A relatively new but promising CRO industry.

Guide: China's CRO industry is booming, the wind is booming, is a very attractive area of the medical sector, the production of a very attractive area of the daily financial report author, Liu Yuchen pharmaceutical industry pharmaceutical services, referred to as CMO, can be understood as contract pharmaceutical, and contract research and development, that is, CRO (Contract Research Organization), translated into a contract research organization.
, CRO is a contract form for pharmaceutical companies and other pharmaceutical research and development institutions in the research and development process to provide specialized outsourcing services enterprises, in the pharmaceutical industry chain upstream.
history, CRO originated in the 1970s, the U.S. Orphan Medicine Act and hatch-Waxman Act in the 1980s to promote innovative drug research and development, pharmaceutical outsourcing services industry began a booming era, 1991-1999 was the first boom cycle.
2014, driven by industry technology breakthroughs (oncology immunotherapy) and improved funding environment, the global research and development pipeline has expanded rapidly and the industry has seen a second boom cycle.
Domestic in this area has been unsympressive until the implementation of drug policy reform in 2016, consistent evaluation, priority review, MAH, new registration classification of chemical drugs and other measures directly drive the domestic research and development of innovative drugs.
it is no exaggeration to say that the release of the internal reform dividend and the resonance of the external cycle have created a historic development opportunity for the domestic CRO industry.
The Daily Earnings brings attention to this relatively unfamiliar area today.
the CRO industry usher in a major development opportunity? In general, the CRO industry chain can be broadly divided into three segments: l from 0 to PCC (preclinical candidate compound) discovery, l from PCC-IND (clinical application for new drugs) verification process, lINDNDA (new drug listing application) human clinical trial stage from the current situation, head CRO business line is mostly concentrated In the clinical phase (IND-NDA), few companies have a preclinical drug discovery (0-PCC) and animal trials (PCC-IND) field, and only the main businesses of the drug Mingkangde and Charles River in the global TOP10CRO are preclinical drugs, and the rest are all clinical service giants.
of this layout structure is that the market size in the clinical stage of the CRO industrial chain is relatively high, of which the proportion of 1-4 periods is more than 70%.
But in the past 20 years, with the drug Mingkangde and Kanglonghua as the representative of China's preclinical CRO reverse, make full use of the number of domestic highly educated chemical personnel and cost advantages, and gradually in the 0-PCC stage to gain a foothold, successfully let overseas orders large-scale transfer to the domestic, both are already the world's largest preclinical chemical service providers.
the distribution of global industrial pattern, the distribution of CRO industry and the size of the local pharmaceutical market is highly positive correlation, there is a deep binding relationship between the two.
, for example, the U.S. now has nearly 40 percent of the global pharmaceutical market and about 40 percent of the CRO.
, domestic CRO enterprises are expected to usher in a historic golden development period, the reason is based on two major reasons.
first, the domestic research and development of innovative drugs began to explode, the number of new registered clinical trials each year from 841 in 2016 to 2286 in 2019, which provides a broad basis for the development of CRO.
second, the rapid rise of small and medium-sized pharmaceutical companies, which rely heavily on outsourcing, seems inevitable.
from the current data, the majority of traditional Chinese medicine companies have given up the struggle to transform, and Biotech has sprung up to occupy half of the domestic research and development of innovative drugs.
2017-2019, in the top 20 research and development bodies of indy number of new drugs in China, Biotech occupied 9 seats, excluding the top-notional Hengrui Pharmaceuticals, traditional pharmaceutical companies and Biotech in the number of declarations.
when the independent research and development package is not perfect Biotech becomes the most important source of industry innovation, outsourcing will become the inevitable choice.
, as the development of the domestic pharmaceutical industry matures, even traditional pharmaceutical companies such as Hengrui Pharmaceuticals will become more and more dependent on CRO.
On the other hand, the expiration of drug patent concentration will have a huge impact on the revenue and net profit of pharmaceutical companies, following 2011-2016, 2017-2023 will be the second peak of patent concentration expiration, potentially costing pharmaceutical companies $145 billion in sales losses.
against this backdrop, pharmaceutical companies have had to seek CRO's help in accelerating drug marketing (for longer patent periods) while reducing research and development spending and improving research and development efficiency.
are the companies worth paying attention to? There are a large number of companies that can provide DRUG research and development CRO services worldwide, but most businesses focus on a certain stage of drug development.
the world engaged in drug research and development outsourcing services companies, the market is more fragmented.
According to Forward-Looking Economist, the United States is a pioneer of the CRO industry and has the largest number of listed companies, with about 55% of the CRO market, while Europe has the second-highest proportion, with a market share of about 30% and Asia only about 13%.
In terms of corporate share, IQVIA is the world's largest CRO company, with a market share of 11.6% in the two phases before and after the clinical period, covance business also involves croquet, and PPD focuses on the clinical phase of the business, of which Kuntai, Covins, PPD and other leading CRO companies have entered China.
Source: Forward-Looking Economist In fact, the EUROPEAN and European CRO market was mature in the 1990s, and with the global expansion of CRO giants and the rise of economic technology in Asia in the 21st century, CRO industry gradually shifted to Asia, and China became a hot spot for CRO industry development.
domestic head CRO company has gradually broadened the scope of business lines, quickly seize the rapid growth of China's pharmaceutical market cake, in the specialized business stage has a considerable competitive advantage and cost advantage.
than multinational CRO companies, local CRO companies are familiar with the domestic market and can provide most preclinical or clinical trial research services.
background, the growth prospects of the domestic CRO industry are becoming clearer.
On the one hand, the domestic CRO industry is an important part of the world, but also to undertake a large number of international orders, the global industry climate is bound to benefit the development of the domestic industry, on the other hand, by the 2016 pharmaceutical reform, the domestic demand for innovative drug research and development began to increase rapidly, CRO industry ushered in rapid development opportunities.
On the basis of this, we need to pay attention to the companies concerned, and the Daily Financial Report believes that the drug Mingkangde, which is engaged in preclinical drug discovery, and Tiger Pharma, which is engaged in clinical trials, will benefit from the industry boom."
Pharmaceutical Mingkangde was founded in 2000, the company's main business by china's laboratory services, contract production research and development / contract production services (CDMO/CMO), laboratory services in the United States, clinical research and other CRO services four major sectors, through drug discovery, preclinical development, clinical research, as well as commercial production of the entire industrial chain, is the only Chinese enterprises squeezed into the top 10 CRO.
last year, China's laboratory business revenue was 6,473 million yuan, up 26.59 percent year-on-year, while the U.S. laboratory business revenue was 1,563 million yuan, up 29.79 percent year-on-year.
's current strong competitors for preclinical CRO business worldwide include multinational leaders Covance, Charles River and local companies Such as Medi-Conde and Conlong, but each has a slightly different focus.
Covance has coverage in the optimization of pilot compounds and subsequent drug analysis and testing, Charles River focuses primarily on safety evaluation, Medicinal focuses primarily on the discovery of small molecular compounds, and in this segment of the field is largely non-benchmarking enterprises, the competitive landscape is good.
Regardless of the absolute volume of revenue or growth level, pharmaceutical Mingkangde's preclinical CRO business has reached the level of transnational leadership and significantly ahead of domestic enterprises, with a clear competitive advantage, the company's preclinical CRO in the global preclinical CRO market penetration rate of less than 5%, is expected to continue to improve in the future.
's main business includes clinical trial technical services and clinical trial-related services and laboratory services.
according to Wind, the company's 2019 clinical trial technical services and related services accounted for 48.23 percent and 51.77 percent of revenue, respectively, the company's performance over the past decade continued to grow rapidly.
from 2010 to 2019, the company's revenue increased from 123 million yuan to 2,803 million yuan, CAGR was 41.53 percent, and revenue growth outs outsey the overall growth rate of the CRO industry over the long term.
2019, the company's net profit of 842 million yuan, up 78.24 percent year-on-year, from 2010 to 2019, the company's home-based net profit increased from 0.32 billion yuan to 842 million yuan, achieving dozens of times the increase in profits.
, according to CDE, the number of clinical trials in China in 2019 was 2,400, up 5.96 percent year-on-year and continuing to grow positively from a 60.98 percent year-on-year increase in 2018.
From 2013 to 2019, the number of clinical trials in China rose from 345 to 2,400, and has continued to rise in recent years, with 7 of the 13 new Chinese Class 1 drugs approved in 2019 being developed with the help of Tagg Pharmaceuticals or subsidiaries.
From the current situation, China's CRO industry is booming, the wind is booming, is a very attractive area of the medical sector, and a number of local CRO enterprises are rising, the logic of domestic substitution here also adapts.
the core of the pharmaceutical industry chain must be in Chinese own hands, which also indicates that the relevant companies will have a very good development prospects.
.