Shares in China’s top drugmaker Hengrui fall as quarterly profit disappoints

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SHANGHAI (Reuters) -Shares in Jiangsu Hengrui Pharmaceuticals dropped nearly 5% on Tuesday, after China’s biggest drugmaker by market value reported a worse-than-expected third-quarter profit.

The specialist in oncology, neurology, immunology, respiratory, metabolic and cardiovascular drugs has expanded licensing deals and developed more innovative drugs amid Beijing’s centralised bulk buying programmes, which have squeezed generic drug revenues.

“Hengrui third-quarter profit growth fell short of market expectations with no contribution from BD (business development) income,” said Cui Cui, an analyst at investment bank Jefferies.

In September, Hengrui agreed to grant a paid license for its innovative cancer drug, trastuzumab rezetecan, to the Swiss arm of India’s Glenmark Pharmaceuticals, with an upfront payment of $18 million under the deal.

The deal was a part of a string of new licensing agreements earlier in the year with overseas drugmakers such as Merck and Britain’s GSK.

More business development income should be recorded in the later quarters, Cui said.

Other catalysts for the drugmaker include sales ramp-ups of its inflammatory and autoimmune disease drugs, Vunakizumab and Ivarmacitinib, Jefferies analysts said in a recent note.

The company posted a 9.5% rise in net profit attributable to shareholders for the quarter ended September 30 to 1.3 billion yuan ($182.5 million) on Monday, below analysts’ estimate of 2.1 billion yuan, per data compiled by LSEG.

Net operating revenue for the quarter rose 12.7% to 7.4 billion yuan, falling short of analysts’ estimate of 8.9 billion yuan.

($1 = 7.1230 Chinese yuan renminbi)

(Reporting by Andrew Silver in Shanghai; Editing by Sumana Nandy)