On May 4, Ningbo Menovo Pharmaceutical Co.Ltd(603538) ( Ningbo Menovo Pharmaceutical Co.Ltd(603538) ) announced that the company had signed the strategic cooperation and equity transfer framework agreement with jiminxin investment, and planned to transfer 84.57% of the equity of Liaoyuan pharmaceutical to jiminxin investment, with a transaction consideration of 537 million yuan, all paid in cash.
At the same time, the two sides reached a strategic cooperation intention based on their respective industrial advantages and needs. “Through strategic cooperation, the company will become the primary partner in the cdmo field of innovative drugs of jiminxin group, and carry out all-round cooperation with it in the R & D and production of innovative drugs, which can also make assets better serve the company.” Ningbo Menovo Pharmaceutical Co.Ltd(603538) indicates.
It is worth mentioning that Liaoyuan pharmaceutical was originally acquired by Ningbo Menovo Pharmaceutical Co.Ltd(603538) and at that time, Liaoyuan pharmaceutical mainly played the role of strengthening the company’s characteristic API product line and helping its preparation business expansion. Now Ningbo Menovo Pharmaceutical Co.Ltd(603538) has entered a new stage of development, and obtained 241 million yuan of investment income by transferring equity, which also proves the success of Ningbo Menovo Pharmaceutical Co.Ltd(603538) investment to a great extent.
In addition, we note that the announcement indicates that the proceeds will be used not only for the acquisition of the remaining equity of Ningbo Menovo Pharmaceutical Co.Ltd(603538) Xuancheng, but also for the investment in projects under preparation such as the capacity reserve of upstream raw material industry related to the new cdmo business. According to the previous information, we can reasonably suspect that the “new cdmo business” here is likely to be Ningbo Menovo Pharmaceutical Co.Ltd(603538) ‘s covid-19 drug business.
The market has speculated that this may be the normal response of the company to seize the new track. From the first quarter financial report released by Pfizer, a pharmaceutical company before trading on Tuesday, Pfizer’s revenue and profit in the first quarter exceeded market expectations. Pfizer Q1 revenue was $25.7 billion, a year-on-year increase of 77%, exceeding analysts’ estimate of $24.36 billion; The net profit was US $7.864 billion, a year-on-year increase of 61%, higher than the market expectation of US $7.21 billion. In the announcement, Pfizer attributed the significant increase in its performance to covid-19 vaccine and paxlovid, with revenue of US $13.2 billion and US $1.5 billion respectively Ningbo Menovo Pharmaceutical Co.Ltd(603538) as a first-class supplier of characteristic APIs in China, it is inevitable to transfer some non track assets to collect funds and increase the layout of upstream industrial chain under the condition of the surge in demand for SM1 and SM2 (carbonic anhydride products).
sell the equity of Liaoyuan pharmaceutical, and the strategic transformation and upgrading route becomes clearer
Separately, from the perspective of industrial structure adjustment alone, Ningbo Menovo Pharmaceutical Co.Ltd(603538) is an important supplier of characteristic APIs in China. Compared with ordinary bulk APIs, characteristic APIs have the advantages of high technical barriers, strong customer stickiness and high gross profit margin. In recent years, under the background of the continuous growth of China’s medical insurance cost control and medical R & D investment, in order to seize the golden overtaking opportunity of expanding production pipelines downstream, and to enhance its own integrated core advantages and anti risk ability, Ningbo Menovo Pharmaceutical Co.Ltd(603538) the pace of transformation from single API business to cdmo and preparation business is accelerating.
“In the first quarter of 2022, the company’s total operating revenue increased by 47.86% year-on-year, of which the cdmo business increased by 296.09% year-on-year and the preparation business increased by 50.87% year-on-year. In order to double the revenue of cdmo business in 2022, the long-term prospect in the future is that these three sectors account for one third respectively.” Ningbo Menovo Pharmaceutical Co.Ltd(603538) has said.
From this perspective, Ningbo Menovo Pharmaceutical Co.Ltd(603538) the sale of Liaoyuan pharmaceutical, the use of the proceeds for the acquisition of the remaining 49% equity of Ningbo Menovo Pharmaceutical Co.Ltd(603538) Xuancheng and the investment in the capacity reserve of upstream raw material industry related to the new cdmo business are the performance of its accelerated transformation.
It is reported that Liaoyuan pharmaceutical’s main products are duloxetine hydrochloride, mirtazapine, clopidogrel and other products, that is, non SM1 and SM2 (carbonic anhydride products) related products. Previously, it mainly provided Ningbo Menovo Pharmaceutical Co.Ltd(603538) with clopidogrel, duloxetine, apixaban, rivaroxaban, ticagrel and other series of API products with thiophene as raw materials, strengthened the company’s characteristic API product line and helped it expand its preparation business. From the latest financial data, the performance growth of Liaoyuan pharmaceutical industry has also shown some signs of slowing down in recent years.
Xuancheng Ningbo Menovo Pharmaceutical Co.Ltd(603538) is an important service platform for Ningbo Menovo Pharmaceutical Co.Ltd(603538) cdmo business. The announcement shows that the production base has a complete multi-functional GMP workshop and China’s leading systems and equipment, which can provide global customers with cdmo services with sustainability, compliance with international GMP standards, high flexibility and high reliability. It is not only an important grasp for Ningbo Menovo Pharmaceutical Co.Ltd(603538) developing advanced new production capacity, but also an important service platform for its cdmo business. At present, it has become the main production base of covid-19 specific drug API of the company.
Further, after this transaction, the overall layout of the company has become more and more clear. Through the transfer of assets with little relevance to the track, slow performance growth and relatively low gross profit margin, the cash flow is recovered (after this asset transfer, the company’s monetary capital stock is expected to be about 1 billion) to increase the layout of important tracks and upstream and downstream of the industrial chain; Then, through the strategic cooperation agreement, strengthen the resource cooperation and business expansion of the company in cdmo business, gradually lighten the heavy assets, and improve the profit margin while promoting the continuous growth of performance.
cooperate with Jimin Kexinda in an all-round way. Cdmo layout is the next city
While transferring the equity of Liaoyuan pharmaceutical, Ningbo Menovo Pharmaceutical Co.Ltd(603538) and jiminxin investment also reached a strategic cooperation intention for innovative drug CDOM business based on their respective industrial advantages and needs.
It is reported that jiminxin group is a well-known modern health industry group in China. It has been listed in the top 10 of China Meheco Group Co.Ltd(600056) industrial top 100 for many consecutive years. According to the agreement, jiminxin shall take Ningbo Menovo Pharmaceutical Co.Ltd(603538) as an important partner in the cdmo field of innovative drug technology research and development or / and customized production services (“innovative drug project”) of itself and its affiliated companies, evaluate the cdmo projects (including but not limited to innovative drug projects) provided by Ningbo Menovo Pharmaceutical Co.Ltd(603538) from time to time in the next five years, and ensure that Ningbo Menovo Pharmaceutical Co.Ltd(603538) gives priority to evaluation, negotiation and signing under similar conditions.
Of course, at the same time, Ningbo Menovo Pharmaceutical Co.Ltd(603538) should also guarantee the priority evaluation, production scheduling and delivery of Jimin credible projects (including but not limited to innovative drug projects) in their own R & D and production bases.
It is worth mentioning that the announcement also pointed out that jiminxin has the right to send a transition team to Liaoyuan pharmaceutical within 15 days after the framework agreement is signed and the seller receives the deposit. The transition group has the right to attend the board meeting as nonvoting delegates and make suggestions on major decision-making matters of the company (but has no voting right), and has the right to know the operation of Liaoyuan pharmaceutical during the transition period, so as to facilitate subsequent delivery.
In addition, within 10 days after the signing of the framework agreement, jimincredible shall pay a total of 107 million yuan to the account designated by Ningbo Menovo Pharmaceutical Co.Ltd(603538) as the signing deposit for the proposed acquisition.
\u3000\u3000 “At present, jiminxin group has more than 20 types of class 1 new drugs under development and has a large demand for cdmo production capacity. At the same time, based on its development strategy, jiminxin group also has the demand to obtain its own API and intermediate production base. Based on the principle of ‘resource sharing, complementary advantages, mutual benefit and win-win and common development’, jiminxin group plans to take the company as its primary partner in the field of cdmo of innovative drugs and cooperate with the company in the R & D and production of innovative drugs Carry out all-round cooperation in production and other aspects. This cooperation will help optimize and adjust the company’s industrial structure, help the company upgrade and transform, and comply with the company’s strategic development plan. ” Ningbo Menovo Pharmaceutical Co.Ltd(603538) indicates.
billion space to be explored urgently Ningbo Menovo Pharmaceutical Co.Ltd(603538) cdmo business may continue to expand
It can be seen that whether it is the proposed acquisition of the remaining equity of Ningbo Menovo Pharmaceutical Co.Ltd(603538) Xuancheng after the sale of Liaoyuan pharmaceutical, or becoming the primary partner of jiminxin in the field of innovative drug cdmo, all these reflect Ningbo Menovo Pharmaceutical Co.Ltd(603538) rapid promotion of cdmo business.
From the perspective of industrial chain, the upstream of cdmo is the fine chemical industry, and the downstream customers are pharmaceutical companies, which is very similar to the industrial chain of characteristic API industry. Ningbo Menovo Pharmaceutical Co.Ltd(603538) as a characteristic API enterprise, it has certain natural advantages to expand to cdmo.
Since its listing in 2017, Ningbo Menovo Pharmaceutical Co.Ltd(603538) while laying out the cdmo business of API, it has begun to accelerate the construction of cdmo one-stop comprehensive service platform. Relying on its EHS compliance ability in the international market, high standard and large-scale manufacturing capacity and solid process development ability, the company has been recognized by international well-known pharmaceutical enterprises such as Krka, Servier, MSD and Bayer, and has established long-term, in-depth and stable cooperative relations with these pharmaceutical enterprises.
Taking MSD as an example, in 2021, Ningbo Menovo Pharmaceutical Co.Ltd(603538) and MSD signed a ten-year cdmo strategic cooperation agreement in the fields of pet medicine, veterinary medicine and animal health care. By the end of 2021, the nine projects in the first phase of R & D have carried out work in different stages, and the technology transfer has been gradually completed, which is about to be commercialized.
At the same time, in 2021, Ningbo Menovo Pharmaceutical Co.Ltd(603538) also undertook cdmo businesses such as basic fragments of small nucleic acid drug synthesis and raw materials of nucleic acid detection reagents, so as to provide raw materials for mainstream nucleic acid detection products in China and build a new performance growth point for the company.
The annual report shows that in 2021, the company’s cdmo business achieved a revenue of 265 million yuan, a year-on-year increase of 118.31%, accounting for 21% of the revenue, and the gross profit margin increased by 18.99% year-on-year to 44.54%. At the same time, the company was also selected as the “top 20 cdmo enterprises in China in 2021”, ranking 8th. In the first quarter of this year, the year-on-year growth of Ningbo Menovo Pharmaceutical Co.Ltd(603538) cdmo business was as high as 296.09%.
It is worth noting that Ningbo Menovo Pharmaceutical Co.Ltd(603538) ‘s cdmo business still has a very broad growth space in the future.
According to intrado globalwire, the cdmo market scale will increase by 165.57 billion US dollars in 2027, and the global cdmo compound growth rate will be about 7.5% from 2021 to 2027. Under the overall policy atmosphere of encouraging innovation in China and the support of industrial capital, Chinese innovative drug enterprises actively seize the industrial opportunities, the number of projects is booming, and the proportion of pipeline of emerging pharmaceutical enterprises is gradually increasing. Relying on the institutional convenience provided by “MAH”, China’s endogenous cdmo demand is gradually showing an explosive trend. It is expected that Chinese cdmo enterprises will continue to grow rapidly in the next 5-10 years, and can occupy an important market share in the global pharmaceutical industry chain.
