Eli Lilly Splurges $3 Billion! Ramping Up Oral Weight Loss Drug Production Capacity in China, Kanglong Chemical Expected to Benefit

On March 12, Kanglong Chemical (300759) A-shares and H-shares both rose, with A-shares reaching over 8% intraday and H-shares surging more than 13%. The stock price increase was driven by news of its strategic partnership with Eli Lilly.

On March 11, global pharmaceutical giant Eli Lilly announced plans to invest a total of $3 billion over the next decade to expand its supply chain capacity in China, establishing a domestic production and supply system for oral solid dosage forms, and focusing on the production capacity for its first registered oral small molecule GLP-1 receptor agonist, orforglipron.

Eli Lilly revealed that this investment will combine internal expansion with external cooperation. On one hand, leveraging the technological and talent advantages of Lilly’s Suzhou factory to strengthen capacity synergy; on the other hand, collaborating with multiple local manufacturing partners to release additional capacity. Additionally, Lilly stated that it has reached a strategic partnership with Kanglong Chemical, initially investing $200 million to support its technological development, with plans to gradually expand the scale based on future growth.

Following this news, on March 12, Kanglong Chemical’s A-shares opened 7.1% higher, with intraday gains exceeding 8%, and ultimately closed up 4.42% at 28.37 yuan per share. H-shares also surged over 13% during the day, closing at HKD 20.16, up 8.39%.

It is understood that from 2024 to 2025, Lilly will continue to expand its innovation and production footprint in China, including a $200 million investment to expand the Suzhou factory, establishing a China Medical Innovation Center, and setting up Lilly Innovation Incubators in Beijing and Shanghai to support early-stage biotech companies in accelerating clinical translation. To date, Lilly’s total investment in China has approached $6 billion, focusing on high unmet needs in cardiovascular metabolic health, neuroscience, oncology, and immunology.

In recent years, GLP-1 has become a hot track. By 2025, Lilly’s semaglutide will top the global “drug king” list with annual sales of $36.507 billion. The core product for this investment, orforglipron, is the world’s first registered oral small molecule GLP-1 receptor agonist. Lilly China has already submitted an application to the National Medical Products Administration (NMPA) by the end of 2025 for the approval of orforglipron for the treatment of type 2 diabetes and obesity.

Ouyou International Chairman Zhang Yue told Beijing Business Today that Lilly’s large-scale expansion in China aims to seize the oral GLP-1 market, build a localized supply chain, and strengthen its global competitive advantage.

Kanglong Chemical is also expected to benefit from this cooperation. The company stated that partnering with Lilly for the commercial production of orforglipron marks an important milestone for its formulation CDMO business.

Zhang Yue believes that, from a financial perspective, this will directly boost Kanglong Chemical’s performance and optimize cash flow; additionally, becoming Lilly’s core manufacturing partner in China will help Kanglong penetrate the global supply chain and accelerate global customer expansion.

Regarding financials, Kanglong Chemical’s performance is expected to decline in 2025. The company’s earnings forecast shows that net profit attributable to shareholders is projected to be between 1.614 billion and 1.686 billion yuan, a decrease of 6% to 10% year-on-year. Kanglong Chemical explained that, despite continued growth in its main business, the decline is mainly due to a decrease in non-recurring gains and losses. Last year, non-recurring gains and losses were higher due to the disposal of PROTEOLOGIX, INC. shares.

In response to related questions, Beijing Business Today sent an interview letter to Kanglong Chemical, but as of press time, the company had not responded.

Beijing Business Today, Ding Ning