The United Laboratories International Holdings Limited (3933.HK): BCG Matrix [Dec-2025 Updated]

United Laboratories sits at a pivotal inflection point: powerful Stars in insulin, GLP‑1 candidates and veterinary medicines are driving rapid top‑line growth while heavyweight Cash Cows in bulk APIs, intermediates and amoxicillin generate the cash runway to fuel ambitious biologics R&D; meanwhile high‑risk Question Marks (ophthalmics, semaglutide biosimilars and multiple Class‑1 innovations) could become tomorrow's growth engines if regulatory and clinical bets pay off, even as low‑return Dogs (mature anti‑infectives, organic fertilizer and older generics) underscore the need for disciplined capital reallocation-read on to see how management must balance funding breakthrough innovation against defending cash cows and pruning non‑core assets.

The United Laboratories International Holdings Limited (3933.HK) - BCG Matrix Analysis: Stars

Stars

The insulin series products represent a classic 'Star' for United Laboratories, combining rapid market growth with a leading relative market share. In H1 2025 the insulin segment recorded gross sales of RMB966.1 million, a year‑on‑year increase of 75.5%. This surge is driven by successful participation in the National Centralised Procurement of Pharmaceuticals and a major tender win from the Brazilian Ministry of Health, which has materially expanded international shipments and market penetration in Brazil and Malaysia. The insulin portfolio's growth is underpinned by a robust product pipeline, notably the marketing application acceptance for Insulin Degludec by the NMPA, positioning the unit for continued high growth and sustained contribution to finished products revenue.

The innovative GLP‑1 receptor agonist and broader metabolic pipeline further reinforce the 'Star' classification with transformational deal value and R&D investment. In March 2025 United Laboratories entered an exclusive licensing agreement with Novo Nordisk for the triple agonist UBT251, receiving an upfront payment of USD200 million and potential milestone payments up to USD1.8 billion plus tiered royalties. This transaction materially improved H1 2025 profitability: profit attributable to owners rose by 27.0% to RMB1,894.3 million. The NMPA approval of Liraglutide Injection in early 2025 expands the Group's addressable markets into obesity as well as diabetes. R&D expenditure rose 21.9% to RMB985.5 million in 2024 to accelerate development of these biologics, indicating sustained investment to capture global GLP‑1/obesity market growth.

The veterinary drug segment is an emerging Star with accelerating revenue momentum and margin resilience. Finished products revenue increased 69.5% to RMB3,978.5 million in H1 2025, with the veterinary business contributing materially to this expansion. United Animal Healthcare has signed strategic contracts with international partners such as New Zealand Riverland Foods to expand distribution and build export channels. The segment benefits from the Group's vertically integrated production model - from API to finished formulation - enabling competitive gross margins in the global veterinary medicine market, which continues steady multi‑year growth. As market share in animal health rises, the segment's EBITDA contribution has increased notably, supporting the Group's overall profitability profile.

Competitive strengths and growth drivers for the Star business units include:

• Strong regulatory momentum: NMPA acceptances and approvals (Insulin Degludec, Liraglutide Injection) enabling product launches and market expansion.
• High‑value licensing deals: USD200 million upfront and potential USD1.8 billion milestones for UBT251 validating pipeline commercial potential.
• Diversified geographic expansion: Procurement wins in China and Brazil tender success, plus distribution partnerships in Malaysia and New Zealand.
• Substantial R&D investment: RMB985.5 million in 2024 (+21.9%) to accelerate biologics and metabolic drug development.
• Vertical integration and scale in animal health: Improves margins and supports rapid capacity scaling to meet global veterinary demand.

The United Laboratories International Holdings Limited (3933.HK) - BCG Matrix Analysis: Cash Cows

Cash Cows

The bulk medicine segment maintains dominant market share and cash flow. In 2024, the bulk medicine segment contributed RMB7,350,000,000, accounting for approximately 53% of the Group's total annual revenue. Despite a mature market environment, the segment remains a primary driver of liquidity, supporting the Group's extensive R&D investments. The Group's vertically integrated model allows it to maintain a stable gross margin of approximately 47% across its manufacturing operations. As of mid-2025, external sales for bulk medicine reached RMB2,529,500,000, confirming its role as a steady revenue generator. This segment requires relatively low CAPEX compared to its massive output, effectively funding the development of newer therapeutic lines.

Intermediate products provide foundational stability in the antibiotics market. The intermediate products segment, primarily focused on 6-APA and penicillin G potassium, recorded external sales of RMB1,010,700,000 in the first half of 2025. This business unit holds a leading position in the global supply chain for antibiotic precursors, ensuring high market share in a consolidated industry. While the market for traditional antibiotics is mature, the Group's scale of production provides significant cost advantages and steady cash inflows. The segment's performance remained resilient even as the Group faced a complex external economic environment in 2024. These products continue to generate reliable returns with minimal need for aggressive market expansion.

Amoxicillin series serves as a cornerstone of the antibiotic portfolio. The Group's amoxicillin products, including capsules and granules, have consistently passed consistency evaluations for quality and efficacy, maintaining their status as market leaders. Although sales of anti-infection products for human use saw a cyclical decrease to RMB1,797,400,000 in 2024, the brand '聯邦阿莫仙' remains a key trademark for protection in Guangdong Province. This product line benefits from high brand recognition and a stable customer base in both domestic and overseas markets. The high volume of sales compensates for the moderate growth rate typical of mature generic drugs. It continues to provide the necessary cash flow to support the Group's transition toward innovative biologics.

Key financial characteristics and implications of the Group's Cash Cows include:

• High absolute cash generation: Bulk medicine and amoxicillin lines together comprised the majority of 2024 revenue, producing predictable operating cash flow.
• Low relative CAPEX requirement: Manufacturing scale and vertical integration reduce incremental capital needs, enabling redeployment of cash into R&D and biologics.
• Stable margins: Approximate 47% gross margin in manufacturing operations supports operating leverage.
• Defensive market positions: Leading shares in bulk APIs and antibiotic intermediates create barriers to rapid share erosion.
• Funding runway for innovation: Cash flows finance transition toward higher-growth biologics and specialty therapeutics without immediate equity dilution.

The United Laboratories International Holdings Limited (3933.HK) - BCG Matrix Analysis: Question Marks

Dogs - Question Marks

Ophthalmic drug portfolio targets high-potential niche markets. The Group is actively developing 45 new drug products, with a specific focus on ophthalmology, including the Class 1 new drug TUL12101 Eye Drops. The first subject for the Phase IIa clinical study of TUL12101 was enrolled in China in early 2025, indicating an early-stage but promising trajectory. Current direct revenue contribution from ophthalmic products is estimated at under 2% of Group revenues (FY2024 base), but the ophthalmology therapeutic area is growing at an estimated CAGR of 6-8% globally. Successful Phase II/III results and NMPA approval could materially increase market share; failure would leave the portfolio with low revenue and high sunk R&D costs.

Semaglutide biosimilar development aims for the weight management market. The Group was the first enterprise in China to obtain clinical approval for a semaglutide biosimilar for weight management, with Phase III trials for diabetes indications progressing in 2025. The global GLP-1/weight management market is growing explosively (market size projected >US$50 billion by 2027), but incumbent multinational players dominate distribution and branding. United Labs' current CAPEX allocation shows a material tilt toward biologics platforms; management disclosed that a significant portion of 2024-2025 CAPEX and R&D budgets is allocated to semaglutide and related biologics infrastructure. If NMPA and potentially EMA/FDA approvals are secured in a timely manner, this program could move from a Question Mark to a Star; if not, it will remain a high-cost, low-share Dog.

New Class 1 innovative drugs in autoimmunity and metabolism. The Group currently has 22 Class 1 new drugs under development, representing a strategic shift to high-value innovation. R&D spending increased by 21.9% year-on-year (FY2024 vs FY2023), driven largely by these Class 1 projects and biologics platform build-out. These programs target high-growth therapeutic areas such as autoimmunity (global market CAGR ~7-9%) and metabolic diseases (CAGR ~6-8%). At present these assets generate zero commercial revenue and negligible market share; their valuation depends on progression through clinical stages, patent protection timelines, and eventual commercialization scale-up.

• Key financial metrics: R&D spending increased 21.9% YoY (FY2024); CAPEX materially allocated to biologics and platform expansion in 2024-2025.
• Commercialization constraints: current market share for these assets is effectively zero; transition to meaningful share requires successful regulatory approvals and significant sales/marketing investment.
• Timeline sensitivity: ophthalmic asset (TUL12101) Phase IIa enrollment early 2025; semaglutide Phase III ongoing in 2025; Class 1 drugs span multi-year development horizons.
• Strategic implication: high current cash burn and capital commitment with asymmetric payoff potential-successful programs could become Stars; failures would become persistent Dogs.

Risk and mitigation points

• Clinical/regulatory risk - Mitigation: prioritize trials with clear endpoints, external CRO partnerships, and regulatory engagement with NMPA/EMA/FDA.
• Commercial competition - Mitigation: identify niche or combination-therapy positioning, pursue partnerships/licensing for market access.
• R&D capital intensity - Mitigation: staged investment, milestone-based financing, out-licensing non-core assets.
• Manufacturing scale-up - Mitigation: invest in flexible biologics capacity and CMO relationships to reduce fixed-cost burden.

The United Laboratories International Holdings Limited (3933.HK) - BCG Matrix Analysis: Dogs

Dogs - Mature anti-infective formulations

Sales of traditional anti-infection products for human use decreased by 23.6% in 2024, reflecting a marked decline in demand for older generic formulations and intensified commoditization. These products are operating in a low-growth, highly price-competitive market where national procurement programs drive aggressive price cuts and compress gross margins. Market analysts identify the Group's reliance on these mature anti-infectives as a vulnerability given flat earnings outlooks compared with growth segments such as insulin and GLP-1 biologics. Management has signaled a strategic reallocation of resources away from legacy anti-infectives toward innovative biological therapies.

Key metrics for the anti-infective dog:

Dogs - Organic fertilizer business

The organic fertilizer operation is a peripheral, non-core activity delivered through Group subsidiaries. It is largely disconnected from pharmaceuticals, contributes a negligible share to consolidated revenue and trades in a low-margin agricultural commodity market. There is limited evidence the fertilizer division holds meaningful market share or high growth potential; its ROI is likely materially below the Group's overall return on equity of 19.6%, making it a candidate for divestment or carve-out where feasible.

Key metrics for the organic fertilizer dog:

Dogs - Older neurological and topical dermatological generics

Older neurological and dermatological generics within the finished products portfolio are saturated markets with low growth and intense competition from numerous generic manufacturers. These lines deliver modest revenue, require minimal incremental CAPEX, and provide limited strategic value. They are retained primarily for portfolio completeness and to serve existing channel relationships rather than as growth drivers; revenues are overshadowed by higher-performing diabetes and antibiotic segments.

Key metrics for older neurological and dermatological generics:

Consolidated observations on Dogs (quantitative snapshot)

• Total Group revenue (2024): RMB13.76 billion
• Combined estimated revenue from Dog segments: RMB1.51 billion (≈11.0% of Group)
• Group return on equity (2024): 19.6%
• Estimated ROIs: anti-infectives ≈8%, fertilizer ≈6%, older generics ≈7%
• Typical market growth for these segments: 0-2% (essentially low/flat)

Implications for capital allocation and portfolio management

Given low market growth and limited strategic upside, the Dogs should receive constrained capital allocation focused on cost optimization, working-capital efficiency and selective retention to support channel relationships. Potential actions include targeted portfolio pruning, monetization (divestiture or JV for the fertilizer arm), and redeployment of freed resources into high-growth biologics (insulin/GLP-1) where margin and growth prospects are materially stronger.