With a post-earnings increase of over 16%, where does Hansen's growth come from?

On August 27, Hansoh Pharmaceutical (03692.HK) saw its stock price rise by more than 16% at one point during trading. The previous day, the company released its interim results for 2026. Revenue for the first half of the year was RMB 8.304 billion, a year-on-year increase of 11.7%; profit was RMB 4.258 billion, a year-on-year increase of 35.8%.

The 35.8% profit growth rate is high, but Hansoh's other revenue reached RMB 1.318 billion, a year-on-year increase of 127.9%, mainly from non-listed equity investment income in the life sciences field. Excluding investment income, the company's core profit growth in the first half of the year was approximately 19%.

The 19% growth rate still outpaced revenue growth. This was due to both revenue growth and better cost control, with sales revenue from innovative drugs increasing by 21.6% and sales and distribution expenses increasing by only 2.3%.

R&D expenditure increased by 20.7% year-on-year, mainly due to more projects entering the later stages: Hansoh is currently advancing more than 70 clinical trials of innovative drugs, and HS-20093 and HS-20089 have initiated multiple global Phase III studies overseas. Domestic Phase III studies related to small cell lung cancer and osteosarcoma have also reached their primary endpoints.

The simultaneous decrease in the sales expense ratio and the advancement of the clinical pipeline constitute the more noteworthy performance quality of this interim report.

01 Revenue increased by 12%, while sales expenses only increased by 2%.

In the first half of the year, Hansoh's product sales revenue increased by 14% year-on-year, of which sales revenue of innovative drugs increased by 21.6%. During the same period, sales and distribution expenses were RMB 1.861 billion, an increase of 2.3% year-on-year.

According to Goldman Sachs' calculations, the ratio of sales expenses to product sales revenue decreased from 30% in the same period of the previous year to 27%. The growth rate difference between revenue and sales expenses widened to nearly 10 percentage points.

This data firstly indicates the emergence of operating leverage. The increased proportion of innovative drugs, the ramp-up of mature products, and cost control can all impact the sales expense ratio. While industry promotional activities in the second quarter were disrupted by the policy environment, and the decrease in expenses cannot be entirely attributed to product strength, the fact that revenue maintained double-digit growth at least suggests that Hansoh did not rely on a simultaneous increase in sales investment to maintain growth.

Gross profit margin rose from 91.1% to 91.9%, while administrative expenses decreased by 4.8% year-on-year. The growth rate of sales and administrative expenses was lower than that of revenue, thus supporting the profit margin.

R&D investment continues to increase. In the first half of the year, R&D expenditure reached 1.739 billion yuan, a year-on-year increase of 20.7%, accounting for 20.9% of revenue. Goldman Sachs noted in its report that the increased R&D spending due to the advancement of several late-stage projects partially offset the contribution of the decreased sales expense ratio to profits.

The improvement in profit margins was not accompanied by a reduction in R&D investment.

Hansoh currently has over 70 innovative drug clinical trials underway, covering more than 40 candidate projects. During the reporting period, it submitted three new marketing applications, completed three pivotal Phase III registration studies, and received initial clinical trial approval for four new drug candidates. The increase in R&D expenses corresponds to more projects entering the more costly later-stage phases.

As of the end of June, the company had RMB 37.383 billion in cash and bank balances, and net cash inflow from operating activities of RMB 2.337 billion. The lower operating cash flow compared to the profit for the same period is related to the inclusion of investment income in the profit; the cash reserves leave room for later clinical trials.

02 Innovative drug growth outpaces peers, overseas expansion begins to change revenue structure

In its report, Goldman Sachs compared the first-half performance of four major Chinese pharmaceutical companies. Hansoh's innovative drug sales revenue grew by 21.6%, higher than Hengrui Medicine's 16% and CSPC Pharmaceutical Group's approximately 20% growth rate. Hansoh's overall revenue grew by 11.7%, with product sales increasing by 14%, the increase mainly coming from innovative drugs.

In the first half of the year, Hansoh's revenue from innovative drugs reached 7.092 billion yuan, a year-on-year increase of 15.4%, accounting for 85.4% of total revenue. Revenue from non-innovative drugs was only 14.6%, and the impact of centralized procurement of generic drugs on overall revenue continued to decline.

By segment, oncology revenue reached RMB 5.473 billion, accounting for 65.9% of total revenue. Ametinib added one new indication during the reporting period, bringing the total number of approved indications in China to five. Non-oncology revenue reached RMB 2.831 billion, with growth driven by products in autoimmune, metabolic, central nervous system, and anti-infective fields.

Domestic sales of innovative drugs form the foundation of performance, while overseas collaborations extend the potential revenue cycle.

To date, Hansoh has licensed seven innovative drugs to six international companies, with a potential transaction value exceeding US$12 billion. Upfront payments are reflected in the financial statements early, and subsequent revenue includes clinical, registration, and sales milestones, as well as sales royalties after product launch.

The $12 billion figure is the maximum contract value with conditions attached. Goldman Sachs points out that Hansoh's cooperation revenue is expected to be roughly flat in the first half of 2026, resulting in a high base for comparison. This interim report's growth did not rely on a new large down payment.

The most significant change in overseas collaborations at present comes from clinical progress.

In December 2023, GSK acquired the overseas rights to the B7-H3 ADC HS-20093. In the third quarter of 2024, an overseas Phase I study was initiated; in August 2025, a global Phase III study for recurrent small cell lung cancer was initiated. From signing the agreement to entering global late-stage clinical trials, less than two years passed.

In July 2026, Hansoh's two Phase III studies in China for small cell lung cancer and osteosarcoma both met their primary endpoints. Goldman Sachs predicts that the first marketing application for HS-20093 will be submitted before the end of 2026, and GSK plans to launch three more global Phase III studies in the second half of the year.

Another B7-H4 ADC, HS-20089, licensed to GSK, has already initiated two global Phase III studies, with three more planned for the year. Continued investment in global clinical budgets and late-stage development resources will determine whether these two transactions can move from initial payments to clinical milestones.

Hansen's overseas expansion strategy is also expanding.

In February 2026, ametinib received approval from the European Commission for two monotherapy indications, gaining regulatory status for entry into the European market. Commercial launch, payment, and actual sales still require further progress.

The overseas development of ametinib has not been without its challenges. In 2020, Hansoh licensed its overseas rights to EQRx, but in 2023, due to a strategic adjustment by its partner, it reclaimed the rights and subsequently took back the overseas registration itself. At the end of 2025, the company granted rights in the Middle East, Africa, and Southeast Asia to Glenmark. The return of rights did not halt the project; Hansoh continued to complete European filings and sought commercialization partners for other regions.

This experience also illustrates that license-out doesn't simply transfer risk away all at once. Partner strategies, registration progress, and regional commercialization all alter a drug's overseas value. Hansoh's ability to take back the project and continue its development is more important than the initial potential revenue.

On July 14, Hansoh granted Avere the rights to its oral IL-23 receptor antagonist HS-20118 outside of Greater China. On the same day, Avere and Nasdaq-listed NextCure announced an all-stock merger agreement, with Hansoh also participating in the investment through convertible notes.

From regional licensing of mature products to entrusting early-stage assets to multinational pharmaceutical companies for development, and then to combining licensing with equity, Hansoh has formed three types of overseas cooperation paths.

03 What is the market pricing?

Following the earnings release, Goldman Sachs raised its 2026 earnings forecast for Hansoh by 15%, and its forecasts for 2027 and 2028 by 5.0% and 5.4%, respectively. The 2026 adjustment is mainly due to better-than-expected sales of innovative drugs, a decrease in the sales expense ratio, and investment income recognized in the first half of the year.

The key to Hansen's success lies in its product sales and pipeline progress over the next three years.

During the conference call, management maintained its guidance for double-digit growth in product sales and business development revenue in 2026 and plans to increase full-year R&D investment by approximately 30%. The peak sales target for amitinib is RMB 8 billion by 2030, with the potential to exceed RMB 10 billion in the long term through indication expansion and combination therapies.

Starting in 2027, Hansoh plans to advance the market launch of its RET inhibitor HS-10365, c-MET inhibitor HS-10241, and B7-H3 ADC HS-20093. In non-oncology areas, the marketing application for the GLP-1/GIP dual receptor agonist ollipopeptide has been accepted by the NMPA, and its TYK2 inhibitor and IL-23 monoclonal antibody are expected to enter the registration stage in the following years.

Hansoh's growth momentum will gradually expand from the single product Ametinib to multiple products, including: whether HS-20093 can be submitted and approved as planned, whether GSK's new global Phase III trial can proceed smoothly, whether Olepoeptide can be approved, and whether Ametinib can generate sales in Europe.

The quality of Hansoh's performance in the next phase will be determined by whether these operating data can be maintained and whether its overseas pipeline can continue to advance towards registration and sales.

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