Behind the continuously adjusted CXO sector, giants have announced large orders.
On the afternoon of February 20, one of the CXO giants Asymchem Laboratories (Tianjin) Co.Ltd(002821) issued an announcement on signing major contracts for daily operation. According to the company, the total amount of the contract is about 3.542 billion yuan. The performance of the contract will have a positive impact on the company’s operating revenue and operating profit in 2022. The company will recognize the revenue in the corresponding accounting period according to the performance obligations of the contract and the revenue recognition principle.
It is worth mentioning that before that, Porton Pharma Solutions Ltd(300363) also announced that it had received a total of $681 million from Pfizer. Larger orders seem to mean that the industry is still booming.
In this regard, Shi lichen, a pharmaceutical strategy expert, told the Securities Daily that from the perspective of the development trend of the pharmaceutical industry, the performance of CXO enterprises with continuous innovation ability and absolute advantages in subdivided fields can continue to grow. CXO enterprises, which initially started from generic drug consistency evaluation, have less and less living space due to low technical difficulty.
Asymchem Laboratories (Tianjin) Co.Ltd(002821) and others have announced large orders
Although the secondary market continues to adjust, the orders of CXO leading enterprises are still “soft”.
According to the announcement of Asymchem Laboratories (Tianjin) Co.Ltd(002821) , in the process of continuously providing contract customized R & D and production (cdmo) services for a small molecule chemical innovative drug of a pharmaceutical company (hereinafter referred to as the “customer”), Jilin Asymchem Laboratories (Tianjin) Co.Ltd(002821) Pharmaceutical Chemistry Co., Ltd., a wholly-owned subsidiary of the company, recently signed a new batch of supply contracts for related products with customers, The contract amount is equivalent to about 3.542 billion yuan. The new supply contract has come into force after being signed and sealed by both parties.
Prior to this, on February 11, Porton Pharma Solutions Ltd(300363) announced that recently, the company received a report from multinational pharmaceutical company Pfizer Inc For the new batch of purchase orders of Pfizer Ireland pharmaceuticals (hereinafter referred to as Pfizer), the company will provide contract customized R & D and production (cdmo) services. As of the disclosure date of the announcement, the total amount of newly obtained orders was 681 million US dollars (about 4.2 billion yuan), more than 50% of the audited operating revenue of the company in the latest fiscal year.
Porton Pharma Solutions Ltd(300363) said that the execution of the order is expected to have a positive impact on the company’s operating revenue and operating profit in 2022. The company will recognize revenue in the corresponding accounting period according to the execution of the order and the revenue recognition principle. At the same time, the company will continue to disclose the implementation of orders in regular reports in accordance with relevant regulations.
In addition, in February 21st, Wuxi Apptec Co.Ltd(603259) and its pharmaceutical companies jointly announced the signing of a commercial cooperation agreement with the world’s first new oral medicine for type 2 diabetes. According to the cooperation agreement, the two sides will continue to strengthen cooperation in the R & D and commercial production of API and solid dispersion.
CXO industry will further differentiate in 2022
While obtaining large orders, how to interpret the CXO sector in the future has also become the focus of the market. “Differentiation” has undoubtedly become the theme word of the CXO sector in the future.
“At present, it is difficult for some CXO enterprises with low technical level to receive orders. The low hanging fruits have been almost harvested, and the threshold of this industry will be further raised in the future.” An industry person who declined to be named told reporters.
Bao Jingang, a researcher of private placement network, previously said in an interview with our reporter that the first is the improvement of industry concentration. The state of undifferentiated prosperity of the whole industry is unsustainable, and the concentration of market share to leading enterprises is the general trend. Secondly, with the continuous discovery and maturity of new technologies and new therapies, CXO enterprises with relevant technical reserves will benefit from it. China’s innovative drug pipeline is seriously homogenized and has entered the stage of capacity clearing. CDE approval is strict, and the investment in new drug R & D will decrease in the short term, but in the long term, it is conducive to guiding the high-quality development of the industry.
“At present, the new drug R & D market is not as popular as in previous years. A number of pharmaceutical enterprises without core competitiveness will be eliminated and then transmitted to the CXO sector. In the future, the CXO sector will be eliminated by the strong and the weak.” A CXO business person who asked not to be named told reporters: “there are still opportunities for some segments of the CXO sector, such as the hot cells and gene therapy.”
In the view of market participants, in addition to the differentiation at the business level, the industry of CXO sector will also be differentiated.
According to the research report company released by Huaxi Securities Co.Ltd(002926) pharmaceutical team, the performance forecast of CXO company disclosed in January 2022 continued the trend of rapid growth, that is, the total operating revenue of core companies increased by more than 40% year-on-year in 2021, and gradually entered a relatively reasonable valuation range considering that the 22-year PE valuation level of some companies was in the range of 30-40 times; In addition, according to the tracked positions of public funds CXO, the pharmaceutical positions of CXO in pharmaceutical funds and non pharmaceutical funds are 58.3% and 32.8% respectively, slightly lower than Q3 last year, but the overall level is still high, and the position level in the short term is high, which will have a certain impact on the stock price, and the probability will show a certain differentiation market.
