Tonghua Dongbao Pharmaceutical Co., Ltd. (stock code: 600867, hereinafter referred to as "Tonghua Dongbao" or the "Company") released its Q1 2023 results on April 26. During the reporting period, the Company recorded RMB 665 million in revenue, RMB 250 million in net profit attributable to owners of the parent company, and RMB 247 million in net profit attributable to owners of the parent company excluding non-recurring gains and losses.

Expanding product portfolio and increasing product sales

Since the beginning of the year, the Company has launched Pre-mixed Insulin Aspart 30 and 50 and oral anti-diabetic drug (OAD) Repaglinide. Meanwhile, the GLP-1RA liraglutide injection and the empagliflozin, another OAD, are expected to be approved for marketing within 2023. These new products have further improved the Company's product structure. During the reporting period, the revenue from insulin analogs increased to more than 20% of the total insulin revenue.

In Q1 2023, the sales of human insulin steadily grew, and the sales of insulin analogs remained strong. The Company has been introducing its insulin analog products into hospitals. By the end of March 2023, the insulin aspart products have been made available in over 2,300 secondary and tertiary hospitals, and insulin glargine is available in nearly 4,500 secondary and tertiary hospitals. The rapid increase in sales of insulin aspart and insulin glargine products will boost the Company's product sales and enhance its overall performance.

Lower cost, higher efficiency, and greater profitability

In Q2 2022, the centralized drug procurement program cut the insulin prices and put pressure on the Company. However, the Company turned the challenge into an opportunity by expanding sales channels, increasing product sales, and taking measures to reduce costs and boost profitability.

The sales growth generated economies of scale, and the optimized supply chain management and production processes further boosted operational efficiency. Despite centralized procurement, the Company maintained a gross profit margin of over 80% for insulin products and a comprehensive gross profit margin of over 75%.

Product innovation and global expansion

Innovation is top of mind for us. In Q1 2023, our R&D spending hit RMB 92 million, up 26.86% YoY. We are accelerating our R&D process. During the reporting period, novel drugs for gout/hyperuricemia have seen rapid progress. In January 2023, the Phase I clinical trial of the URAT1 inhibitor met the primary endpoint. In February 2023, the first subject was enrolled in the Phase II clinical trial. Now, we have exceeded 50% of the enrollment target for the Phase IIa clinical trial.

We are also speeding up our global expansion in recent years. The European Medicines Agency has accepted our marketing authorization application for human insulin injections. If approved, it will accelerate the registration process and promote sales of our human insulin products in overseas markets.

Innovating to excel

Looking ahead, with increasingly diversified products, Tonghua Dongbao will quicken its expansion both domestically and globally, further increasing its sales and market share. We will continue our focus on in-house R&D and external cooperation to drive long-term, high-quality growth.