A few days ago, Baicheng Pharmaceutical (301096. SZ) announced that its wholly-owned subsidiary, Zhejiang Thermo Pharmaceutical Co., Ltd. (hereinafter referred to as "Thermo Pharmaceutical"), has been approved to carry out clinical trials and research on BIOS2207 drugs. At present, this product has not been approved for marketing at home and abroad, and it has certain clinical value in improving the compliance of children.
In the context of the rapid development of the pharmaceutical industry, Baicheng Pharma strives to create an integrated service advantage of "pharmaceutical research + clinical trial + customized R&D and production" for comprehensive drug R&D and production, and continuously improves the layout of the whole CRO/CDMO industry chain, and the company's performance has been steadily improved. At the same time, the company continues to increase R&D efforts, and R&D projects continue to make breakthroughs.
Steady improvement in operating performance
Baicheng Pharmaceutical is a comprehensive pharmaceutical R&D listed company with technology development as the core, integrating innovation, full value chain, platformization and inclusive attributes, focusing on the whole life cycle management of drugs, and is committed to building a pharmaceutical ecological cluster.
It is understood that Baicheng Pharmaceutical mainly provides medical technology entrusted research and development services (CRO), R&D technology achievement transformation services, and customized R&D and production services (CDMO) for various pharmaceutical companies and pharmaceutical R&D investment enterprises.
After years of accumulation and precipitation, Baicheng Pharmaceutical has become a comprehensive pharmaceutical R&D enterprise with strong competitiveness in China. With a deep understanding of the industry, strong R&D strength, rich experience in project development, and a sound quality management system, Baicheng Pharma has provided more than 700 pharmaceutical research, clinical trials or integrated R&D services for more than 500 customers in China.
In recent years, on the basis of strengthening entrusted R&D services, Baicheng Pharma has actively promoted the transformation of R&D technological achievements, strengthened self-R&D investment, and actively carried out equity sharing business in entrusted R&D services and R&D technological achievement transformation services to maximize the value of the project.
In addition, Baicheng Pharma has also built a customized R&D and production service platform, focusing on the whole life cycle management of drugs, and is committed to providing customers with integrated services of "pharmaceutical research + clinical trials + customized R&D and production" to build a high-quality industrial ecosystem.
Under the clear strategic guidance, Baicheng Pharmaceutical's operating performance has been steadily improved. From 2021 to 2023, Baicheng Pharmaceutical will achieve revenue of 374 million yuan, 607 million yuan, and 1.017 billion yuan; The net profit attributable to the parent company was 111 million yuan, 194 million yuan and 272 million yuan respectively, and the revenue and net profit maintained a good trend of year-on-year growth.
Baicheng Pharmaceutical said that in 2023, the company will move to the R&D headquarters, expand the laboratory, and increase the size of the technical team, so that the company has successfully released more production capacity and further enhanced its order acceptance capacity. In 2023, the amount of new orders of Baicheng Pharmaceutical will be 1.360 billion yuan, a year-on-year increase of 35.06%, and the amount of orders in hand will be about 1.586 billion yuan, a year-on-year increase of 18.90%.
The positive trend has continued this year. In the first quarter of 2024, Baicheng Pharma achieved revenue of 216 million yuan, a year-on-year increase of 34.04%; The net profit attributable to the parent company was 49.8182 million yuan, a year-on-year increase of 42.06%.
The main business has developed steadily, and the CDMO business has been vigorously expanded
At present, Baicheng Pharmaceutical is mainly engaged in medical technology entrusted research and development services (CRO business), and the revenue of this business will be about 965 million yuan in 2023, accounting for 94.84% of the revenue; Gross margin was 66.80%.
The CRO industry is a product of the global industrialization division of labor, and its emergence and development are based on the completion of drug research and development with high efficiency and low cost, and continue to deepen the pharmaceutical research and development business of major pharmaceutical companies, provide research and development services covering all processes of drug research and development, effectively improve the efficiency of drug research and development, and is an important way to shorten the new drug research and development cycle and quickly go to market.
In recent years, the domestic CRO market has developed steadily. With the expiration of the patent cliff of original drugs, the demand for CRO services continues to increase. At the same time, policies such as the "generic drug consistency evaluation" system, the "drug marketing authorization person system", "priority review and approval to encourage drug innovation", and centralized procurement guide the structural upgrading of the pharmaceutical industry and stimulate the demand for R&D outsourcing.
From 2018 to 2022, the size of China's CRO market increased from 36.49 billion yuan to 81.37 billion yuan, with an average annual compound growth rate of 22.2%. According to Sullivan's forecast, the size of China's CRO market will reach 275.77 billion yuan in 2030 at a compound annual growth rate of 14%. Under the huge market space, Baicheng Pharmaceutical, which has strong R&D strength and rich experience in project development, is expected to seize a larger market share.
In terms of the transformation of R&D technology achievements, Baicheng Pharma will recommend to customers according to market demand and development plans, and after the recommendation is successful, customers will continue to carry out follow-up R&D on the basis of the previous R&D results to shorten the entire R&D cycle. This model greatly shortens the R&D cycle, ensures the efficiency and quality of R&D, and further enhances customer stickiness.
As of the end of 2023, Baicheng Pharma has independently established nearly 300 drug varieties, with indications covering respiratory, digestive, infectious, tumor, psychiatric neurological, cardiovascular and other diseases with huge market demand. In 2023, the gross profit margin of Baicheng Pharmaceutical's R&D technological achievement transformation business will be as high as 78.62%.
In addition to the above two businesses, Baicheng Pharma is also working hard to expand its CDMO business. With the enthusiasm of innovation and R&D, the CDMO industry continues to grow globally with its own process advantages and large-scale production capacity, and the market prosperity remains high. Sullivan predicts that the global CDMO market will grow at a CAGR of 13.2% to reach $231 billion by 2030.
Thermo Pharmaceutical, a subsidiary of Baicheng Pharma, has achieved seamless technology transformation from laboratory R&D to factory production, solved problems related to sample preparation and process validation in the registration process, and covered hormone and non-hormonal BFS production lines, production lines for special dosage forms of topical drugs such as ointments/gels/transdermal patches, helping pharmaceutical companies and CRO companies improve the efficiency of drug research and development and accelerate the realization of commercial value.
According to the disclosure, Baicheng Pharmaceutical's CDMO business will achieve revenue of 52.4934 million yuan in 2023, a significant increase of 152.35% year-on-year.
Continue to promote R&D and innovation, and the future development is promising
For a long time, Baicheng Pharma has continuously improved the construction of high-level technology R&D platforms, and now has a series of professional R&D centers and technology platforms to provide all-round support for the company's drug R&D and production, and promote the coordinated development of CRO business and CDMO business.
It is understood that Baicheng Pharmaceutical has established an innovation center, pharmaceutical R&D center, clinical center, traditional Chinese medicine natural medicine center, and health product R&D center focusing on technological innovation and technology R&D, and continues to deepen the fields of inhalation preparations, transdermal preparations, sustained-release preparations, complex injections, etc., forming a series of core technologies with independent intellectual property rights, building a development trend of multi-variety key technology clusters, accelerating the innovation process, improving R&D efficiency, and supporting the company's steady and far-reaching development.
As of the end of 2023, Baicheng Pharma has 31 authorized patents, 90 patent applications, and 34 copyrights. During the reporting period, 178 company registration applications were made, and 63 were approved.
According to the disclosure, Baicheng Pharma has carried out a number of new drug research and development projects, completed the IND application of 4 Class 2 new drugs, obtained IND approval documents for 2 Class 2 new drugs, and completed the phase I clinical trial of 1 Class 1 new drug and entered a new stage.
In addition, Baicheng Pharma also has a number of R&D projects that have also made outstanding progress in the near future. According to the announcement, the BIOS2207 drug independently developed by Thermo Pharmaceuticals, a wholly-owned subsidiary of Baicheng Pharmaceutical, has been approved to carry out clinical trial research, which is mainly used for the treatment of adults and children aged 4 years and above with partial-onset seizures (with or without secondary generalized seizures).
In addition, BIOS2207 drug has not yet been approved for marketing at home and abroad, and there is no relevant sales data. This product is optimized on the basis of known active ingredients and has certain clinical value in improving compliance in the pediatric population.
On the whole, Baicheng Pharma adheres to the dual-line development of innovative drug R&D and generic drug R&D, continuously carries out technological innovation and industrial upgrading, actively cultivates new business growth points through the integrated layout of the whole CRO/CDMO industry chain, and gradually forms a closed-loop industrial chain of drug R&D, customized production and commercial production, and continues to improve the overall competitiveness and profitability, which is worth looking forward to in the future.