Home » The secret of WuXi AppTec’s annual report: the beginning of the clearance of domestic “innovative drugs”? |Jianzhi Research – Wall Street News

The secret of WuXi AppTec’s annual report: the beginning of the clearance of domestic “innovative drugs”? |Jianzhi Research – Wall Street News

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The secret of WuXi AppTec’s annual report: the beginning of the clearance of domestic “innovative drugs”? |Jianzhi Research – Wall Street News

WuXi AppTec’s performance report and phone call today will drop a blockbuster in China’s innovative drug market. Will me-too innovative drugs officially begin to clear?

WuXi PharmaTech delivered a satisfactory financial report to the market, with a year-on-year increase of more than 70% in non-net profit, slightly exceeding the previous forecast. The company gave 22-year revenue guidance in the conference call this morning. With the advancement of CDMO orders for the new crown drug, the company’s revenue will grow rapidly. Haitong Securities expects the company to grow by about 67% in 22 years, significantly exceeding the previous Haitong forecast. 45%.But keen investors must have found something different, the company’s domestic new drug research and development business will decline in 22 years.

In the company’s performance report released last night, regarding the business of the domestic new drug research and development service department, WuXi Pharma’s domestic new drug research and development service department in 2021 earned 1.25 billion yuan,But the company’s expectation is that there will be a certain level of revenue decline in 22 years.

This has also become a more concerned issue for the market – domestic me-too drugs have begun to cancel orders? To this,Wall Street News & Wisdom ResearchIt is believed that the expected decline in revenue of WuXi AppTec’s domestic new drug division means that the official confirmation of domestic small molecule me-too drugs has begun to clear.

Me-too drug market clearing begins?

Hu Zhengguo, chief investment officer of WuXi AppTec, said in a conference call this morning: “The reason for the 22-year expected decline in the domestic new drug R&D department’s business is that the demand for fast follow projects has declined due to changes in the market environment; some customers are turning to first in class and me at this stage. Better and new molecular species such as small nucleic acid, protac, peptides, etc., which will lead to the company’s increased development difficulty, increased development time, and technology needs to be upgraded, so the current income will decrease. At present, the company is still in pipeline construction, but it is expected that the cost of a single service will increase in the future. Growth, and as the pipeline progresses, milestones and sales splits will contribute even more in the future.”

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From WuXi AppTec’s statement, me-too drugs have officially begun to be cleared.

On the one hand, in July last year, the Center for Drug Evaluation (CDE) of the State Drug Administration issued the “Guidelines for Clinical Research and Development of Antitumor Drugs Oriented to Clinical Value”, which led to changes in the direction of policy supervision. Jianzhi Research once wrote in the article “What do the new regulations on anti-tumor drugs in the market mean for the hot CXO industry? According to the analysis in the Institute of Wisdom, this principle will change the current situation of me-too drugs crowding together and crowding out medical resources.New drug development companies improve the speed and quality of drug development;at the same timeTo ensure the maximum rights and interests of patients, the clinical control group of the new drug is required to be compared with the recommended therapy in the existing standard to ensure the benefit of the treatment of the patients after the drug is marketed, which is also one of the questions that Innovent Bio’s PD-1 was previously questioned at the US FDA Expert Committee “The first domestic PD-1 “meeted” the FDA today, why does the entire pharmaceutical industry pay attention to it? | See Zhizhi Research.

On the other hand, Jianzhi Research’s previous article “Why is the domestic innovative drug sector so fragile? It is mentioned in the “Research on Seeing Wisdom”,The logic of domestic medical insurance payment has been broken, and it is difficult to go abroad to internationalize, which has become an important reason affecting the valuation of innovative drug companies.

In addition, the pharmaceutical industry in the secondary market isThe rapid cooling in the second half of last year and the rapid decline in industry valuations have hindered the listing of a large number of biotech companiesAt the same time, the decline in the valuation of the secondary market directly affects the valuation of the primary market. The decline in valuation and the decline in investors’ willingness to invest have led to further difficulties in financing biotech companies in the primary market.

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Therefore, many biotech companies in the pre-IPO stage have encountered financing difficulties.The lack of money means that the development of new drugs and clinical trials that require a lot of money cannot proceed smoothly, and some me-too drugs with weak products have to stagnate.

Recently, in an interview with Yu Wenxin, a pharmaceutical analyst at Haitong Securities, Yu Guoliang, the chairman of Guanke Meibo, said:

“At present, most of the money of biotech companies is lacking in clinical rather than production; any company will find CRO for production before entering the clinic, so despite the lack of money, production is bound to be done, so the impact of lack of money will not affect too much CRO, the most uncomfortable is the clinical phase III related companies. The difficulty faced by pharmaceutical companies is that they need funds to recruit clinical patients. If they lack funds, they will not be able to advance. Therefore, the pressure is mainly on companies with late-stage companies. However, with the generation of better clinical data and the acquisition of good companies, there are still opportunities. And although it seems that there is less money, in fact, investors are demanding more about the company’s valuation. “

In addition to the problem of the quality of me-too drugs, although a large number of me-too drugs have reduced the burden of medical insurance through price wars, they have squeezed more industry resources for real innovative drug research and development, whether it is human, capital, clinical resources. , the market, resulting in a sharp rise in the cost of these companies that really do innovative research and development.

Therefore, judging from the statement of WuXi PharmaTech and CrownBio, the domestic innovative drug market, or the “innovative drug” market filled with a large number of me-too drug development, may have begun to clear up, and companies that are really doing innovative R&D will benefit, and China’s innovative drug market will usher in another change.

Can a biotech company accept the fact that it is a biotech and not a biopharma?

In addition to the clearing of the market itself, another issue that the market is concerned about is the positioning of domestic biotech companies. In the past three years, almost every biotech company has expressed that it wants to become a biopharma, from R&D to manufacturing to sales, in terms of management statements and company actions, and become a bigger player in the market to gain more benefits. High valuation, in the capital market, the valuation of a large number of biotech companies skyrocketed. But does the market really need so many all-in-one biopharmas?

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Jianzhi Research believes that Biotech’s mission is actually to focus on R&D, not to make future sales and operations constrained R&D, and to use the financing funds more efficiently in R&D, while many domestic biotech companies invest in R&D for high valuations.capital is heavierOn the construction of production equipment and sales team,Once there is a problem with the capital chain, the first thing that will be affected is the research and development progress, so even if there are good products in the pipeline, the development progress will be delayed and market opportunities will be lost.

From the words of the chairman of Guanke Meibo above, it can be seen that biotech companies should consider cooperating with big pharmaceutical companies and CRO companies in the future, and each uses their strengths and takes what they need. Jianzhi Research believes that such a market is a truly benign and sustainable market, and it is believed that cooperation and mergers and acquisitions in the pharmaceutical market will gradually increase in the future.

To sum up, the ebb of the bubble in the innovative drug market is the time for the industry to re-think calmly, but investors should also believe that,After the market clears, the industry will usher in a better innovation pattern

Risk Warning and Disclaimer

Market risk, the investment need to be cautious. This article does not constitute personal investment advice and does not take into account the particular investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, views or conclusions contained herein are appropriate to their particular circumstances. Invest accordingly at your own risk.

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