As an important link in the R&D industry chain of pharmaceutical companies, the CRO industry has obtained important development opportunities and the scale of the industry has grown rapidly.
China is the world’s second largest drug-using country and the fastest growing economy in the global drug market. The national pharmaceutical policy is gradually clarified, the acceleration of medical reform and the expansion of the medical insurance market have provided a broad space for the development of drugs and medical devices. As an important link in the R&D industry chain of pharmaceutical companies, the CRO industry has obtained important development opportunities and the scale of the industry has been improved. Rapid growth.
CRO (Contract Research Organization) is a professional organization that provides clinical or preclinical research services for new drugs to pharmaceutical companies through contracts. It is a great tool to help pharmaceutical companies reduce R&D costs, improve R&D efficiency, and shorten R&D time. According to statistics, CROs are general The research and development time can be shortened by 30%. According to the agreement between Astellas, Japan’s second largest pharmaceutical company, and the CRO company INC Research, it is predicted that through CRO, the research and development costs can be reduced by up to 40%, while saving 10%-20% of clinical research time.
With the rapid development of economy and technology, as well as the accelerated aging of the population and rising R&D costs, CRO has become an area of close attention worldwide. The increasing investment in R&D by pharmaceutical, biotechnology, and medical device companies directly promotes the growth of the CRO industry. The China Development and Development Alliance found that my country has more than 500 CRO companies and has formed a complete industrial chain. CRO sales in the domestic market in 2016 The amount is 46.2 billion yuan, and it is expected to reach 97.5 billion yuan in 2020, and it will continue to grow.
M&A and Listing, Becoming the Expansion Path of CRO Giants
At present, my country’s CRO industry is dominated by the three giants of WuXi AppTec, Kanglong Chemical and Tiger Pharmaceuticals. With the listing of Kanglong Chemical in 2019, the three major domestic CRO giants have gathered in the stock market. In recent years, CRO giants have actively expanded their core business, developed into one-stop CRO services, and expanded their scale by accelerating mergers and acquisitions and investment.
—— WuXi AppTec: Scale and Business Expansion
WuXi AppTec is currently the largest CRO company in China, carrying thousands of R&D and innovation projects from more than 3,000 innovation partners in more than 30 countries around the world. In recent years, WuXi AppTec has expanded its business in an all-round way, increasing its volume through investment or mergers and acquisitions. Through the purchase of the Illumina HiseqX10 sequencing system, the acquisition of NextCODE in the United States to deploy gene sequencing. By continuously increasing external investment, acquiring American clinical trial CROs, and Munich drug discovery service provider Crelux Gmb, etc., completed the layout of overseas R&D centers. Tong has established R&D companies in Beijing, Jinshan, Changzhou, Wuhan, Nanjing, Suzhou, Shanghai, Wuxi and other places in China to strengthen its domestic advantage. In 2017, WuXi AppTec invested 10 billion yuan to build a life and health industrial park in Chengdu, and its development strategy was extended to the western region.
——Kanglong Chemical: Quality Improvement of Acquisitions and Increment of Listing
In recent years, Kanglong Chemical has gradually extended its business from traditional small molecule drug research and development services to the drug development stage, and has established a service including drug safety evaluation services, chemical and drug process development services, GMP chemical raw materials and pharmaceutical preparation production services, and biological analysis services A complete drug development service platform with clinical trial services. Since 2016, Kang Longhua has expanded its business capabilities, completed the acquisition of Quotient Bioresearch, SNBLClinical Pharmacology, and Xceleron, and built a specific layout under the systematic strategic planning of a full-process integrated drug research, development and production service platform. In order to meet the expansion of domestic market business, Kanglong Chemical acquired the shares of Kangtaibo and laid out the Ningbo Park in 2017. So far, it has 11 R&D service bases and branches in Beijing, Ningbo, the United Kingdom, and the United States. In 2019, Kanglong Chemical was listed on the Shenzhen Stock Exchange, and its capital scale has been further expanded, continuously consolidating its leading position in the industry.
—— Tigermed Pharmaceuticals: Global Set-up and Key M&A
Since its establishment, Tigermed has successfully carried out more than 1,500 clinical trial services for more than 600 customers worldwide. In recent years, the company has actively participated in the establishment of a number of pharmaceutical industry investment funds and mergers and acquisitions funds to expand revenue by exploring and cultivating high-quality innovative pharmaceutical companies. Establishment, acquisition and other methods to complete the establishment of global service outlets in 95 major cities in mainland China and Hong Kong, China Taiwan, South Korea, Japan, Malaysia, Singapore, India, Australia, Canada, Switzerland, the United States, Romania and other places to complete the global layout. Tiger Pharmaceuticals has actively acquired through domestic and overseas mergers and acquisitions, and currently has 20 domestic subsidiaries in Hangzhou, Jiaxing, Shanghai, Beijing, Guangzhou, Taizhou, Hunan and 13 overseas subsidiaries in the United States, Australia, and India. The subsidiary business includes pharmaceutical research and development. In addition, industry investment and medical data management are also the focus. Tigermed Pharmaceuticals was listed on the Shenzhen Stock Exchange in 2012 and has been relying on major customers such as Takeda Pharmaceuticals and Roche to maintain good revenue. In 2018, it achieved revenue of 2.29 billion yuan, an increase of 35.8%, and maintained a relatively fast pace in the increasingly fierce competition. development of.
Characteristic Breakthrough, Strategic Choice for Small and Medium CRO Companies
With the continuous improvement of the industrial chain of leading CRO companies and the continuous expansion of the industrial scale, other CRO companies are facing the risk of mergers and acquisitions at any time. They have to go out of their own characteristics and use their expertise to become bigger and stronger in the cracks.
——Yaoshi Technology: Focus on Molecular Building Block Technology
Nanjing Yaoshi Technology Co., Ltd. was formally established and operated in Nanjing in 2008. It is the world’s leading supplier of innovative chemical products and services in the field of drug research and development. With its excellent design, synthesis and supply capabilities in the field of molecular building blocks, it achieved a performance of 219 million yuan in the first half of 2018, and reached cooperation with more than 80% of the world’s top 20 pharmaceutical companies. Yaoshi Technology currently has R&D and production bases in Nanjing, Zhejiang, Shandong and the United States, with more than 400 employees. In recent years, Yaoshi Technology has relied on its technological advantages and cooperated with foreign industry giant AGIOS Pharmaceuticals, Inc. to actively explore the international market, and has been able to occupy an invincible position in the CRO market.
—— Biocytogen: Focus on Biomedicine
Biocytogen Gene Biotechnology Co., Ltd. was established in the United States in 2008, and the Beijing head office was established in 2009. Relying on a stable and efficient gene editing technology platform, it is a comprehensive biomedical CRO integrating model animal customization services, important model animal development and large-scale reproduction and supply, in vivo pharmacological efficacy evaluation services, and antibody drug development outsourcing services the company. Biocytometer formed a gene editing platform based on the self-developed C57BL/6 mouse embryonic stem cell-based gene editing system and the EGETM system, and then gradually developed a model animal reproduction and supply platform, a pharmacological effect platform and an antibody based on the gene editing platform. The drug R&D service platform has become an irreplaceable CRO enterprise in the field of biomedicine. It currently has branches in Shanghai, Haimen, Jiangsu, and Boston, USA. At the same time, it has offices in Wuhan, Guangzhou, Chengdu and other places to provide services at home and abroad. In 2018, Biosaito completed the C round of financing, injecting funds for the next step of development.
——Maidisiwei: Focus on Medical Device Registration
At present, medical CRO occupies the mainstream of the market. Since its establishment in 2011, Beijing Medis Medical Technology Co., Ltd. has focused on medical device registration and declaration services, and is committed to providing companies with services including medical device registration and clinical trials. The all-round one-stop solution has become one of the companies that provide the most comprehensive service content in the field of medical device CRO, and has formed a special business especially in orthopedics products. At the beginning of 2018, it completed the A round of financing of 10 million yuan, forming its own foothold.
Integration and Specialization are the Direction
Following the “Notice on the Pilot Program of the Drug Marketing Authorization Holder System”, “Opinions on Deepening the Reform of the Review and Approval System to Encourage Innovation in Drugs and Medical Devices”, “Notice on Organizing and Implementing Special Projects for the Development of Biomedical Contract R&D and Production Service Platforms” With the release of a series of documents, the structural adjustment of the CRO industry has accelerated, gradually forming a situation where the stronger becomes stronger.
The dominant position of the giants continues to expand. In addition to the business expansion of the CRO giants, the state has also issued relevant policies to support the development of the CRO giants. In 2018, the National Development and Reform Commission issued and implemented the “Notice on Organizing and Implementing the Special Project for the Construction of Biomedical Contract R&D and Production Service Platforms”, giving some companies engaged in biomedical contract R&D service projects about 30% of the total investment of a single project, with an amount not exceeding 100 million Yuan investment support within the central budget. The “Notice” takes “strengthening superior enterprises” as the main task, and the rigid conditions include “the amount of R&D service contracts in 2017 exceeds 200 million yuan”. Most small and medium-sized CRO companies are excluded, and the industry advantage of CRO giants is further improved Consolidate.
Integration and specialization are the directions. With the rapid adjustment of the domestic CRO industry structure and the industry presents a hierarchical competition pattern, domestic CRO companies will face two different development paths. One is that large CRO companies represented by industry giants lay out the entire industry chain, continue to expand their business scope and market scale, and form a comprehensive integrated contract research and development service platform with multi-link and international services. The other is that small and medium-sized CRO companies avoid the dominant areas of industry giants, continue to strengthen their advantages in their own characteristic areas, become the leader in subdivisions, and form a professional contract research and development service platform with core technical advantages.