Bank of Communications International has issued a research report stating that Hengrui Pharma's first-quarter results continued the high-growth trend from the previous year. Sales of innovative drugs, particularly non-oncology products, grew rapidly, accounting for over 60% of total product sales, indicating that the company's innovation transformation has been largely successful. The company continues to efficiently advance its research and development efforts, with multiple pipelines making positive progress. ADC data readouts at the ASCO conference are highly anticipated. Based on the first-quarter performance, Bank of Communications International has raised its profit margin forecasts for Hengrui Pharma for 2026 to 2028 and increased its net profit forecast by 3% to 4%. The report considers the company's current valuation reasonable and has raised the target price to HK$74, while maintaining a "Neutral" rating. The report noted that Hengrui Pharma's first-quarter revenue and adjusted net profit grew by 13% and 17% year-on-year, respectively, slightly exceeding the bank's previous expectations. Revenue from innovative drugs surged 26% year-on-year, increasing its share of total product sales to over 60% (61.7%). Non-oncology products performed notably well, with revenue growing 92% year-on-year, benefiting from multiple product approvals, new inclusion in the national reimbursement drug list, and accelerated hospital adoption. First-quarter business development revenue reached RMB 787 million, primarily from the upfront payment for the GSK collaboration (PDE3/4) and revenue recognized from 11 other assets based on R&D progress. For the full year, the company expects to recognize US$250 million out of a total upfront payment of US$500 million.
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