On September 10, 2020, the “2020 China Pharmaceutical and Health Industry Development Conference and the 4th China Pharmaceutical R&D Innovation Summit (PDI)” announced the “2020 China Top 20 R&D CRO Companies” (hereinafter referred to as “R&D CRO List”).
Since 2015, the domestic pharmaceutical industry policy reform has accelerated, especially after my country joined ICH in 2017, domestic pharmaceutical companies have accelerated the transformation and upgrading from generic drugs to the combination of generic drugs. The demand side of domestic and foreign outsourcing services is accelerating, and the dividends of innovation and upgrading in the domestic pharmaceutical market are gradually emerging. Some traditional offshore outsourcing companies have begun to attach importance to the expansion of domestic business, and the proportion of onshore outsourcing business in the overall business structure has begun to increase.
As one of the most important components of the innovative drug R&D service system, CRO refers to an academic or commercial scientific institution that provides professional services to pharmaceutical companies and R&D institutions in the drug R&D process through contracts. Undertaking some of the links in the research and development of new drug projects, enabling new drug research and development risks to be effectively dispersed in the entire industry chain.
In this way, pharmaceutical companies can not only reduce fixed-cost expenditures and costs, but also effectively shorten the new drug development cycle, improve overall research and development efficiency, and win valuable time for the commercialization of innovative drugs. Related research shows that the scale of the CRO industry is positively related to the R&D expenses of pharmaceutical companies: as long as the R&D investment of pharmaceutical companies is still growing rapidly and the CRO penetration rate is still increasing, the industry still has a lot of room for growth.
According to statistics from the Shanxi Securities Research Institute, in 2019, the 11 listed companies in medical services have a growth rate of 25.21% in operating income, a growth rate of 22.26% in net profit, and a net profit growth rate of 34.41% after deductions. The price reform policy of medical services has been increased and consistent. Driven by the growth in demand for CROs for medical innovation and medical innovation, the industry maintains a high boom.
In terms of profitability, gross profit margin increased by 1.09% year-on-year, net profit margin remained stable; sales expense ratio, management expense ratio and financial expense ratio remained basically stable.
On September 10, 2020, the “2020 China Pharmaceutical and Health Industry Development Conference and the 4th China Pharmaceutical R&D Innovation Summit (PDI)” announced the “2020 China Top 20 R&D CRO Companies” (hereinafter referred to as “R&D CRO List”).
As far as the CRO industry environment is concerned, the domestic market is still dominated by “many”, “small” and “scattered”. There has not been much change in this aspect during 2019, and the overall number of companies is still showing an upward trend. The pyramid effect has been emphasized again. According to relevant reports, there are still a small number of CRO companies with an annual revenue of more than 100 million yuan, accounting for only about 6% (more than 30), and about 94% of CRO companies have less than 100 million yuan in revenue. .
Looking at the world, due to the technical advantages and customer stickiness brought by the long-term technology accumulation of leading CRO companies, as well as the mergers and acquisitions within the industry, the industry concentration of the global CRO industry continues to increase. According to the statistics of the Foresight Industry Research Institute, the world’s top ten The market share of large CRO companies has reached more than 60%. Domestic companies are not so much developing rapidly, they may still be “surviving in the cracks.” Especially in the field of clinical CRO, the domestic industry leader still has a lot of room for improvement.
Leading domestic clinical trial service-Tigermed
In this year’s “R&D CRO List”, Hangzhou Tigermed Pharmaceutical Technology Co., Ltd. won the first place on the list (hereinafter referred to as “Tiger Pharmaceutical”), and its strong strength deserves its leading position in clinical trial services.
In 2019, it achieved operating income of 2.803 billion yuan, a year-on-year increase of 21.85%; realized net profit attributable to shareholders of listed companies of 841 million yuan, a year-on-year increase of 78.24%; during the period, there were 123 service outlets (including Hong Kong, China and Taiwan), covering 800 A number of drug clinical trial institutions and overseas subsidiaries have been established in 10 countries in Asia Pacific, North America, Europe and other regions.
From 2012 to 2019, Tigermed’s revenue and net profit have increased year by year, and the year-on-year growth rate of net profit in 2019 has reached a record high; at the same time, the corporate financial report shows that the new contract amount of Tigermed during 2019 is 4.231 billion yuan (+27.9 %), with a total of 5.011 billion yuan (+36.1%) of contracts to be executed. There are plenty of orders in hand, future revenue growth is guaranteed, and the leading position in the clinical CRO field is solid.
In terms of R&D investment, Tigermed’s R&D investment in 2019 reached 124 million yuan, a year-on-year increase of 40.91%. The number of R&D personnel has also increased steadily. In 2019, the number of R&D personnel increased from 42 to 468. On the one hand, it has increased investment in research and development, on the other hand, it has brought in talents and capital to support the two core elements. Tigermed has both.
The R&D achievements of Tigermed in 2019 mainly include:
Provided full-process clinical trial services for Chongqing Yongrenxin implantable left ventricular assist system during the development process.
In-depth cooperation has been carried out in a number of new drug clinical research projects for Zejing Pharmaceutical.
Provide full-process services for the clinical trial application of Zhejiang Tongkang Medicine’s Class 1 targeted anticancer drug TY-302 capsule.
Provided full-process technical services including product registration, clinical research, etc. for the British RSR company’s aquaporin antibody (AQP4/Ab) detection kit.
Provided full-process SMO services for the clinical research of the long-acting triple inhalation preparation “Quan Zai Le” for GlaxoSmithKline (GSK).
At the same time, the proportion of Tigermed’s business in China has gradually increased in recent years, reaching 56.7% in 2019, which has largely consolidated its position as the leading domestic clinical trial service.
Leading pre-clinical safety review-Joinn Lab
The third place in the “R&D CRO List” is Beijing Joinn Lab(hereinafter referred to as “Joinn Lab”), which is known as the “leading preclinical safety review”. In 2019, Joinn Lab achieved operating income of 639 million yuan, a year-on-year increase of 56.40%; realized a net profit of 178 million yuan attributable to the parent, a year-on-year increase of 64.64%; realized a non-net profit of 155 million yuan, a year-on-year increase of 71.41%, and the performance was very beautiful.
As a domestic preclinical CRO company focusing on drug non-clinical safety evaluation services, Joinn Lab is also the first company in China to pass the US FDA/GLP inspection. Its main business mainly refers to preclinical toxicology research, including safety pharmacology. Test, reproductive toxicity test, genetic toxicity test, carcinogenic test, etc.
In terms of new drug data and achievements, Joinn Lab’s new drug in 2019 is also remarkable, with a surge in orders on hand, reaching 1.04 billion, an increase of 30% year-on-year. At the same time, it completed the IND work of more than 230 large-molecule innovative drugs, and obtained more than 60 approvals, and made major breakthroughs in ophthalmology and other fields. The contract value signed has maintained rapid growth, with an increase of over 50% compared to 2018. Whether it is focusing on the present or the future, Joinn Lab has a strong explosive force.
On the other hand, since 2014, Joinn Lab’s gross profit margin and net profit margin have also maintained a steady growth trend. With the increase in profitability, the debt ratio has dropped from 64.78% to 41.65%, and the financial pressure has been continuously reduced. Even in the case of an 88.24% increase in sales expenses, it is mainly due to the rapid growth of labor compensation and business volume, but the management expenses and financial expenses have remained reasonably low, and the company’s operating conditions can be described as good.
In addition, most of Joinn Lab’s current revenue comes from cooperation with domestic companies (in 2019, Joinn Lab’s new drugs came from 92% of domestic business). On the one hand, it reflects its domestic roots and leading domestic thinking and status. On the other hand, it can also It is foreseen that the profit margins of its overseas markets will increase over time.
Strong rookie-Pharmaron
The company that won the second place in the “R&D CRO List” is the second largest CRO giant in China, and Pharmaron is often compared with WuXi AppTec. In fact, if you look into the difference between the two, their areas of expertise are actually different.
In 2019, Pharmaron achieved annual operating income of 3.757 billion, net profit of 547 million attributable to the parent, and net profit of 550 million deducted from the parent, representing a year-on-year increase of 29.2%, 64.3%, and 58.2% respectively. The performance basically met expectations.
At the same time, Pharmaron’s performance growth rate in 2015-2019 was obvious. Although the growth rate declined slightly in 2016, its quarterly revenue growth was around 30%, and the overall industry position was gradually consolidated. In 2019, we will continue to increase infrastructure construction and expand scale and production capacity as the main purpose. The Drug Safety Evaluation Center expanded 3,500 square meters of animal laboratory facilities in 2019; the Shanghai branch also began formal operations. At the same time, the laboratory service business staff increased by 595 people, an increase of 16.06% year-on-year to 4301.
In addition, it is more noteworthy that “lab services”, as the cornerstone business of the company Pharmaron, achieved revenue of 2.38 billion yuan in 2019, an increase of 25.52% year-on-year. CMC business benefited from business synergy and maintained rapid growth, achieving revenue of 902 million yuan (+39.60%), and clinical research service revenue of 456 million yuan, an increase of 31.30% year-on-year. While the strength of business stickiness has increased, it can be seen that the cornerstone business The role of “leading sheep” cannot be ignored.
At the same time, Pharmaron’s R&D expenses in 2019 reached 62,871,500 yuan, an increase of nearly 100% compared to 2018, focusing on DNA-encoded compound libraries and new synthetic chemistry technologies (including photochemistry, flow chemistry, biocatalysis and other new reaction technologies) ) And other important fields, its core competitiveness has been qualitatively improved.
Regarding Pharmaron as a whole, the continuous big moves in 2019 have largely demonstrated the purpose of Pharmaron. It has made every effort to achieve one step closer and lead the stable industry leader.
In Conclusion
Although the CRO industry is an emerging industry that has only developed in China in the past 20 years, its courage and prospects are not inferior to most traditional companies.
In particular, under the new pharmaceutical environment, new policy guidance, and new drug research and development needs, the CRO industry has deeply rooted in the research and development system and is demanded by an increasingly powerful new drug system. The two work together and coexist with twins.
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