Abstract: the growth of global CXO industry is relatively stable, and the performance growth of leading companies mainly comes from biological drug cdmo services. Chinese CXO enterprises showed a high degree of prosperity in 2021, and inventory level, contract liabilities and orders also laid the foundation for growth in 2022. However, when the industry income develops to a certain scale, the industry will enter a differentiation stage. The research and development heat of biopharmaceuticals, cells and genes has brought the demand for global biopharmaceutical cdmo services. Chinese CXO enterprises also actively layout biopharmaceuticals, cells and genes.
Key points supporting rating
The global CXO industry is growing steadily, and the biological drug cdmo service shows great growth potential. The global pharmaceutical market revenue and R & D investment continue to grow steadily, the outsourcing demand of small and medium-sized pharmaceutical enterprises continues, and pharmaceutical enterprises need to carry out cost control. Covid-19 epidemic has brought some new orders to CXO enterprises around the world, including chemical small molecule drugs, antibodies and vaccines. After the income of global leading companies reached a certain scale, the growth of traditional small molecule business slowed down, and the main performance growth was contributed by biological drug related businesses. Biological drugs show good growth potential in sales revenue, and the corresponding bio cdmo services show great growth potential. At present, bio cdmo production capacity is still in the hands of a few leading enterprises, and the bio cdmo business of leading enterprises shows excellent performance growth in 2021.
China’s CXO industry shows a high performance boom in 2021 and will enter a differentiation stage in the future. From Q1 to Q3 in 2021, China’s CXO enterprises showed excellent year-on-year growth in revenue and profit. The inventory level and contract liability level at the end of Q3 also increased compared with the same period last year, laying the foundation for the performance boom in 2022. Both Asymchem Laboratories (Tianjin) Co.Ltd(002821) and Porton Pharma Solutions Ltd(300363) are subject to large orders from overseas pharmaceutical enterprises, which will help the performance growth in 2022. Chinese CXO enterprises will actively carry out capacity building and team building in 2021 to release capacity, so as to improve their order taking capacity. After the income of China’s CXO industry reaches a certain scale, the overall CXO industry is expected to enter a differentiation stage. Leading companies with technology and core competitiveness are expected to undertake more orders and more complex businesses in chemical small molecule business, and increase their performance in emerging businesses such as biological macromolecules. Companies with low competitiveness in the industry will face the problem of reduced overall growth. The investment is expected to enter a period of “careful selection”, and CXO enterprises with core competitiveness need to be selected for investment.
The research and development heat of biological drugs, cells and genes brings corresponding CXO demand, and Chinese CXO enterprises actively carry out corresponding layout. The number of biological drugs and the number of clinical trials of biological drugs in the approved number of new CDE drugs ind in China show an upward trend, and the growth potential of cdmo services related to biological drugs is greater than that of the overall cdmo market. As a leading cdmo service enterprise in China, Yaoming biology has mastered wuxiup, wuxibody, wuxidar4 and other advantageous platforms, showing high performance growth, actively carrying out capacity construction, and CXO enterprises, a leader in traditional chemical small molecules, are also actively carrying out layout in emerging fields.
Key recommendation
Asymchem Laboratories (Tianjin) Co.Ltd(002821) 、 Porton Pharma Solutions Ltd(300363) ； It is suggested to pay attention to: Joinn Laboratories (China) Co.Ltd(603127) , the main risks faced by Yaoming biological rating
The risk of industry slowdown, the risk that the financing of innovative medicine industry is less than expected, the risk of international political changes and the risk of currency exchange rate changes.
(BOCI Securities)
