The Chinese drugmaker delivered sharply higher earnings, thanks to a bumper deal with Pfizer to develop a new cancer drug, but its older products came under pressure

image credit: Bamboo Works

Key Takeaways:

• 3SBio's revenues jumped 94% to $2.58 billion in 2025, boosted by more than $1 billion in early payments from Pfizer
• However, income from core sales and services slipped 9.3%, leaving investors torn between bullish and bearish reactions

For many Hong Kong-listed drugmakers, upfront payments from international licensing deals can deliver a financial shot in the arm, boosting earnings.

But the gains from these high-profile partnerships can sometimes be short-lived. A truer test of a company's financial health may lie in the underlying growth of its products, as illustrated by the latest annual results from 3SBio Inc. (1530.HK).

Beneath the impressive headline figures, which were lifted by a blockbuster rights deal with pharmaceutical giant Pfizer (PFE.US), the Chinese drugmaker's baseline sales slipped back, leaving investors in two minds about how to react.

3SBio's revenues surged 94.3% to 17.69 billion yuan ($2.58 billion) in 2025 from the prior year, while net profit quadrupled to 8.48 billion yuan, driven by about 9.43 billion yuan in fees related to Pfizer's purchase of international rights to a cancer drug under development. With up to $4.8 billion in additional milestone payments yet to be realized from that deal, the outlook seems bright. But for now, if the licensing windfall is excluded from 2025 earnings, income from products and services fell 9.3% to about 8.27 billion yuan.

Behind that core figure is a growing competitive challenge for 3SBio's established products, including a therapy to offset the effects of chemotherapy, and an erosion of market share.

The key revenue pillar, an injection to treat low platelet counts in patients with thrombocytopenia, is under pressure from oral alternatives that have been included in China's centralized drug procurement, triggering deep price cuts. The market share in mainland China for TPIAO, 3SBio's injectable drug, fell 6.2 percentage points last year to 60.4%.

Meanwhile, 3SBio's subsidiary focused on developing novel drugs, Sunshine Guojian, has also seen sales of its proprietary products drop. Annual revenues fell to 912 million yuan, making up just 21.71% of total revenue.

More specifically, its flagship product used to treat autoimmune disorders is also slipping. The drug, Yisaipu, has fallen to 23.35% of the TNF inhibitor market, trailing behind anti-inflammatory drugs based on adalimumab that command a 48.83% share. Sales of the breast cancer drug Cipterbin, an HER2 monoclonal antibody, also fell in 2025, mainly due to the rise of HER2 antibody-drug conjugates (ADCs). Meanwhile, the company partnered with Duality Biotherapeutics (9606.HK) in January 2025 to develop an HER2 ADC, suggesting it regards Cipterbin as a legacy drug that is on its way out.

Investor attitudes toward 3SBio have swung between up- and downbeat, driving share-price volatility. Ahead of the results, optimism prevailed, sending the stock 10.41% higher on March 27. After the earnings came out on March 30, the price fell 6.75% in the next session. The swings continued, with an 11.84% rebound on April 1. The company's market value currently stands at around HK$64.4 billion, reflecting bullish and bearish views on its medium- to long-term outlook.

Cash buffer

The partnership with Pfizer has beefed up 3SBio's finances. The company held cash reserves of 12.18 billion yuan at the end of last year, with an interest-bearing debt ratio of just 9.8%. At that point, the drugmaker had more than 20 drug pipelines on the go, with annual R&D spending reaching 1.52 billion yuan, a year-on-year rise of 14.6%. Three new therapeutic agents – envafolimab, eltrombopag and roxadustat – were approved for market launch last year, aimed at platelet disorders, cancer and anemia. In addition, new drug applications have been filed for candidate treatments for gout, atopic dermatitis and macular disorders, which could over time supplement the company's earnings.

Meanwhile, the collaboration with Pfizer is gradually translating into more predictable milestone income. In January, Pfizer initiated global Phase Three trials of the PD-1/VEGF bispecific antibody as a treatment for colorectal cancer and enrolled the first patient. Within the year, it also plans to launch global Phase Three trials across multiple indications, including non-small cell lung cancer, endometrial cancer and urothelial carcinoma. The total potential milestone payments for 3SBio, which originated the drug, could reach $4.8 billion.

Meanwhile, two other segments have become important revenue streams for 3SBio beyond its core business.

A subsidiary specializing in hair-loss and obesity treatments, Mandi International, brought in 743 million yuan in the first half of 2025, supported by its 71% market share for the alopecia treatment minoxidil. The unit, which is in the process of a spin-off listing, continues to generate stable cash flow.

In addition, contract drug development and manufacturing services delivered 263 million yuan of revenues last year, up 46.3%.

3SBio is trading at a price-to-earnings ratio of about 7 times, compared with around 26 times for CSPC Pharmaceutical Group (1093.HK), another established drugmaker pivoting toward innovative medicines. Investors may not yet have fully factored in the potential benefits of the Pfizer partnership, with the late-stage trials and associated payment milestones. Any upside in 3SBio's valuation will depend on a recovery in core product sales and the progress of its candidate therapies, as well as the clinical trials for its drug collaboration with Pfizer.

To subscribe to Bamboo Works weekly free newsletter, click here

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.