SINO BIOPHARM: When the "Innovation Proportion" is Crossing the Singularity

A mid-term report is sometimes just a periodic report card. But sometimes, it reveals a structural turning point.

The mid-term report of SINO BIOPHARM for 2025 belongs to the latter.

In the first half of the year, SINO BIOPHARM's total revenue reached 17.57 billion RMB, a year-on-year increase of 10.7%. But the real story lies beneath the profit statement: after excluding one-time factors, the adjusted net profit attributable to the parent company reached 3.09 billion RMB, with a year-on-year growth rate of 101.1%. The profit growth rate is several times that of the revenue growth rate, which is not simply a result of operational leverage.

The answer points to a key indicator: the proportion of revenue from innovative products. This figure reached 44.4% in the first half of 2025, getting closer to the annual target of 50%.

Innovative business has now become the core engine driving the company's growth and profitability. In the future, the company's value curve, market expectations, and even industry position will be redefined by this continuously rising proportion.

A Transformation Verified by the Market

The quality of growth is far more important than the speed of growth.

Behind the overall revenue growth of 10.7% for SINO BIOPHARM is a much faster growth of 27.2% in revenue from innovative products. The high-value, high-margin innovative product portfolio is indisputably becoming the locomotive driving the company's value growth.

This improvement in growth quality stems from a profound internal resource restructuring within the company.

On one hand, there is a firm investment in the future. In the first half of 2025, the company's R&D expense ratio reached 18.1%, a historical high, with 78% of R&D expenses allocated to the development of innovative products.

On the other hand, there is extreme efficiency in the present. In stark contrast to the significant increase in R&D investment, the company's sales and management expense ratio has continued to decline for five consecutive years, slightly decreasing to 42.9% this period. Against the backdrop of widespread marketing compliance pressures and high costs in the industry, this "reverse operation" demonstrates the company's excellent operational management capabilities, successfully optimizing the cost structure of existing businesses while expanding innovative investments. By enhancing its operational efficiency, it has established a strong, self-sustaining R&D engine.

The market's reaction has been keen.

After experiencing a long winter in the biopharmaceutical capital market, market sentiment has shifted from a fervent pursuit of "stories" to a rational return to "certainty." Capital is clearly gathering towards companies with strong self-sustaining capabilities, mature commercialization systems, and clear profit paths.

The strong cash flow, substantial cash reserves, validated commercialization capabilities, and an innovative pipeline about to enter a period of intensive harvest reflected in SINO BIOPHARM's mid-term report make it a rare asset that combines growth and safety in an uncertain industry.

This is a successful transformation validated by both market data and capital flows.

New Engine - Using LiXin as an Innovative Complement

If continuous internal changes laid a solid foundation for SINO BIOPHARM's transformation, then the full acquisition of LiXin Pharmaceutical announced in July has equipped it with a powerful new engine for global innovation Its core strategic intention is to acquire an innovative engine that fully complements the existing pipeline. LiXin Pharmaceutical has a globally leading antibody discovery and ADC technology platform in the fields of tumor immunity and tumor microenvironment, including the tumor microenvironment-specific antibody development platform (LM-TMETM), the antibody development platform targeting difficult-to-drug targets (LM-AbsTM), and the next-generation antibody-drug conjugate platform (LM-ADCTM). Acquiring these platforms means that the R&D capabilities of SINO BIOPHARM have taken a key step from "catching up" to "leading."

According to the company's explanation during the conference call, the integrated system will form an efficient "upstream and downstream" collaborative relationship.

LiXin Pharmaceutical will operate as a high-efficiency, high-output "innovation discovery engine," maintaining relative independence and focusing on work from early R&D to the IND (Investigational New Drug) stage. Once a project enters the IND stage, it will be seamlessly handed over to the mature platform of Zhengda Tianqing. Zhengda Tianqing will leverage its scaled clinical development, production (CMC), and commercialization capabilities to accelerate the late-stage development and market transformation of innovative assets.

This model retains the R&D vitality and efficiency of startup biotech while integrating the platform resources and certainty of large pharmaceutical companies, achieving a synergistic effect of "1+1>2."

This integration has also elevated the thickness and competitiveness of SINO BIOPHARM's R&D pipeline to a new height. A number of globally competitive blockbuster candidates have emerged, covering the four core therapeutic areas the company focuses on.

In the highly competitive oncology field, the company has formed a strong product matrix.

Among the internal pipeline, the CDK2/4/6 inhibitor TQB3616 for breast cancer treatment shows potential to overcome existing therapy resistance due to its stronger inhibition of the CDK2 target, with its second-line indication nearing approval and first-line and adjuvant treatments progressing rapidly. Another HER2 bispecific ADC drug, TQB2102, has demonstrated a significantly lower incidence of interstitial lung disease (ILD) in clinical trials compared to similar drugs, achieving a better balance of efficacy and safety.

The addition of LiXin Pharmaceutical brings more cutting-edge "ammunition." Its Claudin18.2 ADC drug LM-302 shows first-in-class potential in difficult-to-treat cancers such as gastric and pancreatic cancer and has received breakthrough therapy designation or fast track designation in both China and the United States. The globally leading CCR8 monoclonal antibody LM-108, as a new type of tumor immunotherapy, has received two breakthrough therapy designations in China and has shown excellent early efficacy in multiple solid tumors.

Beyond oncology, the layout in other fields is equally impressive. In the liver disease/metabolism field, Lanifibranor, as China's first oral MASH (metabolic dysfunction-associated fatty liver disease) drug entering Phase III clinical trials, is expected to fill a significant market gap. In the respiratory field, the PDE3/4 inhibitor TQC3721 ranks second in global development progress and is expected to become a cornerstone drug for COPD treatment These potential products also have ample external business development expectations.

A global R&D pipeline driven by both internal research and external acquisitions, with a reasonable structure, clear tiers, and coverage of cutting-edge targets and major disease areas, has already taken shape.

Three-Year Blueprint for Global Pharma

For SINO BIOPHARM, the long investment period for value creation is coming to an end, and the intensive harvest period for value realization has arrived.

According to the company's plan, the next three years (2025-2027) will be an "innovation super cycle." Nearly 20 innovative products are expected to be approved and launched successively, with more than half expected to have peak sales exceeding RMB 2 billion.

• 2025: In the second half of the year, CDK4/6 inhibitors and HER2-EGFR products are expected to be approved and launched, with innovative drug revenue accounting for a historic breakthrough of over 50% for the year.
• 2026: Five innovative drugs are expected to be launched, including heavyweight products such as HER2 bispecific antibody ADC and Claudin18.2 ADC.
• 2027: More than 10 innovative drugs are expected to be launched, at which point the number of innovative products launched by the company will exceed 35, with revenue accounting for over 60%.

This accelerated value realization will fundamentally reshape the company's financial model. The continuous influx of high-profit products will further optimize the revenue structure and drive profits into a new phase of rapid growth.

More profound changes are occurring at the strategic level of R&D. The company's chairman has clearly stated in the outlook that it aims to shift from "following innovation" to "first-in-class" and "best-in-class," becoming a global Pharma.

The global top-tier discovery platform brought by Li Xin Pharmaceutical is the technological cornerstone for achieving this strategic leap. These platforms enable the company to challenge more difficult targets, fundamentally enhancing the value of innovation.

Supporting this grand blueprint is the company's strong financial strength.

As of June 30, 2025, the company has a cash reserve of up to RMB 30.5 billion. This substantial "war fund" gives the company great initiative and flexibility in future industry integration. The company's management has openly stated in conference calls that it does not rule out continuing acquisitions, product licensing-in, platform technology collaborations, and various forms of transactions, and is continuously exploring cooperation with top laboratories and scientists globally.

The model of "internal growth + external acquisitions" is a common growth path for global pharmaceutical giants.

The company's management has expressed confidence in the future in the last two conference calls, providing stable guidance for achieving double-digit growth in both revenue and net profit for the year, and is optimistic about further growth in the second half of the year.

At the same time, the management also emphasized that it will not disappoint the market in external business development for core products. An internal and external collaborative, high-efficiency R&D system is taking shape, and a product launch "super cycle" consisting of nearly 20 heavyweight new products is about to arrive.

The capital market needs to start re-evaluating this company with a brand new, global perspective