As we approach the mid-year earnings disclosure season of 2024, numerous innovative pharmaceutical companies are revealing their interim reports, showcasing impressive growth in both revenue and profitsThis surge in performance is primarily driven by the rapid market expansion of core medicinal products, with some entities achieving significant breakthroughs in overseas marketsNotably, sales in the U.Smarket are nearing 6 billion yuan, highlighting the global reach of these companiesIn addition, rigorous cost-control measures also contribute positively to these companies' financial outcomes.

Among the listed innovative pharmaceutical companies in the A-share market, companies like BeiGene, Eddingpharm, and Betta Pharma have attracted considerable market attention, with total market capitalizations of approximately 192.65 billion yuan, 15.01 billion yuan, and 14.91 billion yuan as of the closing price on August 9. These three firms have reported their operational data for the first half of 2024, displaying robust performances with revenue growth rates soaring up to 65.4%, and some registering non-recurring net profit increases of 144.98% year-on-year

From July to August 9, these companies saw their stock prices surge significantly, with increases of 28.47%, 16.3%, and 21.52% respectively.

Regarding these impressive financial performances, BeiGene released its main financial data on August 8, showcasing total revenue of 11.996 billion yuan, marking a spectacular year-on-year increase of 65.4%. Despite still facing a net loss of 2.877 billion yuan, it represented a reduction in loss compared to the previous year, specifically a 2.342 billion yuan decreaseThe adjusted net loss stood at 3.125 billion yuan, exhibiting a reduction of 2.377 billion yuan from the prior year.

As of the closing price on August 9, BeiGene's A-share price was 140.01 yuan, pushing its total market value to 192.65 billion yuanHistorically, BeiGene has maintained high revenue growth from 2021 to 2023, with year-on-year increases of 257.94%, 26.06%, and 82.13%. In terms of adjusted net profit, the company showcased a reduction in loss of 4.142 billion yuan in the full year of 2023 compared to 2022, followed by a 2.377 billion yuan reduction in the first half of 2024, indicating an ongoing improvement in operating conditions.

To complement financial statements compiled in accordance with Chinese accounting standards, BeiGene has employed adjusted operating profit indicators as supplementary data regarding operational performance

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After excluding the impact of non-cash items such as share-based payment expenses and depreciation, the adjusted operational loss for the first half of 2024 was 592 million yuan, compared to a loss of 3.342 billion yuan in the same period last yearDuring the second quarter of 2024, the company recorded an adjusted operating profit of 345 million yuanEast China Securities notes that this marks the first quarter where adjusted operating profit has turned positive, bringing the company close to turning its overall financial performance from a loss to a profit.

In addition to BeiGene's impressive performance, Eddingpharm and Betta Pharma also achieved remarkable growth as innovative enterprisesOn July 12, Eddingpharm released a performance forecast for the first half of 2024, estimating a net profit between 246 million to 280 million yuan, reflecting a year-on-year increase of 126.39% to 157.68%. The adjusted net profit forecast is between 175 million to 196 million yuan, translating to a year-on-year lift of 85.86% to 108.42%. Furthermore, the projected net profit for the second quarter of 2024 is estimated to range between 100 million to 134 million yuan, representing a year-on-year increase of 128% to 205%.

Over the prior years of 2021 to 2023, Eddingpharm experienced revenue fluctuations of -18.36%, -12.98%, and a modest growth of 6.03%, with non-recurring net profits declining by 74.41%, 63.98%, and exhibiting a dramatic increase of 689.66% in the most recent year, showcasing a significant turnaround in 2024.

On August 6, Betta Pharma disclosed its semi-annual report for 2024, achieving revenue of 1.501 billion yuan, which corresponds to a year-on-year growth of 14.22%. The company also recorded net profits of 224 million yuan, an increase of 51%. The adjusted net profit was 217 million yuan, indicating a remarkable year-on-year leap of 144.98%. The company’s prior revenue growth was more muted, with increases of 5.82% and 3.35% in 2022 and 2023 respectively.

As of August 9, share prices for Eddingpharm and Betta Pharma were 12.24 yuan and 35.66 yuan respectively, attributing total market values of 15.01 billion yuan and 14.91 billion yuan.

The success of these innovative pharmaceutical companies can largely be attributed to the growth of their product lines

BeiGene's revenue spike stemmed from its self-developed products, Brukinsa (zanubrutinib capsules) and Tislelizumab (made by a partner), whose sales saw significant increases during the first half of 2024.

During the first half of 2024, Brukinsa's global sales reached 8.018 billion yuan, representing a staggering increase of 122%. Of that amount, U.Ssales were approximately 5.903 billion yuan, reflecting an increase of 134.4%, stemming largely from expanded indications in the treatment of chronic lymphocytic leukemia, alongside a growing share in newly diagnosed patientsIn Europe, sales reached 1.057 billion yuan, marking a 231.6% surge, driven by increased market shares across all key regionsWithin China, sales were 873 million yuan, representing a growth of 30.5% due to expanded sales across approved indications.

Brukinsa has now been approved in over 70 markets globally, including China, the U.S., and the EU for multiple indications

In the first half of 2024, it received FDA and NMPA approvals for an indication treating adult patients with relapsed/refractory follicular lymphoma who have prior received at least two systemic therapies, making it the first BTK inhibitor approved for this indication and the most widely applicable BTK inhibitor for patients in China, the U.S., and the EUEast China Securities anticipates that Brukinsa is positioned to become a blockbuster product for BeiGene, aiming to venture into the multi-billion dollar market for hematological tumors alongside its other BCL-2 inhibitor.

Additionally, Tislelizumab's sales reached approximately 2.191 billion yuan in the first half of 2024, a year-on-year growth of 19.4%, driven largely by new patient demand due to its incorporation into the national healthcare insurance schemeCurrently, Tislelizumab has been approved for 13 indications in China, with 11 having met the criteria for inclusion in the national insurance directory

Furthermore, its global regulatory registrations are progressing steadily, helping establish a solid commercial foundation for BeiGene in the solid tumor market.

For Eddingpharm, the product growth trajectory has been fueled by new product launches and comprehensive market placement achievementsThe company’s first self-developed Class I innovative biological drug was approved by NMPA and FDA in 2023, successfully integrating into the national insurance directory through negotiations, marking 2024 as its first significant year for insurance volume growthThe company has also successfully negotiated for its sodium hyaluronate injection and secured opportunities for selective meds under central procurement, further bolstering rapid market volume.

Simultaneously, Eddingpharm's robust pipeline indicates an optimistic future for sustained performance growth as both new and existing products are anticipated to contribute positively.

Betta Pharma's growth primarily stems from contributions from its current product lineup

The company has five marketed products, with its cornerstone drug, Axitinib, maintaining stable sales, while the contributions from Enasidenib and Bevacizumab have seen measurable increasesThe inclusion of novel drugs like Furmonertinib and Vorolanib into the national insurance scheme has further accelerated their market tractionBetta Pharma is also proactively advancing its research and development timelines, with Enasidenib expected to receive FDA approval by year-end, and ongoing applications for recombinant human white blood cells.

Further emphasizing their impressive performance, the three companies have also managed to effectively control costsBeiGene noted in its 2024 mid-year financial results announcement that efficient expense management has enhanced operational efficiency significantlyEast China Securities highlighted that the company's sales and administrative expenses are stabilizing, while research expenses are maintaining low single-digit growth rates, reflecting a consistent improvement in financial health and the outlook of transforming losses into profits.

While BeiGene has not yet formally disclosed its semi-annual results for 2024, data from the winter quarter indicates that sales expense rates have decreased from 48.64% to 36.9%, with management expense rates dropping from 118.48% to 81.88%, and research expense rates declining from 91.9% to 62.1%.

Eddingpharm has attributed its impressive half-year performance forecast to notable sales growth outpacing expense growth, along with enhanced government subsidies tied to earnings recognition

This indicates a comparative decline in its expense rates for the first half of 2024. Data from the first quarter shows the sales expense rate fell from 26.61% to 23.74%, while management expenses dropped from 14.24% to 11.27%, and research expenses fell from 5.06% to 4.52%.

In parallel, Eddingpharm has significantly reduced potential impairments impacting performance by increasing its asset impairment provisions to approximately 952 million yuan in 2023, which ultimately mitigated the overall profit impact for 2024.

Betta Pharma's adjusted net profit, which soared by 144.98% in the first half of 2024, substantially exceeded its revenue growth of 14.22%. This remarkable achievement can be directly tied to the company's keen focus on managing operating expenditures while enhancing efficiency.

Southwest Securities analysts emphasize Betta Pharma's commitment to optimizing input-output efficiency, emphasizing quality in research projects while diligently managing operational expenditures