From 2065438 to May 2005, Wuxi PharmaTech spun off its subsidiary Hequan Pharmaceutical, which is mainly responsible for the research, development, production and service of small molecule innovative drugs, and announced the listing of the New Third Board. 2065438+June 2007, Yao Ming Bio, a subsidiary mainly engaged in biological preparation business, announced its listing on the Hong Kong Stock Exchange. On May 8, 20 18, Wuxi PharmaTech was listed on the Shanghai Stock Exchange, and the "three-split" return was completed.
The company mainly focuses on the American market. During the period of 20 15-20 17, the business income in the US market maintained a steady growth, while the income in China and Europe increased rapidly, and the proportion gradually increased. In the process of pharmaceutical R&D, production and service industries transferring to emerging countries represented by China, the company's business focus gradually shifted to China. The proportion of domestic business income increased from 20 1719% to 20 17 18. 16%, and the proportion of American business income increased from 20 17 to 64%.
The business income of Wuxi PharmaTech increased from 46,543,840 million yuan in 2065,438+07 to 7,765 million yuan in 2065,438+07, and the CAGR in 2065,438+04-2065,438+07 was 23.33%, and in 2065,438+07.
1. Company business
WuXi PharmaTech's main business spans R&D outsourcing (CRO) and manufacturing OEM (CMO).
CRO business can be further divided into preclinical CRO business and clinical CRO business: preclinical CRO company has higher fixed assets and employees' salaries, and this business is also the core of Wuxi PharmaTech. Wuxi pharmatech ranks first in China in this field.
CMO's business is to produce drugs on behalf of pharmaceutical companies, and the biological drug CMO company has invested a lot in fixed assets. Biomedical CMO has higher bargaining power and better future development prospects. The company's chemical CMO business (Hequan Pharmaceutical Co., Ltd.) is owned by A-share drug Wuxi PharmaTech, and about 87% of it is listed in Hong Kong stock market.
Most companies only cover a part of CRO and CMO, while Wuxi PharmaTech can cover the whole process. It is the only company at home and abroad that can provide full-process services from molecular screening, synthesis, clinical trials to market production and OEM production.
2. Sales model
Overseas customers are connected by Wuxi PharmaTech's overseas sales, connecting overseas customers+business development+undertaking project investment. The cooperation of domestic pharmaceutical companies is conducted by Yao Ming Sales Company, which bears the risks of docking with domestic customers and cooperative research and development.
At present, the main customers include Pfizer, Johnson & Johnson, Novartis, Roche, Merck and other top 20 large pharmaceutical companies in the world and various new drug research and development institutions, with more than 3,000 customers.
3. Industry space
Industrial chain diagram:
CRO, the full name of "contract research institution", means to provide related services for clinical research of new drugs for large pharmaceutical companies through contract orders. Essentially, it is an R&D outsourcer of pharmaceutical companies, which sounds a bit shabby, but it is actually a talent and technology-intensive industry.
Affected by global industrial transfer and domestic innovation demand, policies, talents and other factors, the domestic CRO industry will achieve rapid development.
CMO has a huge market, and its growth rate far exceeds the global average of 5%.
In terms of revenue, the global pharmaceutical CMO industry is decentralized and highly market-oriented. What are the main domestic pharmaceutical companies (subsidiaries of Wuxi PharmaTech), Kailaiying and Boteng?
Thanks to the rapid development of domestic pharmaceutical market, friendly policies, huge population and aging trend, all these indicate that the growth potential of domestic CMO market will far exceed the global average.
According to the statistics and forecast of Southern Research Institute, the CMO/CDMO market in China will grow from 27 billion yuan to about 52.8 billion yuan in 20 16-2020, with a compound annual growth rate of 18.27%.
Internationally, LabCorp occupies an absolute leading position in the industry with Covance, Chiltern and IQIVA ***, and seven companies, such as Syneos, Charlesriver and Wuxi PharmaTech, have the same scale, forming the second echelon.
Drug discovery ranks first in the world.
Wuxi pharmatech has an absolute competitive advantage in local enterprises. First of all, the chemical ratio of Kanglong Chenghua and Zhi Zhi is relatively small; Secondly, WuXi PharmaTech's drug discovery business grew well. From 20 15 to 20 17, the CAGR of drug discovery business of kanglong chemical company was 18.76%, while Wuxi pharmatech reached 27.74%.
Medium-term gradual transformation
WuXi PharmaTech formulated the "Long Tail Strategy" a few years ago, which expanded the scope of customers from international pharmaceutical companies and biological companies to entrepreneurs and university professors. From the point of view of short-term profit, it is uneconomical and uneconomical to do so. In the case of the same customer acquisition cost, the marginal income brought by the head multinational pharmaceutical companies is far greater than that of the long-tail entrepreneurs and university professors. But breakthrough innovation is likely to happen in the long tail.
Long-term strategic planning
The upstream and downstream expansion of Wuxi pharmatech around preclinical CRO, clinical CRO and CMO is still a bottleneck, and its market share is limited. Wuxi pharmatech's breakthrough can learn from Huawei's development path: to become a customer's customer and directly face consumers.
As an equipment supplier, Huawei is the second party of network operators such as China Mobile and Vodafone, and the operators are facing end consumers. Through smartphones, tablets and personal computers, Huawei has successfully cut into the field of consumer electronics. Consumer electronics business does not form a competitive relationship with the original customers, and can even produce a synergistic effect to guide the original customers.
Wuxi pharmatech's transformation is similar. The existing form is that scientists study the mechanism of diseases, and CRO assists pharmaceutical companies to develop innovative drugs. After the new drug goes on the market, the patent right belongs to the pharmaceutical company, which educates doctors, doctors to diagnose and educate patients to use drugs. Is it possible for "scientists+doctors" to face "patients" directly? Mainly depends on how WuXi PharmaTech and WuXi PharmaTech will cooperate in the future.
The company's vision for the future: "Let the world have no drugs that are difficult to do and no diseases that are difficult to treat". We think that the first goal is "no difficult medicine", and WuXi PharmaTech and WuXi PharmaTech have basically achieved it. The second "incurable diseases" need to be realized through the platform of Wuxi Kant, with the focus on accurate "diagnosis".
Risk of lifting the ban: On May 8, 20 19, the company lifted the ban on 6140,000 shares; In May, 202 1,10,323 million shares were released, which caused pressure to release the ban.
Risk of employee turnover: Wuxi PharmaTech may find it difficult to retain key employees, or it is increasingly difficult to hire high-quality employees. In order to reward and retain key employees, the company was forced to substantially increase employees' salaries, including equity incentives.
Regulatory risk: Wuxi PharmaTech may fail to comply with existing regulations and industry standards, respond slowly to adverse policy changes, or fail to obtain/renew specific licenses, which may adversely affect the company's reputation, business, financial status, operating performance and prospects.
Intellectual property protection risk: in the case of project failure or major breach of contract, terminate the service agreement with customers in advance; The number of projects put back into commercial production is lower than expected; The expansion of production capacity and clinical trial capacity is slower than expected;
Risks of overseas investment: 20 18, 10 In June, the U.S. Treasury implemented some provisions of the Foreign Investment Risk Review Modernization Act of 20 18, authorizing the Committee on Foreign Investment (CFIUS) to review uncontrolled overseas investments in 27 industries, including the health care industry. WuXi PharmaTech's investment in many different countries and regions may be subject to strict supervision or government review in specific countries or regions, which increases the uncertainty and transaction cost of WuXi PharmaTech's future overseas investment.
Foreign exchange risk: About 80% of Wuxi PharmaTech's revenue comes from overseas customers and is denominated in US dollars. At the same time, its cost base is mainly denominated in RMB.
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