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On the evening of March 30, Joincare Pharmaceutical Group Industry Co., Ltd. (hereinafter referred to as "Joincare," 600380.SH) released its 2020 annual report. According to the report, the company achieved operating revenue of 13.522 billion yuan, a year-on-year increase of 12.87%, and net profit attributable to shareholders of 1.12 billion yuan, a year-on-year increase of 25.28%. This achievement of increased profits and revenue not only continues Joincare's steady growth trend in recent years but also highlights the enormous value of the company's layout in the high-quality inhaled formulation sector.

Dedicated Layout of Innovation-Driven, Strength Supporting Steady Revenue Growth

In 2020, the impact of the COVID-19 epidemic spread across various industries in both domestic and international markets. Against the backdrop of the biopharmaceutical industry where crises and opportunities coexist, Joincare's various business segments developed steadily, with multiple innovative products continuously making efforts. The company successfully completed its operating goals for the reporting period. The company's revenue growth mainly benefited from the continuous increase in the contribution of key formulated product sales from early dedicated layouts to overall revenue. For example, sales of the main chemical pharmaceutical product, sodium apixaban for injection, increased rapidly year-on-year; sales of levomilnacipran microspheres for injection, piperonyl butoxide hydrochloride tablets, and fluvoxamine maleate tablets achieved sustained and substantial year-on-year growth; exports of meropenem (mixed powder), a major variety of chemical raw materials, achieved significant growth, and new sales of novel coronavirus antibody detection reagents were achieved. The 2020 annual report shows that Joincare's chemical pharmaceutical products achieved sales revenue of 6.699 billion yuan, a year-on-year increase of 8.44%; chemical raw materials and intermediates products achieved sales revenue of 3.935 billion yuan, a year-on-year increase of 12.24%; and diagnostic reagents and equipment product revenue increased by 83.28% year-on-year.

Since its listing, Joincare, under the leadership of Chairman Zhu Baoguo, has adhered to technological innovation as its strategic foundation, committed to building a technological platform for high-barrier complex formulations. After years of development, Joincare has become a comprehensive pharmaceutical company covering multiple fields, including chemical preparations, traditional Chinese medicine preparations, chemical raw materials and intermediates, diagnostic reagents and equipment, and health products. In 2020, the company gradually entered the harvest period of its pipeline. During the reporting period, 5 new products were approved for listing, most of which are high-barrier complex formulations. Among them, 3 varieties (5 specifications) of inhaled formulations and 1 variety (2 specifications) of lipid microemulsions were approved, marking a major breakthrough in the company's R&D and industrialization in innovative drugs.

It is understood that due to the extremely high difficulty of imitation of inhaled formulations, China's respiratory drug field faces "bottleneck" development challenges such as high technical barriers, high costs, and high risks. The domestic inhaled formulation market is monopolized by multinational companies. While maintaining steady operations, Joincare, relying on its competitive advantages as a comprehensive pharmaceutical company, has dedicated itself to the inhaled formulation field for eight years, leading top domestic experts and R&D teams to conduct in-depth research and create innovative achievements, preemptively seizing the segmented market in the inhaled formulation field. In 2020, the company's cumulative R&D investment reached 1.261 billion yuan, a year-on-year increase of 18.25%, accounting for 9.32% of total revenue. There are a total of 137 research and development products, including 41 complex reagents in chemical preparations.

In addition, Joincare continues to increase the intensity of strategic cooperation and continuously pay attention to cutting-edge technologies. For example, in 2020, the investment in Xinling Pharmaceutical added a layout in the field of transdermal patch technology. Recently, the company also announced a strategic cooperation agreement signed between Joincare Research Institute and Tencent Quantum Laboratory to jointly promote the role of quantum computing + artificial intelligence in microbial synthetic biology research and related drug research.

Accelerated Realization of Inhaled Formulation Layout, Driving Force for Revenue Growth

As a leading domestic enterprise in inhaled formulations, in 2020, Joincare's listed and under-research inhaled formulation products are transitioning from the accumulation stage to an "echelon" outbreak stage. After the listing of multiple drugs, the specifications and types of domestic inhaled formulation generic drugs are continuously expanded, breaking the industry competition pattern monopolized by a few multinational companies. During the reporting period, the company obtained registration certificates for 5 varieties, clinical approval for 6 varieties, and passed consistency evaluation for 4 varieties. Joincare has not only built a matrix of multiple inhaled product formulations but also accelerated the entire process of drug R&D, production, and listing while ensuring quality and quantity. The listing and sales of key products demonstrate the company's ability to realize its industrial layout and have become the leading force in the company's revenue recovery after the control of the epidemic.

According to publicly available data, in 2020, the two main inhaled formulation varieties for which Joincare obtained drug registration certificates were: ipratropium bromide and budesonide suspension. Among them, inhaled budesonide suspension was approved in two sizes, 2ml:0.5mg and 2ml:1mg, which are also core products with a large market volume. At the same time, previously approved inhaled formulation varieties have also made rapid progress. After being approved for pediatric dosage forms, Lishutong (salbutamol hydrochloride nebulization solution), as the first domestically approved Class 3 chemical drug and a major national science and technology project variety, was included in the national medical insurance catalog, obtaining recognition from the state and the pharmaceutical industry for its products and technology.

In terms of marketing, in 2020, Joincare reorganized its offline prescription drug sales team. While strengthening the coverage of existing advantageous varieties, it established a respiratory-specific sales team based on the needs of product strategic layout. A refined marketing expansion system covering the whole country has been basically formed, significantly accelerating the speed of new respiratory products entering hospitals. In the future, the company's diversified online and offline marketing model is expected to empower various research and development products to continuously expand the market and contribute to revenue elasticity.

Joincare stated that in 2020, the company's inhaled formulation product matrix progressed smoothly and met expectations. In the next stage, the company will accelerate the development of new products into hospitals and increase the momentum of revenue growth. At the same time, the company will continue to adhere to steady progress, striving to become a research-oriented pharmaceutical enterprise with industry influence under the dual drive of innovation and high-barrier technology platforms, carefully developing new drugs, actively developing products and markets.