Splurge of $3 Billion! Eli Lilly Ramps Up Oral Weight Loss Drug Capacity in China, Kanglong Chemical Expected to Benefit

(Source: Beijing Business Today)

On March 12, Kanglong Chemical (300759) saw both A-shares and H-shares rise simultaneously, with A-shares briefly increasing by over 8% during trading and H-shares surging more than 13%. The stock price increase was driven by news of a 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 collaborations. On one hand, leveraging the technological and talent advantages of its Suzhou factory to strengthen capacity synergy; on the other hand, partnering with multiple local manufacturers to release additional capacity. Additionally, Lilly stated that it has reached a strategic cooperation with Kanglong Chemical, initially investing $200 million to support its technological development, with plans to gradually expand the scale as the business grows.

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

It is understood that from 2024 to 2025, Lilly will continue to expand its innovation and manufacturing footprint in China. This includes a $200 million investment to expand the Suzhou plant, establishing a China Medical Innovation Center, and setting up Lilly Innovation Incubators in Beijing and Shanghai to support early-stage biotech startups 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 focus of Lilly’s current 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 approval to market orforglipron for the treatment of type 2 diabetes and obesity.

Zhang Yue, Chairman of Aoyou International, told Beijing Business Today that Lilly’s large-scale expansion in China aims to seize the market for oral GLP-1 drugs, 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’s formulation marks an important milestone for its formulation CDMO business.

Zhang Yue believes that for Kanglong Chemical, this partnership can directly boost the company’s financial performance and improve cash flow. Additionally, becoming Lilly’s core manufacturing partner in China will help Kanglong Chemical integrate into the global supply chain and accelerate its expansion of global clients.

Regarding financial outlook, Kanglong Chemical expects a decline in performance in 2025. The company’s earnings forecast indicates that net profit attributable to shareholders will be between 1.614 billion and 1.686 billion yuan, a decrease of 6% to 10% year-over-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 income was higher due to the disposal of PROTEOLOGIX, INC. equity.

In response to related inquiries, Beijing Business Today sent a request for an interview to Kanglong Chemical, but as of press time, no reply has been received.

Beijing Business Today Reporter Ding Ning