FIRST SHANGHAI has released a research report maintaining its "Buy" rating on CONSUN PHARMA (01681), adjusting profit forecasts for 2025-2027. Using a 10% discount rate and 0% perpetual growth rate, the firm calculated a target price of HK$25.20, corresponding to a 2025 P/E ratio of 19x, representing 59.50% upside potential from current levels. The firm considers the company's continuously optimizing operational structure, leading market position in kidney disease products, steady earnings growth, and high dividends combined with share buybacks as demonstrations of value and confidence.

**Outstanding Overall Performance with Continuous Operational Structure Optimization**

CONSUN PHARMA demonstrated impressive performance and steady growth momentum in the first half of 2025, actively optimizing its operational structure and deepening strategic positioning. In H1 2025, the group's revenue reached RMB 1.569 billion, up 23.7% year-on-year. Gross profit increased approximately 27.6% to RMB 1.209 billion. Gross margin further improved to 77.1%, up 2.4 percentage points from the same period in 2024, primarily attributed to declining procurement costs of traditional Chinese medicine raw materials. Profit attributable to shareholders was approximately RMB 498 million, up 24.6% year-on-year. The company continued its high dividend policy, with the board recommending an interim dividend of HK$0.33 per share, representing a payout ratio exceeding 51%.

**Core Products Drive Growth with Synergistic Development Across Business Segments**

CONSUN PHARMA's nephrology drug segment recorded sales revenue of approximately RMB 1.131 billion, up about 28.0% from the same period in 2024, with core product Uremic Clear Granules continuing to drive growth and maintaining its leading position in the modern traditional Chinese medicine category for kidney diseases.

Gynecological and pediatric drug sales revenue reached approximately RMB 172 million, up about 17.5% from the same period in 2024. Among these, Yuanlikanag Oral Solution is the only oral liquid iron supplement included in both the National Essential Medicine List and medical insurance catalog, focusing on the prevention and treatment of iron deficiency anemia (IDA) in children and pregnant women. In 2024, the National Healthcare Security Administration removed reimbursement indication restrictions, significantly improving clinical accessibility in adult departments and steadily increasing market share.

Medical imaging contrast agent series products recorded sales revenue of approximately RMB 95 million, up about 22.0% from the same period in 2024. In 2024, the company's gadolinium-DTPA injection in multiple specifications passed consistency evaluation, and launched two new CT contrast agents: Kangbixian (Iohexol) and Kangyouxian (Iopromide). Additionally, several products under development including Octafluoropropane Lipid Microsphere Injection have been submitted for approval or completed validation pending application, continuously enriching the product pipeline.

Yulin Pharmaceutical segment saw increases in dermatology, hepatobiliary, and orthopedic drug sales, growing approximately 19.7%, 4.6%, and 2.1% respectively compared to the previous year.

**Outstanding Kidney Disease Products Occupying Industry Leadership Position**

Uremic Clear Granules is CONSUN PHARMA Group's flagship product, maintaining a leading position in the kidney disease traditional Chinese medicine market. As an exclusive variety, it possesses unique market competitiveness. Uremic Clear Granules is primarily used for chronic kidney disease (CKD), effectively reducing serum creatinine levels, delaying eGFR decline and CKD progression, with high safety profile.

Data indicates that the adult CKD prevalence rate in China reaches 8.2%, with an estimated patient population exceeding 120 million, representing a substantial target market size. Uremic Clear Granules is China's first kidney disease traditional Chinese medicine to complete evidence-based medical research and systematic biology studies, with confirmed clinical efficacy and "strong recommendations" from multiple clinical guidelines and expert consensus.

Since chronic kidney disease currently has no curative treatment and existing therapeutic drugs lack significantly effective competitive advantages, Uremic Clear Granules, as a traditional Chinese medicine, provides certain therapeutic benefits in delaying disease progression. Its mechanism of action primarily involves toxin excretion through intestinal pathways, offering high safety and medication convenience.

Furthermore, the product benefits from an excellent sales and public relations team, broad indication coverage (covering most patients with renal insufficiency), and widespread recognition among physicians and patients, resulting in high clinical application frequency. The drug has been included in the medical insurance catalog with relatively affordable pricing. Under the centralized procurement context, the company adopted a "price-for-volume" strategy, achieving dual breakthroughs in consolidating existing volumes and increasing incremental volumes.

In conclusion, Uremic Clear Granules is expected to maintain steady sales growth in the future. Although Uremic Clear's patent protection expired in 2024, due to its complex compound composition making generic production difficult, combined with strict new drug evaluation and approval processes and lengthy cycles, this variety is expected to maintain relatively high market barriers for an extended period. The competitive landscape is likely to remain relatively concentrated, with market leadership position expected to continue.