Hengrui Medicine Alert:Access China conference highlights

Healthy growth expected in 2017

    Management guided 18-20% sales growth in China and 20% growth forexports in 2017, while net profit growth is likely to be higher than salesgrowth. For the domestic business, the main drivers include apatinib andcontrast agents. As for exports, the company expects sevoflurane to achieve15-20% market share by YE2017and it is likely to receive 5-8US ANDAapprovals in 2017. On NRDL revision, the company indicated that imrecoxib islikely to enter the new NRDL, while negotiation with government is ongoingfor the addition of apatinib. The company expects release of NRDL before CNY.

    Domestic growth to be driven by apatinib and contrast agents

    The company indicated that apatinib achieved solid results in 2016andremained optimistic on the growth in 2017, but declined to offer any details.We estimate apatinib sales in 2016might be approximately RMB950m whilethe budget for 2017is likely to be around RMB1.6-1.8bn. For contrast agents,strong growth momentum of approximately 30% is likely to continue with theramp up of new drugs including ethiodized oil and gadoteric acid megluminesalt injection. For the generic drugs business, the company expects pricingpressure to continue due to drug tender and secondary price negotiation.

    Updates on R&D and other key takeaways

    Management expects resubmission of 19K in the near term while retagliptin islikely to be refiled 1-2months after 19K. On albumin paclitaxel, the productionapproval is likely to be filed in 2017. The company also expects the completionfor phase 3studies for 3L liver cancer and NSCLC for apatinib and phases 3study for PD-1in liver cancer in 2017. For pyrotinib, phase 3study in Chinaand phase 1study in the US are on track. On R&D spending, it is likely to beapproximately 10% of sales in 2017. On M&A, the company indicated that thepriority would be companies with established sales channels in the US, whichcould allow the company to have its own sales force in the US as the exportsbusiness ramps up.