSK), with an upfront payment totaling 270 million US dollars under the agreement.

As a member of the "large group" transitioning to innovative drugs, Hansoh Pharma has already taken the lead in transforming into an innovative pharmaceutical company, butStill requires a longer period of continuous accumulation andPower Up, Accelerate into the Fast Lane of Innovative Drugs.

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