Innovent’s Half-Year Results Better Than Expected, Fair Value Estimate Intact, Remains Our Top Pick

Narrow-moat Innovent’s results were better than expected due to high growth in sales of non-Tyvyt drugs. Revenue for the six months was CNY 2.2 billion, or a 15% year-on-year growth. Although Tyvyt revenue declined 26% to USD 159 million (according to Eli Lily’s disclosures), we estimate that non-Tyvyt drug revenue was CNY 850 million, or about 150% growth. We think most of this was due to strong sales in its bevacizumab biosimilar. Cost of sales as a percentage of revenue from product sales doubled to 21.4% (from 10.2%), which is in line with our expectation due to price cuts in drugs such as Tyvyt and TNFa inhibitors.