CSPC’s 2025 results remained under pressure with revenue and net profit both down 10% YoY. The management’s tone remained conservative, considering the centralised procurement and pricing pressure on domestic drug sales, and targeted positive growth in 2026. CSPC’s innovation platforms in long-acting peptide, ADCs, and siRNA are eye-catching, however, investors are also watching the pace of core business recovery and the consistency of earnings improvement. Maintain HOLD rating and uplift TP to HK$9.1.
Key Factors for Rating
4Q results remained soft, while the finished-drugs business gradually stabilised: CSPC reported a soft 4Q topline, with revenue down 3% YoY (or 8% QoQ) to RMB6.1bn. Revenue declines in the core therapeutic areas narrowed, or turned positive sequentially, with QoQ changes of +12% in nervous system, -7% in oncology, +2% in anti-infectives, +4% in cardiovascular, +2% in respiratory, and -33% in digestion/metabolism. Gross margin was flat QoQ at 65.6%. R&D expenses surged 24% YoY and 8% QoQ to RMB1.6bn. Overall, CSPC recorded 33% YoY decline in net profit in 4Q25. In 2025, CSPC reported revenue of RMB26.0bn, down 10% YoY. Collaboration revenue reached RMB1.79bn (vs. RMB18m in 2024), partly offsetting pressure in the core pharma business. Net profit attributable to shareholders was RMB3.88bn, down 10% YoY, due to a 4.4ppts decline in gross margin and a 4ppts increase in the R&D ratio, partially offset by a 5ppts decline in the distribution expense ratio.
2026 outlook: Management expects 2026 to remain a difficult year and is targeting positive top-line growth. The main headwinds remain centralised procurement and pricing pressure, but management expects support from innovative product launches, tighter cost control, and BD contributions. For collaboration revenue, the remaining upfront payments from prior deals in 2024/25 are expected to be recognised in 2026. In addition, the US$1.2bn upfront payment from AstraZeneca for the deal achieved in January 2026 is expected to be recognised this year, together with potential milestone payments from partners as overseas clinical programmes progress. API prices recently rebounded amid geopolitical tensions, and management is more constructive on the API segment given CSPC's manufacturing scale and cost advantages. Key 2026 readouts include: 1) SYS6010 (EGFR ADC) in 2L EGFR-mutant NSCLC (phase III); 2) KN026 (HER2/HER2 bispecific) in 1L breast cancer (phase III), neoadjuvant breast cancer (phase III), and a 2L gastric cancer OS update. Other phase I readouts include SYS6010 in NPC, ESCC, and GC; SYS6043 (B7-H3 ADC) in NPC and gynecologic tumors; and SYS6002 (Nectin-4 ADC) in urothelial carcinoma and cervical cancer.
Two innovative platforms caught investors’ attention: 1) Long-acting peptide platform: the collaboration with AstraZeneca on long-acting peptide medicines, with an upfront payment of US$1.2bn, R&D milestone payments of up to US$3.5bn, and sales milestone payments of up to US$13.8bn, has attracted strong investor interest. SYH2082 (a GLP-1/GIP receptor dual-biased agonist polypeptide long-acting injection) has obtained IND approval in both China and the US. SYH2082 selectively activates the cAMP pathway to reduce β- arrestin recruitment; management therefore described the monthly injection as potentially differentiated on tolerability. 2) siRNA platform: management said its PCSK9 siRNA is already the first domestic programme in phase III, while siRNA drugs targeting Lp(a), AGT, Apo(a), C5, and ANGPTL3 are already in phase I. Extrahepatic siRNA delivery is also progressing, including lung, kidney, fat/muscle, and CNS delivery.
Key Risks for Rating
Upside: (i) Better-than-expected product sales; and (ii) more BD collaboration achieved. Downside: (i) Slower-than-expected ramp-up of newly launched drugs; (ii) failure of R&D; and (iii) price cut on core drugs.
Valuation
Post-results, we lowered our finished-drugs sales forecasts to reflect domestic pricing pressure, and also reduced our API revenue forecasts following the soft 2025 results. At the same time, we factored in the AstraZeneca upfront payment, bringing total collaboration revenue to RMB10.0bn in 2026. We rolled forward our DCF model and derive a target price of HK$9.10. Maintain HOLD.