Key Takeaways:
- Net profit RMB4.465 billion, up 0.3% YoY, missing analyst estimates
- Innovative drug sales jump 16.4% to RMB8.809 billion, 63.2% of pharma revenue
- Company plans RMB1-2 billion A-share buyback for employee incentives
Geri
Hengrui Pharma profit rises 0.3% as generics drag on bulk buying
Hengrui Pharma reported first-half net profit of RMB4.465 billion, up 0.3% from a year earlier, as China's bulk-buying programs squeezed its generics business.
"The company expects multiple growth drivers to gradually generate synergies and is optimistic that innovative drug revenue will achieve rapid growth," Hengrui said in its interim statement.
Revenue fell 1.9% to RMB15.456 billion in the six months through June. Innovative drug sales rose 16.4% to RMB8.809 billion, accounting for 63.2% of pharmaceutical sales, while generics revenue dropped 16.07% to RMB5.1 billion. Anti-tumor products generated RMB6.265 billion, up 2.6%, representing 71.1% of innovative drug sales. R&D investment climbed 19% to RMB4.605 billion, or 29.8% of revenue.
The results missed expectations. Second-quarter net profit of RMB2.2 billion trailed the average analyst forecast of RMB2.9 billion, while revenue of RMB7.3 billion fell short of the RMB8.9 billion estimate, according to LSEG data. Shares of Hengrui fell as much as 7.46% to RMB50.85 in Shanghai trading.
The company announced plans to repurchase A-shares worth RMB1 billion to RMB2 billion at a maximum price of RMB90.85 per share, with the shares used for employee share ownership plans or equity incentives.
Hengrui has completed 13 overseas business-development transactions since 2023, including out-licensing, NewCo and strategic alliances, with total potential value of about US$42 billion. Partners include BMS and GSK. Kailera Therapeutics completed its Nasdaq IPO in April, while Braveheart Bio listed on the Nasdaq Global Market on Aug. 6.
In its metabolic pipeline, two Phase III studies of ribupatide injection, a GLP-1/GIP dual receptor agonist, reported positive topline results for type 2 diabetes. HRS-7535, an oral GLP-1 receptor agonist, met all primary and key secondary endpoints in a Phase III obesity study, with mean body-weight reduction of up to 11.1%.
The flat profit growth signals that Hengrui's shift from generics to innovative drugs remains a work in progress, with bulk-buying pressure likely to persist. Investors will watch the planned NDA submissions for ribupatide and HRS-7535, along with execution of the buyback, as the next catalysts.
This article is for informational purposes only and does not constitute investment advice.
[1] HENGRUI PHARMA (01276.HK) 1H26 Net Profit Rises 0.3% YoY to RMB4.465 Billion; Shares Now Down Over 7%[2] Hengrui Pharma Reports 2026 Interim Results as Innovation and Globalization Continue to Drive Business Momentum[3] China's top drugmaker Hengrui sees profit growth squeezed by bulk-buying programs
