CSPC Pharmaceutical Group Ltd.'s stable pipeline projection and expansions in product reimbursement and distribution coverage carve out a favorable long-term outlook for the Chinese pharmaceutical company, according to two analyst notes.

The Hong Kong-listed drugmaker posted a 17% increase in second-quarter earnings to HK$675 million. Revenue totaled HK$7.2 billion in the six months ended June 30, up 17.2% over the same period in the prior year.

While revenue for its antibiotic business declined 15% compared to the same period in 2016, growth was seen across other business units, led by a 30% growth rate in innovative drugs and 53% growth in its caffeine and other drugs segment.

Moderate year-over-year earnings growth is driven by the inclusion of certain products on China's drug reimbursement list as well as the expansion of its sales network into channels outside of hospitals, such as drug stores and grassroots medical facilities, according to an Aug. 24 note from DBS Vickers analyst Mark Kong, who has a "buy" rating on the stock.

In February, three drugs under CSPC Pharma's innovative drugs business were added to the national reimbursement drug list: NBP, also known as butylphthalide, which is used to treat acute ischemic stroke; Jinyouli, a recombinant human granulocyte colony stimulating factor that is used boost white blood cell count to prevent infection in patients receiving chemotherapy; and Nuolining, a Chinese version of Gleevec used to treat certain types of leukemia.

According to an Aug. 22 note from Jefferies analyst Eugene Huang, who also had a "buy" rating on the stock, NBP's growth can be attributed to the company's efforts in penetrating into lower-tiered hospitals and community clinics in mature markets such as Beijing, Hebei and Guangdong, while also entering new county-level markets.

Meanwhile, Jinyouli's growth momentum will be supported by the company's drug tendering and marketing efforts, targeting 30 more hospitals and over 300 more physicians by the end of the year.

The company's long-term outlook remains promising, with clinical trials for nine innovative drugs targeted for launch in the next two to seven years, Kong said.

The company will also devote research and development expenditure into exploring new anti-cancer therapies such as immuno-oncology and chimeric antigen receptor T-cell therapy as well as securing regulatory approvals for drugs such as clopidogrel and metformin, Jefferies' Huang said.