The revenue scale of 11.812 billion yuan and the net profit level of 2.061 billion yuan were the operating results of Livzon Group on March 26 last year. This is also the first time since 2018 that the company's net profit attributable to parent company has exceeded the integer mark of 2 billion yuan.

In recent years, the overall performance of the pharmaceutical industry has been under pressure. The chemical preparation field of Livzon Group has also been affected by policies such as medical insurance negotiations and centralized procurement, including the sales revenue of key products such as ilaprazole sodium for injection and voriconazole for injection. However, as an innovative comprehensive pharmaceutical company, the company has maintained stable performance and operational resilience.

According to the company's 2024 annual report, the optimization of revenue structure, the continuous advancement of strong research and development, the continuous enrichment of product clusters, and the expansion of long-term performance growth space have become important factors for the company to achieve "centralized procurement and immunity".

Filling up the "technology tree"

When centralized procurement drastically cuts into the red ocean of generic drugs, filling up the "technology tree" has become the response of Livzon Group, a large pharmaceutical company. With microsphere technology dominating the long-acting preparation world on the left hand and the pipeline under development advancing rapidly on the right hand, the development record of Livzon Group is outlined.

From the analysis of Livzon Group's annual report, Livzon Group has not only built a high-barrier complex preparation platform represented by microspheres and an innovative drug platform represented by biological drugs, but has also gradually become a large-scale comprehensive pharmaceutical company with comprehensive development of preparations, raw materials and diagnostic reagents; at the same time, through R&D innovation, it has focused on the five major areas of chronic diseases such as digestion, assisted reproduction, mental neurology, anti-infection and metabolism, and built a rich pipeline under development, in order to lay the foundation for long-term development.

According to the 2024 annual report, Livzon Group has a clearer layout in R&D: among the 45 projects under development, 23 are innovative drugs, high-barrier complex preparations, and high clinical value products, and competitive drugs in key areas have entered the late stages of application for listing or clinical phase III, and some major single products have emerged. Aripiprazole microspheres, semaglutide, IL-17 A/F and other products with market potential are about to be launched.

The "technology tree" needs strong R&D support. The 2024 annual report shows that the company's R&D investment exceeded 1 billion yuan again last year, and the R&D investment in the past five years has exceeded 6 billion yuan.

Self-research + BD have become the two wheels driving R&D of Livzon Group. BD is conducive to quickly filling the company's pipeline, while self-research uses AI to accelerate the self-research process.

The accelerated pace of BD is the performance feature of Livzon Group's R&D last year. Six projects, including innovative KCNQ2/3 drugs for psychoneurology, D2/D3/5HT2A receptor antagonists, innovative DHODH inhibitors in the field of anti-infection, innovative PDE5 inhibitors in the field of men's health, innovative small nucleic acid drugs in the field of metabolism, and new recombinant protein influenza vaccines, have been successfully introduced, of which five are innovative drugs. At present, the company is accelerating the subsequent clinical development work.

The company has made it clear that the BD direction is based on the group's key areas, including digestion, psychoneurology, metabolism, anti-infection and other fields, taking into account both short-term and medium-term projects, and focusing on projects that are highly compatible with the existing pipeline or can form complementary advantages, so as to promote the company's product iteration and the construction of innovative technology platforms.

The role of AI is becoming explicit

Strong R&D is reflected not only in R&D investment, but also in the R&D structure. Innovative drugs and high-barrier complex preparations (microspheres) have already constituted important product matrix puzzles.

How to ensure the efficiency of strong R&D? The core secret lies in the continuous optimization of production relations.

In order to adapt to the strong R&D investment, Livzon Group has continuously improved its management structure and built an integrated management structure for pharmacy, non-clinical, medical strategy, clinical operation, drug vigilance, and registration affairs, achieving full coverage and control of the entire process of drugs from early research to market launch.

This continuous optimization is more conducive to innovation focus. In last year's annual report, the company made it clear that by strengthening the project establishment and re-evaluation mechanism, through prudent evaluation and decision-making, some common generics, lack of market competitive advantages or low patent protection barriers will be comprehensively optimized, and resources and R&D investment will be concentrated to fully promote competitive R&D projects.

A noteworthy phenomenon is that the role of AI in Livzon Group's R&D is becoming more prominent. Liu Ning, the company's secretary, gave an example, saying that Livzon has comprehensively expanded its diversified application scenarios in the entire process of drug research and development and achieved phased results. For example, in the early stage of drug research and development, the company used the precise process of the AI platform to efficiently predict the physical and chemical properties and stability relationship of the input molecules; the innovative molecular route design based on AI provides a new idea for the exploration of chemical synthesis paths and process development, helping the scientific research team to accurately explore more potential and promising synthetic routes among many possibilities; combined with the long-term accumulated R&D experience and data resources, it effectively improves the R&D efficiency of key links such as biological drug impurity removal. The use of AI effectively improves R&D efficiency and quality, injects strong impetus into R&D work, and promotes innovative R&D to improve quality and efficiency.

Abundant cash reserve pool

Strong R&D requires cash flow support. On the balance sheet in 2024, the monetary fund reserves exceeded 10.8 billion yuan, which is the third consecutive year that the company has exceeded 10 billion yuan.

Abundant cash also brings "welfare bureau" to shareholders. Following the dividend of 7.5 billion yuan in the past decade, and the dividend rate has been at the forefront of the industry, Livzon Group plans to pay a cash dividend of 11 yuan (tax included) for every 10 shares this year.

Based on abundant cash reserves and the diversification of industrial structure, the preparation, API and diagnostic end have worked together, thus significantly enhancing the ability to resist external risks.

"The country has achieved more than 10 batches of centralized procurement, but the company has not really entered the large varieties of centralized procurement, which also confirms the clinical value of the company's products to a certain extent." Liu Ning said that the varieties under development have sufficient pipeline layout and R&D gradient, which gives the company more flexibility in dealing with the impact of centralized procurement; at the same time, it also provides more possibilities for the company to explore innovation in the future.

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