Where does the growth momentum for Jiangsu Hengrui Pharmaceuticals (01276) in the third quarter come from?

In 2026, China's innovative drug industry continues to enter a new stage of translating innovation into commercial outcomes. Data from the National Medical Products Administration show that China approved 76 innovative drugs for marketing in 2025, a record high; in the first half of 2026, another 38 innovative drugs were approved. As more innovative products reach the market, the industry's competitive focus has gradually expanded from the accumulation of R&D pipelines to product commercialization, profitability and sustained growth capability. For Jiangsu Hengrui Pharmaceuticals (01276), what is more worth watching than current performance is who will take over the next round of growth. On one hand, some innovative drugs approved earlier face increasingly intense market competition; on the other, new products, new indications and global collaborations continue to make progress. Amid the transition between old and new growth drivers, can Hengrui open up new growth space? With significant quarter-on-quarter growth, what new signals is Jiangsu Hengrui Pharmaceuticals sending? The latest disclosed third-quarter report shows that in the first three quarters of 2026, Jiangsu Hengrui Pharmaceuticals achieved operating revenue of RMB24.409 billion, up 5.26% year on year; of this, product sales revenue was RMB21.476 billion, up 2.52% year on year. Net profit attributable to shareholders of the listed company was RMB6.923 billion, up 20.38% year on year. In the third quarter alone, operating revenue was RMB8.953 billion and net profit attributable to parent was RMB2.458 billion, up 22.39% and 12.59% quarter on quarter, respectively. After pressure on growth in the second quarter, the significant quarter-on-quarter growth in third-quarter operating data provides a new signal for observing the company's subsequent growth trend. Putting this performance in an industry context, in the first half of 2026, operating revenue of pharmaceutical manufacturing enterprises above designated size was flat year on year, while total profit rose 4.2% year on year, both lower than the overall growth rate of industrial enterprises above designated size nationwide during the same period. Against the backdrop of intensifying industry competition, the growth of innovative drug companies also faces new tests. From the perspective of innovative drug sales performance, in the first three quarters Hengrui's innovative drug sales revenue reached RMB13.871 billion, up 17.05% year on year, accounting for 64.59% of pharmaceutical sales revenue. Among this, revenue from anti-tumor innovative products was RMB9.865 billion, up 3.13% year on year, accounting for 71.12% of innovative drug sales revenue. Non-tumor innovative products showed stronger growth momentum, with sales revenue reaching RMB4.006 billion, up 75.36% year on year, accounting for 28.88% of innovative drug sales revenue. From specific products, growth in the non-tumor business already reflects the supporting role of product portfolios across multiple therapeutic areas. According to the company's interim report, products such as Hengli Glizin in the metabolic field achieved relatively rapid growth, newly included medical insurance products such as Ivarmacitinib, Vunakizumab and Recaticimab accelerated volume ramp-up, and products such as Remimazolam and Tegileridine Fumarate in the anesthesia and analgesia field also contributed to growth. Marketed products in different therapeutic areas successively contributing revenue are becoming an important foundation for Hengrui to respond to competition in the innovative drug market and broaden growth sources. Taking a longer view, innovative R&D in the non-tumor field is accelerating its expansion. According to statistics in McKinsey's report "Building a Bridge to Global Innovation," from 2019 to September 2025, the number of China's Phase I and Phase II non-tumor innovative pipelines increased from 133 to 814, an increase of about 512%, higher than the approximately 330% increase in the tumor field during the same period. Relevant industry statistics from Citeline also show that global R&D pipelines in immunology and obesity grew 20.6% and 30.7% year on year, respectively. The diversification of R&D directions provides innovative drug companies with more long-term development opportunities. For Hengrui, in addition to continued expansion in the non-tumor field, approval and commercialization progress for important indications of tumor-related products are also important clues for observing growth in the next stage. Major indications, medical insurance access and core products: who can catch the next leg of growth? In the field of innovative tumor drugs, continued expansion of important indications is becoming an important path for Jiangsu Hengrui Pharmaceuticals to cultivate growth drivers for the next stage. Since the beginning of this year, multiple marketed core products have successively obtained approval for new important indications, further expanding potential patient coverage and creating new opportunities for subsequent sales growth. In the third quarter, Hetrombopag Olamine Tablets were approved for adult patients with chemotherapy-induced thrombocytopenia (CTIT) caused by anti-tumor therapy mainly based on solid tumor chemotherapy, becoming the world's first approved thrombopoietin receptor agonist (TPO-RA) in the CTIT field. As a non-peptide oral TPO receptor agonist, Hetrombopag has further expanded into the field of tumor supportive care, and the oral route improves treatment convenience. As the applicable patient population further expands, this new indication is expected to bring new market increment to the product. In addition, the HER2 ADC Trastuzumab Rezetecan was approved for a new indication of HER2-positive colorectal cancer, becoming China's first anti-HER2 product approved for colorectal cancer. This is the third indication approved in China for the product after lung cancer and breast cancer. At the same time, Trastuzumab Rezetecan also made important progress in the first-line treatment of HER2-positive advanced breast cancer. Its Phase III clinical studies (SHR-A1811-307), both as monotherapy and in combination with pertuzumab, reached the primary endpoint of progression-free survival (PFS). As therapeutic areas and lines of treatment continue to expand, Trastuzumab Rezetecan is expected to form a richer indication portfolio and create new opportunities for subsequent commercialization growth. If approval of new indications opens up potential market space, then medical insurance access is expected to become an important link in driving the release of commercial value. In the first half of this year, the HER2 ADC Trastuzumab Rezetecan was approved for a new indication in second-line treatment of HER2-positive breast cancer, and the CDK4/6 inhibitor Dalpiciclib was approved for a new indication in adjuvant treatment of early breast cancer. The former further expanded the indication scope of Trastuzumab Rezetecan, while the latter extended the treatment setting of Dalpiciclib to early-stage patients. According to information on drugs declared for the 2026 medical insurance catalog adjustment published by the National Healthcare Security Administration, both new indications have entered the public declaration list. For marketed innovative drugs, approval of new indications means an expanded potential patient population, while further expansion of medical insurance coverage is expected to drive the conversion of clinical demand into actual sales. If the relevant new indications successfully obtain medical insurance coverage, Hengrui is expected to usher in a new round of product market volume ramp-up opportunities. In addition to opportunities brought by new indications, existing core products also continue to provide growth support. Represented by the second-generation androgen receptor (AR) antagonist Rezvilutamide, Hengrui has formed an innovative product layout with a market foundation in areas such as prostate cancer. As clinical awareness increases and physician prescribing accumulates, related products are expected to further expand sales scale. From approval of new indications to advancement of medical insurance access and then to continued sales of mature products, Hengrui is cultivating new growth opportunities at different commercialization stages. How to translate an increasingly rich indication layout into actual sales increment will become an important focus for Hengrui in the next stage. From R&D to globalization, what other growth opportunities is Hengrui laying out? The continued realization of commercialization results cannot be separated from the sustained support of self-developed pipelines. According to Citeline's "Pharma R&D Annual Review 2026," Hengrui ranks second in the world by number of self-developed pipelines. At present, the company has 27 Class 1 innovative drugs and 6 Class 2 new drugs approved for marketing in China, more than 100 self-developed innovative products in clinical development, and more than 400 clinical trials conducted domestically and internationally. Entering the second half of 2026, Hengrui's innovation results continued to advance, with progress made in multiple areas from new drug launches and registration filings to key clinical studies. According to information disclosed by the company, in the third quarter a total of 7 innovation results were approved, including 2 Class 1 innovative drugs and 5 new indications; another 7 marketing applications were accepted. Among them, the closely watched metabolic product pipeline made multiple advances. Two marketing applications for the oral GLP-1 product HRS-7535 for adults with type 2 diabetes and long-term weight management were accepted, and the marketing application for the GLP-1/GIP dual receptor agonist Retatrutide Injection for adults with type 2 diabetes was also accepted. In addition, two Phase III study results for HRS-7535 were published in Nature Medicine, further enriching the clinical research evidence for the relevant products. In the oncology field, Hengrui's innovative products appeared at the European Society for Medical Oncology (ESMO) Congress for the 11th consecutive year. In 2026, Jiangsu Hengrui Pharmaceuticals had a total of 64 anti-tumor and related research results selected, involving 21 innovative drugs. Notably, two ADC Phase III clinical studies were both selected for preferred paper oral presentations: the HERON-Lung01 study of the HER3-targeted ADC Rui Kang Lu Ze Tuo Ta Monoclonal Antibody (SHR-A2009), focusing on patients with EGFR-mutant advanced non-small cell lung cancer who progressed after EGFR-TKI treatment; and the HORIZON-Breast06 study of the HER2 ADC Trastuzumab Rezetecan (SHR-A1811), focusing on patients with HER2-low advanced breast cancer. The appearance of these two studies further demonstrates Hengrui's continuously deepening innovative layout and clinical R&D strength in the ADC field. The large and diversified self-developed innovation pipeline formed by Hengrui's years of sustained investment provides a solid foundation for carrying out global cooperation at different levels. Differentiated innovative assets across multiple therapeutic areas from oncology to metabolism not only bring out-licensing opportunities for products, but also create conditions for joint R&D and deeper strategic cooperation. From the perspective of the industry environment, international cooperation in China's innovative drugs remains active. Statistics from a Guosheng research report show that from January to August 2026, the potential total value of China Meheco Group's overseas transactions reached US$112.857 billion, already exceeding the full-year level of 2024. Against this backdrop, Hengrui's continuously accumulating R&D results are being transformed into more diverse global cooperation opportunities. In May this year, Jiangsu Hengrui Pharmaceuticals reached a global strategic cooperation and licensing agreement with Bristol Myers Squibb (BMS), covering 13 early-stage projects in oncology, hematology and immunology, with cooperation content including bidirectional licensing, joint discovery and development, and more. The potential total value of this cooperation is up to approximately US$15.2 billion, of which a US$600 million upfront payment was received in the third quarter. Compared with traditional one-way asset licensing, this cooperation further extends to bidirectional licensing and joint R&D, reflecting the deepening of the cooperation model between the two parties. On September 29, Jiangsu Hengrui Pharmaceuticals reached an exclusive licensing agreement with Novo Nordisk for HRS-1596, a GLP-1/GIP dual receptor agonist with the potential for once-weekly oral administration. Under the agreement, Novo Nordisk obtained exclusive global rights to develop, manufacture and commercialize HRS-1596 outside Greater China. The potential total transaction value of this cooperation is up to US$2.6 billion, including a US$300 million upfront payment and up to US$2.3 billion in development, regulatory and commercialization milestone payments, and Hengrui will also receive royalties based on product sales. HRS-1596 has been approved to conduct Phase 1 clinical trials in China. It is worth noting that HRS-1596 is still in the early clinical development stage, yet the upfront payment was as high as US$300 million. This transaction arrangement reflects Novo Nordisk's emphasis on the project's R&D potential and further demonstrates the international cooperation appeal of Hengrui's innovative assets in the metabolic field. In addition to cooperation with large multinational pharmaceutical companies, the NewCo model is also continuing to advance. Hengrui's NewCo partners Kailera Therapeutics and Braveheart Bio listed on Nasdaq in April and August this year, respectively. Through a combination of innovative asset licensing and partial equity arrangements, Hengrui retains the opportunity to participate in partners' subsequent growth while promoting overseas development of relevant projects. From innovative asset licensing to strategic cooperation covering multiple early-stage projects and then to the NewCo model, Hengrui's globalization layout is presenting more diverse paths. In particular, cooperation with BMS has extended to bidirectional licensing, joint discovery and development, and potential co-commercialization of specific projects. Compared with simple asset export, the expansion of these cooperation models also provides new opportunities for Hengrui to participate more deeply in global drug R&D and value creation. From continued sales of marketed innovative drugs to approval of important indications and advancement of medical insurance access, and then to continuous output from the R&D pipeline and deepening global cooperation, Hengrui is forming more diverse growth support. The next round of growth no longer relies solely on market volume ramp-up of a single product; product echelons across multiple therapeutic areas and increasingly rich global cooperation paths are creating more opportunities for the continued translation of innovation results. As commercialization potential is gradually released and innovation value is accelerated, the momentum for Hengrui's new round of growth is gathering pace, and future growth space is becoming clearer.