Hongri Pharmaceutical obtains clinical approval for the "last line of defense" against superbugs

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On March 20, 2026, Hongri Pharmaceutical (300026.SZ) announced that the clinical trial approval for Polymyxin E Sulfate Sodium Methylate has been granted by the National Medical Products Administration (Approval No.: 2026LP00701).

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Hongri Pharmaceutical Announcement

This drug is a Class 3 chemical injection, focusing on acute and chronic infections caused by Gram-negative bacteria sensitive strains, especially Pseudomonas aeruginosa. It is clinically recognized as the “last line of defense” against multi-drug resistant bacterial infections, approved in just three months from acceptance to approval.

01

Performance Continues to Decline

This move is a strategic breakthrough amid pressure on Hongri Pharmaceutical’s traditional business. The company has built six major segments, including traditional Chinese medicine formula granules, finished drugs, and medical devices, with Chinese medicine formula granules (Kangrentang) and Xibijun injection as core pillars, accounting for over 46.15% and 16.17% of revenue in 2024, respectively.

However, the company’s performance has been steadily declining in recent years. In 2024, revenue reached 5.78B yuan, down 5.34% year-over-year; net profit attributable to shareholders was only 21.47 million yuan, a sharp drop of 95.76% year-over-year.

The third quarter of 2025 showed revenue of 4.15B yuan, down 6.59% YoY; net profit attributable to shareholders was 80.76 million yuan, down 52.03% YoY.

The core reason is that the Chinese medicine formula granules business has been significantly squeezed by national standards implementation, centralized procurement normalization, and medical insurance cost control, compressing profit margins; although Xibijun injection has academic and channel advantages, its growth ceiling is clear; slow progress in innovative drug pipelines and a lack of new growth points also contribute.

The clinical approval of Polymyxin E Sulfate Sodium Methylate aligns with the company’s strategic needs. As an urgently needed imported alternative in clinical settings, its use is highly concentrated in ICUs and infectious disease departments, with low price sensitivity. It has high technical and policy barriers, allowing it to avoid the fierce competition typical of generic drugs.

More importantly, this product synergizes well with the company’s existing critical illness channel resources, especially leveraging the ICU academic promotion network built over more than ten years with Xibijun. If successfully launched, it can quickly enter the market and form a “combination therapy” of anti-inflammatory and antibacterial treatments for critical illnesses alongside Xibijun.

02

Price Wars Are Unavoidable

From the competitive landscape, only a few domestic companies have received clinical approval; Hongri Pharmaceutical has the first-mover advantage and is expected to seize the domestic substitution window. From an industry perspective, the approval of this drug comes at a structural window where global antibiotic resistance crises are intensifying.

Frost & Sullivan data shows that the market size for antibiotics against multi-drug resistant Gram-negative bacterial infections in China is projected to reach 42.2 billion yuan by 2030.

Industry logic is shifting from large-scale sales of broad-spectrum antibiotics to precise treatment of multi-drug resistant bacteria. Drugs with irreplaceable clinical value will command higher market premiums.

It is worth noting that from clinical approval to commercialization, Hongri Pharmaceutical faces multiple uncertainties.

Drug development involves long cycles, high investment, and high risks. This product must undergo complete Phase I-III clinical trials, typically taking 3-5 years, requiring continuous large-scale funding, with no guarantee of success.

Polymyxin drugs have known nephrotoxicity and neurotoxicity, making safety data critical. If severe adverse reactions occur or efficacy falls short of expectations, development could be halted or indications limited.

Although the current track is less crowded, leading generic manufacturers like Qilu Pharmaceutical and Kelun Pharmaceutical have already initiated clinical trials or submitted applications for similar products. If multiple approvals occur in the future, price wars will likely ensue.

03

Filling the Pipeline Gap

Previously, the monopoly on injectable polymyxin B sulfate was broken by penalties, causing the terminal price to drop from 2,303 yuan per unit to 123 yuan, a 95.8% decrease. If Hongri Pharmaceutical cannot complete market deployment before centralized procurement, high R&D costs may face the risk of “price cuts upon listing.”

Additionally, antibiotics remain a key regulatory focus. The “Antibiotic Restriction Order” continues to tighten. In 2023, the antibiotic use intensity in tertiary public hospitals nationwide was 34.02, down from 37.78 in 2019, a 9.95% decrease. Prescription rights and usage scenarios for special-use antibiotics are strictly controlled. Even if the product is launched, volume growth may be limited.

Meanwhile, centralized procurement has normalized coverage of chemical drugs, and as a generic drug, this product’s inclusion in future procurement is almost certain. Significant price reductions will directly compress profit margins.

Currently, Hongri Pharmaceutical is at a low point in performance, with net profit declining sharply and cash flow under pressure. Whether it has sufficient resources to support full lifecycle development remains uncertain.

Especially since the raw material fermentation process is complex, with high environmental costs, raw material price fluctuations could impact profitability stability. As a generic drug, its technological barriers are much lower than those of Class 1 innovative drugs. Long-term competition will depend on cost control and channel capabilities, making it difficult to establish an exclusive monopoly.

Overall, this clinical approval is a positive signal in Hongri Pharmaceutical’s development, representing both a strategic response to performance pressure and filling a gap in the domestic high-end anti-infection drug pipeline.

For investors, clinical approval is just the first step of a long journey. There is still a long way to go before product launch and revenue realization. In the short term, it is unlikely to reverse the company’s performance decline. The long-term value of the product will depend on the progress of clinical trials, launch timing, and ultimate commercialization success.