Surged over 100%, insulin leader Gan & Lee Pharmaceuticals makes a comeback

The pharmaceutical industry is emerging from the trough.

Against the backdrop of the silver economy, the impact of previous centralized procurement is fading.

Recently, Gan & Lee Pharmaceuticals, a leading domestic insulin manufacturer, released its performance forecast for the first half of 2025. The forecast shows that the company is expected to achieve a net profit of 600 million to 640 million yuan, a year-on-year increase of 100.73% to 114.12%, compared to 299 million yuan in the same period last year. The adjusted net profit is expected to be 460 million to 500 million yuan, a surge of 262.47% to 293.99% year-on-year.

Regarding the significant growth in performance, Gan & Lee Pharmaceuticals attributes it primarily to a notable increase in operating revenue and refined cost control.

Gan & Lee Pharmaceuticals stated that through two rounds of insulin centralized procurement, the company successfully achieved its strategic goal of expanding market share.

It is reported that the 2024 volume-based procurement, while significantly impacting Gan & Lee's short-term performance, continued to expand its market share.

Gan & Lee Pharmaceuticals noted in its performance forecast that the 2024 volume-based procurement saw a 32.6% increase in contracted volume compared to the previous round. Meanwhile, the reasonable rebound in product prices created a synergistic effect of simultaneous growth in volume and price.

Gan & Lee Pharmaceuticals stated that in the first half of 2025, leveraging the market coverage advantage gained from centralized procurement, the company deepened its presence in various market segments, resulting in significant growth in product sales.

Does this mean Gan & Lee Pharmaceuticals has entered a period of stable growth? How much room for growth remains?

Relevant data shows that Gan & Lee Pharmaceuticals is the first domestic company to master the industrial production of third-generation insulin. In 2005, it launched glargine insulin, breaking the monopoly of foreign companies and laying the foundation for domestic substitution.

In recent years, the most discussed topic has been the impact of centralized procurement on pharmaceutical companies' performance and, consequently, their valuations. During the first round of centralized procurement in 2021, Gan & Lee Pharmaceuticals entered the procurement scope by significantly reducing prices.

At the time, the industry's basic logic was to use third-generation insulin to capture the market share of second-generation insulin through price reductions. This strategy proved highly successful. Data shows that third-generation insulin now accounts for 70% of demand, a 36% increase from pre-procurement levels.

Gan & Lee Pharmaceuticals sacrificed short-term performance to gain a larger market share.

Financial reports show that from 2019 to 2021, Gan & Lee's revenue grew from 2.895 billion yuan to 3.612 billion yuan, with net profit increasing from 1.167 billion yuan to 1.453 billion yuan. In 2022, due to the impact of centralized procurement, revenue plummeted to 1.712 billion yuan, and net profit turned negative.

It is worth noting that amid the overall downturn in the pharmaceutical industry, Gan & Lee's choices have opened up growth opportunities in recent years. Reports show that from 2023 to 2024, revenue rose from 2.608 billion yuan to 3.045 billion yuan, and net profit increased from 340 million yuan to 615 million yuan.

In the first half of this year, performance has returned to pre-procurement levels. With continued growth, annual performance is expected to reach a record high.

Previously, the market questioned Gan & Lee's aggressive pricing strategy. The company's executives responded that increasing production was necessary to sustain growth for new products and those with low market share.

The results show that Gan & Lee emerged as the biggest winner in this round of insulin procurement. Its 2024 annual report revealed that all six insulin products submitted for procurement were selected, with A-class products in every category, securing 46.86 million units for the first year, a 32.6% increase from the previous round. Third-generation insulin products accounted for 43.55 million units, up 11.56 million units, representing 30% of the total. Domestic market share rose to second place, trailing only Novo Nordisk.

In other words, Gan & Lee's strategy of trading price for volume was a complete success.

Overall, after three years of adjustment, Gan & Lee has emerged from the trough and is back on a fast growth track. Additionally, its potential in the weight-loss market should not be underestimated. Research indicates that Gan & Lee is developing the world's first biweekly GLP-1 receptor agonist (GZR18) and a fourth-generation weekly insulin, with superior weight-loss effects and greater convenience compared to semaglutide.

Kan Jian Finance believes that Gan & Lee's spring has arrived, with future market opportunities now open. As performance continues to grow, the market will undoubtedly assign it the correct valuation.