Review of previous articles: What is the prospect of the third phase of drugs in the field of innovative drugs? Analysis of two drugs in the fourth phase of the field of innovative drugs. How much deferred income is there in the fifth phase of the field of innovative drugs? Let's

previous review:

Let’s do some extended thinking - since companies that can adopt the license out model must be companies with R&D capabilities, such as Innovent Biotech , Hengrui Medicine , Kangfang Biotech , BeiGene and other popular pharmaceutical companies.

So, in other words, does the more "deferred income" generated under the authorized R&D model mean the stronger its R&D capabilities?

Compare several innovative drug companies to take a look at their deferred income:

Microchip Bio - Because the authorized research and development time is earlier, the licensing fee is relatively small.

However, in 2015, Huya Biotech International transferred the Chidamide sold by Microchip Biotechnology to Japan Eisai in the form of a sub-license, and earned US$280 million in revenue.

BeiGene - The total authorized R&D contract is US$1.625 billion (equivalent to RMB 10.9 billion), and deferred income in 2018 was US$18 million (equivalent to RMB 121 million).

Innovent Biologics - the total authorized R&D contract is US$1.456 billion (equivalent to RMB 9.778 billion), and the deferred revenue from and in 2017 was RMB 349 million.

Hengrui Medicine - The total authorized R&D contract amounted to US$7.3 billion (equivalent to RMB 3.847 billion). There was no deferred revenue generated from authorized R&D in 2018.

Through comparison, it is very obvious that BeiGene’s authorized R&D contract total is higher, indicating that its products are more valued by foreign markets and its R&D capabilities are relatively stronger.

If we were to study just one of these popular companies, it would certainly be BeiGene.

However, in addition, there is a more important detail that needs to be noted - BeiGene's deferred revenue is lower than that of Innovent Biologics, but its actual recognized revenue is higher than that of Innovent Biologics. This shows the progress of BeiGene's R&D Faster than Innovent.

Hengrui Medicine has no deferred revenue, mainly for three reasons:

1) An authorization in 2015 has been terminated, and it terminated its cooperation with the authorized party Incyte;

1) Due to the cooperation with Arcutis in 2018, Therefore, the down payment has not yet been received;

2) 3) In the cooperation with TG Therapeutics, the down payment is paid in the form of equity, so it is not included in the deferred income.

After reading the research and development, it is not enough. For a pharmaceutical company, there are A more important business process needs to be done - the sales and promotion of new drugs on the market

The promotion expenses of new drugs on the market are reflected in sales expenses. In recent years, its sales expenses have been 24.4 million yuan, 31.99 million yuan, and 51.13 million yuan respectively. Accounting for 28.6%, 28.9%, and 34.6% of operating income

By comparison, Microchip Bio's sales expense rate is at a low level in the same industry. This is mainly related to the product track it has chosen - rare diseases.

The first indication of its main product, chidamide, is peripheral T-cell lymphoma , which is a rare disease. Since there are few competitors in the same track on the market, marketing expenses are relatively low.

Therefore, if you compare it with US stock company Alexion Pharmaceuticals , which also produces drugs for rare diseases, their sales expense ratios are similar.

In addition, from the perspective of sales expense growth VS revenue growth:

The more competitive products are Alexion and Hengrui . Although their sales expense rates are declining, their revenue growth rates are Growth can be maintained.Microchip Biotech and Beida Pharmaceutical have continued to invest in sales expenses to ensure the increase in revenue growth.

Having sorted out the main products and business logic of Microchip Biotech, a core question has arisen:

Its revenue of 148 million yuan and net profit of 31 million yuan. With such performance, its listing valuation is as high as 8 billion yuan, with a price-to-earnings ratio of more than 250 times. I would like to ask, is this valuation expensive?

Before valuation, we need to think about a question. For an innovative drug company, what are the applicable valuation methods?

predicts the follow-up, and listen to the next chapter’s analysis

does not constitute any investment advice. The stock market is risky, so you need to be cautious when entering the market