--- title: "Despite a 90.36% year-on-year increase in net profit, Gan & Lee Pharmaceuticals still couldn't stop its stock price from falling. How can the company regain its glory amid the 'growing pains'?" description: "Uneasy sentiment continues to pervade the capital markets. Source | Pharmaceutical Research Society Among the companies most affected by insulin centralized procurement in recent years, Gan & Lee " type: "topic" locale: "en" url: "https://longbridge.com/en/topics/25631183.md" published_at: "2024-11-20T06:12:39.000Z" author: "[医药研究社](https://longbridge.com/en/profiles/15545088)" --- # Despite a 90.36% year-on-year increase in net profit, Gan & Lee Pharmaceuticals still couldn't stop its stock price from falling. How can the company regain its glory amid the 'growing pains'? ![Image](https://pub.pbkrs.com/uploads/2024/ca32ee190ea20210a3c5725c64635edc?x-oss-process=style/lg) Unease continues to pervade the capital markets.   **Source｜**Pharmaceutical Research Society When it comes to companies most affected by insulin centralized procurement in recent years, Gan & Lee Pharmaceuticals is undoubtedly one of them. Since 2021, the insulin centralized procurement initiative was officially launched. As an industry leader, Gan & Lee Pharmaceuticals actively participated and expanded its market reach through the procurement, but its financial performance has seen significant fluctuations. Financial reports show that in 2022, Gan & Lee Pharmaceuticals' revenue was 1.712 billion yuan, a year-on-year decline of 53%, with a net loss of 440 million yuan. By 2024, the company's performance has shown considerable recovery. According to financial reports, in the first nine months of this year, Gan & Lee Pharmaceuticals achieved revenue of 2.245 billion yuan, a year-on-year increase of 17.81%, and net profit attributable to shareholders of 507 million yuan, up 90.36% year-on-year. However, unease still lingers in the capital markets. As of the close on November 18, Gan & Lee Pharmaceuticals' stock price was 45.73 yuan per share, down about 80% from its peak. Additionally, major shareholders have been reducing their holdings. Reports indicate that since its IPO, Gan & Lee Pharmaceuticals has announced as many as 14 rounds of shareholder 减持 plans. ![Image](https://pub.pbkrs.com/uploads/2024/98f3bd445cfb0c99d84867bbf96ec93a?x-oss-process=style/lg) So, what are investors' concerns about Gan & Lee Pharmaceuticals? And how can the company enhance the certainty of its growth? **1\. Centralized Procurement and Market Competition: Gan & Lee Pharmaceuticals Enters a 'Transition Period'** Looking back at 2022, the significant decline in Gan & Lee Pharmaceuticals' performance was closely tied to price reductions resulting from centralized procurement. It is reported that in the 2021 insulin centralized procurement, six of Gan & Lee Pharmaceuticals' insulin products—including insulin glargine injection, insulin lispro injection, and insulin aspart injection—were all selected, with an average price cut of 65.33%. Under these circumstances, Gan & Lee Pharmaceuticals' performance was bound to fluctuate significantly. The company has acknowledged that "while centralized procurement has boosted sales volume, the short-term increase in volume has not yet offset the impact of price reductions on revenue." After participating in centralized procurement, the company has been eager to regain its high-growth trajectory, but successive financial reports have shown that reaching previous peaks is no easy task. For example, in the first three quarters of 2023, Gan & Lee Pharmaceuticals reported revenue of 1.906 billion yuan, up 54.07% year-on-year but still 24% lower than the 2.503 billion yuan recorded in the same period in 2021. Net profit attributable to shareholders was 266 million yuan, a significant turnaround from losses but still 70% below the 871.4 million yuan achieved in the same period in 2021. Beyond centralized procurement, fierce market competition has also hindered Gan & Lee Pharmaceuticals' progress. First, it's undeniable that insulin products have vast commercial potential. Data from the International Diabetes Federation (IDF) Diabetes Atlas shows that 9.1% of adults worldwide suffer from impaired glucose tolerance (IGT), totaling 464 million people. By 2045, this figure is expected to rise to 10%, affecting 640 million adults. This enormous demand has attracted numerous pharmaceutical companies to enter the market. According to Pharmaceutical Economic News, in 2023, seven companies were selling recombinant human insulin preparations in sample terminal markets. Among them, Novo Nordisk (imported + joint venture) ranked first with a 48.84% sales share, followed by Tonghua Dongbao Pharmaceutical at 16.73%, and Zhuhai United Laboratories Zhongshan Branch at 15.12%. Overall, under the influence of centralized procurement and market competition, Gan & Lee Pharmaceuticals' path to regaining growth will require significant effort, which has also affected investors' expectations for the company's future. While the improved performance in the first three quarters of this year still falls short of 2021 levels, it reflects the greater possibility of Gan & Lee Pharmaceuticals returning to its peak. What factors are driving this recovery? **2\. What Should Gan & Lee Pharmaceuticals Be Wary of After Regaining High Growth?** Regarding the reasons for growth in the first three quarters of this year, Gan & Lee Pharmaceuticals provided its own analysis in the financial report, which can be summarized as follows. First, as centralized procurement policies continue to improve, insulin 续标 has been implemented, bringing product prices back to a more reasonable range. In the insulin 续标 in April this year, all six of Gan & Lee Pharmaceuticals' core products were 续标， with prices rising by an average of 31% compared to the initial centralized procurement. In terms of 协议量， Gan & Lee Pharmaceuticals secured 46.86 million units for the first year, a 32.6% increase from the previous centralized procurement. It can be said that centralized procurement has also created opportunities for Gan & Lee Pharmaceuticals to achieve "volume and price increases simultaneously." In the financial report, the company stated, "With the deepening implementation of centralized procurement policies, we expect to continue benefiting from both price increases and higher 协议量， driving sustained and stable growth in performance."   Second, while focusing on domestic market expansion, Gan & Lee Pharmaceuticals has accelerated its overseas expansion. According to the third-quarter report, Gan & Lee Pharmaceuticals' international sales revenue reached 242 million yuan, up 37.63% year-on-year. Currently, the company's insulin products have obtained 51 drug registration approvals in 19 overseas countries and regions, with 正式 commercial sales in 18 of them. ![Image](https://pub.pbkrs.com/uploads/2024/217546253084d6ad5e553063ac141fec?x-oss-process=style/lg) However, it's worth noting that while the global insulin market is larger, giants like Novo Nordisk, Eli Lilly, and Sanofi hold dominant positions. For now, Gan & Lee Pharmaceuticals faces significant competitive pressure in its overseas expansion, requiring the company to continuously strengthen its competitive barriers. But judging from Gan & Lee Pharmaceuticals' current R&D spending, the company appears to be "cutting expenses to ensure profits." Financial reports show that in the first three quarters of 2024, R&D expenses were 201 million yuan, with an R&D 投入率 of just 8.95%—lower than the 11.63% recorded in the same period last year and below the industry average. This inevitably raises concerns among investors about the smooth progress of future product pipeline development. ### Related Stocks - [603087.CN - Gan & Lee](https://longbridge.com/en/quote/603087.CN.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.