From root healing, cell gene therapy (CGT) has opened a golden era of commercialization. Compared with traditional small molecule and macromolecular drugs, CGT drugs target the upstream of biological genetic information transmission and can theoretically treat all diseases caused by protein abnormalities. Through gene repair therapy, it has a wide range of indications, and has the characteristics of one needle cure and root solution. CGT drugs have high unit price, good curative effect, and benefit from the acceleration of upstream approval and downstream insurance support. It is entering the golden age of commercialization and large-scale. According to FDA prediction, 10-20 CGT drugs will be approved for marketing every year from 2020 to 2025. It is estimated that in 2025, the global CGT market will exceed US $30 billion (CAGR = 71% in 202025) and the Chinese market will reach US $2.59 billion (CAGR = 287% in 202025).
With strong demand, CGT cdmo is ready to go. The rapid increase of commercial products and the active and vigorous R & D demand will greatly promote the development of CGT cdmo. With the commercialization of CGT products, the demand for production capacity will increase from 100 people to 1000 or 10000 people, increasing the dependence of pharmaceutical enterprises on cdmo production capacity. In addition, CGT clinical R & D pipeline is in a rapid expansion cycle, and cdmo can assist R & D and production. According to the prediction of arm report, by 2026, the number of global CGT clinical projects will reach 3500 (including stem cell therapy), which is twice that of 2020. Benefiting from the rapid development of the terminal CGT market, the global CGT cdmo market will reach nearly US $10 billion in 2025 (CAGR = 34.9% in 202025), and the Chinese CGT cdmo market will reach 10.7 billion yuan (CAGR = 51.5% in 202025).
Complex manufacturing and strong willingness to outsource CGT production. CGT drugs have many production steps, great difficulty and high cost, and the production outsourcing rate is much higher than that of small molecule or macromolecular drugs, up to more than 65%. Taking car-t as an example, its production involves multiple steps such as plasmid, virus and cell, and each step involves complex production, purification and analysis. High technical barriers and high production costs lead to a shortage of CGT production capacity, prompting pharmaceutical enterprises to cooperate with cdmo enterprises.
Cdmo focuses on the development of production process, optimizes the production process, improves the R & D efficiency of pharmaceutical enterprises, reduces the development cost and increases the dependence of pharmaceutical enterprises. We believe that the continuous innovation of CGT Technology (such as universal car-t) and production technology (virus suspension culture) will quickly reduce the drug production cost and promote the rapid development of CGT and cdmo industry.
Investment suggestion: 2021 is the first year of China's CGT commercialization. Fosun Kate and mingjunuo's cell therapy products have been approved to market one after another, officially opening China's CGT drug market. Benefiting from the growth of terminal CGT industry, China's CGT cdmo industry has been accelerated and is expected to exceed 10 billion in 2025. Considering the high dependence of CGT enterprises on cdmo, the influx of funds into the CGT track will continue to benefit the upstream cdmo enterprises. Therefore, we believe that CGT cdmo will grow rapidly with the continuous promotion of CGT pipeline. We are optimistic about cdmo companies that have laid out their production capacity in advance and built a core technology platform. We recommend Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) , Porton Pharma Solutions Ltd(300363) . We suggest paying attention to Kingsley biotechnology and Heyuan biology.
Risk analysis: the acceptance of CGT drugs in the Chinese market is less than expected, the popularity of CGT related financing decreases, and the capacity construction of cgtcdmo is less than expected
