As a technology-driven industry, the underlying technology of synthetic biology is its core competitiveness.
In the past 10 years, the R&D cost of the underlying technology of synthetic biology has dropped by 1,000 times, or even more, which means that synthetic biology startups also have the opportunity to carry out R&D activities that were originally supported by large enterprises, bringing the heat of the synthetic biology field.
McKinsey has predicted that 70% of chemically manufactured products can be produced by biological means in the future, and the academic community generally believes that the bioeconomy will be the theme of the fourth industrial revolution.
So, what are the applications of synthetic biology? What is the size of the market?
Synthetic biotechnology is a technology that replaces traditional chemical processes with cell metabolism and enzyme catalysis, which is simply the use of fungi and other organisms to make various compounds.
Synthetic biology has a wide range of applications and can be applied to various fields such as cosmetics, chemicals, medicine, agriculture, food, and energy.
In 2019, the global synthetic biology market reached US$5.3 billion, of which healthcare was the largest segment, accounting for 39.65%.
With the wider application of synthetic biology in various fields, the global synthetic biology market is expected to reach about $18.9 billion in 2024, and the compound annual growth rate of the synthetic biology market will reach 28.8% from 2020 to 2024.
Compared with 2019, the proportion of food and beverage and agriculture is expected to increase from 4.00% and 3.52% to 13.64% and 11.82% respectively in 2024, and the proportion of medical and health care is expected to decrease to 26.59%.
With such good development prospects, what are the investment opportunities?
In fact, China has always been a big fermentation country, accounting for about half of the world's production capacity, whether it is antibiotics and other bulk APIs or all kinds of amino acids and even functional sugar alcohols required in the field of food and feed, are produced through fermentation, and the mainland has unique advantages in this regard.
On the basis of such a huge traditional fermentation, the development momentum of domestic synthetic biology is also relatively rapid.
Naturally, the leading companies are traditional fermentation companies, such as Twining Biotech, a leading company in the field of antibiotic intermediates.
Another force is the former leaders in the field of medical cosmetology, such as Bloomage Biotech and Juzi Biotech, the synthetic biology business of these companies mainly involves recombinant collagen, and this product can be regarded as a relatively definite landing scenario for domestic synthetic biology.
In addition, there are pharmaceutical companies like Kanghong Pharmaceutical, which claim to have applied synthetic biotechnology in the process of developing innovative drugs.
The key role of antibiotics as basic drugs is still irreplaceable, today we will take a look at the leading enterprise in the field of antibiotic intermediates in China - Twining Biotechnology.
In terms of performance, Twining Biotech continued its high growth trend in 2022, and still maintained a high revenue and profit growth rate in the first quarter of 2023 and 2024.
In 2023, the company will achieve operating income of 4.823 billion yuan, a year-on-year increase of 26.24%, and net profit attributable to the parent company of 941 million yuan, a year-on-year increase of 128.56%.
The profitability of Twining Biotech is also improving, with a significant decrease in the management expense ratio and financial expense ratio, and a continuous increase in net profit margin. The net profit margin in 2023 will be as high as 19.5%, ahead of Hengrui Pharmaceutical, Huadong Pharmaceutical and other leaders.
Behind the rapid growth of performance, Twining Biotech has formed high industry barriers in the antibiotic intermediates industry, with outstanding advantages in cost, resources, environmental protection and technology.
First, industry barriers
First of all, the development of antibiotic intermediates is difficult and the core technical barriers are high.
Secondly, there is a certain degree of pollution in the production process, which must meet the emission standards stipulated by the state or locality, and there are high environmental protection barriers.
In addition, the antibiotic intermediates industry is a capital-intensive industry, which puts forward higher requirements for the financial strength of enterprises.
The second is geographical advantages
Twining Biotech has obvious geographical advantages in Yili, Xinjiang, with low costs in terms of raw materials, energy, labor and geography.
The third is the scale advantage
Twining Biotech is one of the leading enterprises in the field of antibiotic intermediates, complete product types and leading production technology, and the company's original 500m³ fermentation tank is currently the largest fermentation tank for antibiotics in the world, and the output and efficiency of a single batch have been greatly improved.
Among the main antibiotic intermediates of Twining Biotech, erythromycin thiocyanate has a production capacity of 3,000 tons/year, with a market share of about 44%, ranking second in the industry; The production capacity of cephalosporin intermediates is 3,000 tons/year, ranking first in the industry; The output of penicillin intermediates is about 6,700 tons/year, ranking second in the industry.
Fourth, technical advantages
Twining Biotech is the first company in China to break through foreign technical barriers and become the first company in mainland China to enzymatically produce 7-ADCA (a cephalosporin intermediate). By the end of 2023, the company has applied for a total of 158 patents, of which 72 patents have been granted.
In addition, in February 2024, Twining and Jinhui Technology will cooperate in the use of AI-assisted synthetic biology research and development and cooperative development of new products, combining artificial intelligence with Twining's existing industries and driving the company to form new quality productivity as soon as possible.
Cut into the synthetic biology track to help the company maintain its leading position in the antibiotic industry.
Compared with some companies that are still in the concept stage, Twining Biotech has a number of synthetic biology products that are ahead of the industrialization progress, and is the first batch of synthetic biology companies in China to achieve product delivery.
In December 2023, Twining Biotech completed the commissioning of the first phase of the synthetic biology project, and a number of synthetic biology projects such as bisabolol and 5-hydroxytryptophan were put into production.
Among them, bisabolol has entered the sales stage, and the fermentation titer and sugar conversion rate of this product are leading in the world, and the commercialization of this product has been the first in China.
Bisabolol is a 100% natural source of high-purity organic compounds, which has a very good effect in repair, and the current market demand for bisabolol is expected to be 500-800 tons, and the main competitor is BASF.
The bisabolol produced by Twining Biotech through synthetic biology technology has achieved the quality of natural extraction, and has a competitive advantage over bisabolol synthesized by chemical method in terms of cost.
Finally, to sum up, the technology of synthetic biology is catering to the current industry development trend, and at the same time reducing the cost of product acquisition, although there are still many uncertainties in the future of synthetic biology, but for the industry, the new star of Twining Biology has begun to be brilliant.
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