Hualan Biological Alert:Access China conference highlights 2017

Albumin shortage remaining, guiding 25% growth in 2017

    The company guided 25% YoY revenue growth for FY17 and above 20% CAGR in 2017-19. Management estimated the plasma collection exceeded 1,020 tons in 2016; translating into 40% YoY increase. While the company expects 1,650 tons by YE19 from 23 existing plasma stations, it also plans to open 2 new stations each year. For albumin, although its ASP is unlikely to rise like before, the supply shortage remains even in tier 1 cities, according to management. This is consistent with our recent due diligence in Beijing and Shanghai.

    Volume and ASP upside in the PDT (plasma derived therapeutics)

    Revenue breakdown for PDTs among albumin, IVIG and factor VIII are about 40%, 40% and 13%, while the rest are from vaccines. Market dynamics between domestic and MNCs are stable at 40%/60% split according to Hualan. The company revealed that direct/indirect sales of albumin are 30%/70% respectively. Hualan saw supply conditions improved for albumin, while factor VIII and IVIG are still in severe shortage. Further volume and ASP upside in these products are expected.

    Updates on vaccine and monoclonal antibody segments

    Hualan booked a net loss of RMB33mn in vaccine arm in 2015, and another loss of RMB50mn expected in FY2016 following the Shandong vaccine event and distributor destocking. Hualan plans to exports vaccines upon approval of international vaccine registration. The company expects to deliver 2mn units of vaccines to overseas markets. For the mAbs, it has received the first OEM order of approx. RMB5mn last year. The company jointly invested and developed the largest domestic mAb reactor container with Hualan Genetic Engineering Limited. At present, 4 mAbs are under development, of which 3 received clinical approvals. All 4 mAbs imported R&D techniques from top 5 WW best-selling originator products.