Clinical CRO "Clash of Kings"!

Some people compare clinical CRO to frequent and high-intensity front-line work, and preclinical CRO to intellectual mental work
.

Moreover, due to the high-tech and professional characteristics of pre-clinical CRO, it also makes more money than clinical CRO

Some people also say that in the entire CRO chain, the high growth stage of preclinical business has passed, and the industry is constrained by upstream and downstream industries.
In the future, the "growth point" of the industry will focus on the clinical CRO sector
.

The debate on preclinical versus clinical CRO has also been one of the most debated topics in recent years
.

However, judging from the current overall situation of the CRO industry, most of the main businesses are biased towards pre-clinical CRO, which is an industry model with multi-point flowering and precise efforts

On the evenings of March 24th and 28th, WuXi AppTec and Tigermed announced their respective 2021 annual reports.
In the content of the annual reports, the growth of the clinical CRO segment last year was the main promotion point.
So who are the two clinical CRO leaders? Better?

Logic: A high-speed industry that relies strictly on "innovation"

Logic: A high-speed industry that relies strictly on "innovation"

From 2000 to 2001, local CRO companies such as WuXi AppTec and Tigermed were established one after another.
At that time, the Chinese market was mainly dominated by generic drugs, and the fundamental logical trend of the CRO industry was not obvious
.

After 2017, with the support of various policies and a large amount of funds, the logic of drugs shifted from generic drugs to the innovative drug industry, and the domestic CRO industry also ushered in a highlight moment for listing and financing

During the period from 2015 to 2021, clinical CRO showed explosive growth in previous years, but as time went on, the projects promoted by clinical CRO in the early stage gradually entered the clinical stage, and the growth rate of clinical CRO successfully surpassed, and with the passage of time, Future trends are also expected to be more pronounced
.

In addition, according to an industry veteran who did not wish to be named, judging from the global clinical CRO market trend, the market concentration has gradually accelerated in recent years.
Clinical laboratory company LabCorp acquired Covance and Chiltern respectively; in 2016, clinical CRO Quintiles merged with data consulting company IMS Health, expanding their respective advantages in clinical CRO
.

Following the footsteps of foreign countries, in the same 2015, domestic CROs also ushered in major changes.
After CDE issued the "Announcement on Carrying out the Self-inspection and Verification of Drug Clinical Trial Data", the domestic clinical trial supervision has truly become standardized
.

Deeper clinical reforms have also directly pushed the clinical CRO industry into a period of rapid development, and domestic clinical CROs have entered a relatively standardized development stage

It was after this stage that Tigermed and WuXi AppTec, two listed companies rooted in clinical CROs, ushered in a high performance growth that they had never had before.
The real battle for the leader begins
.

Competition: Tiger and WuXi accelerate integration to strengthen leading advantages

Competition: Tiger and WuXi accelerate integration to strengthen leading advantages

Different from the law that pre-clinical CROs bloom more and the advantages of listed companies are concentrated, domestic clinical CRO companies mainly show a pyramid distribution pattern, excluding multinational pharmaceutical companies CRO companies, such as Tigermed and WuXi PharmaTech, are at the top of the pyramid by virtue of their respective advantages, while The bottom distribution is mostly small enterprises with huge numbers and lack of core competitiveness
.

In terms of market share, Tigermed will take the first place with a market share of 8.
5% in 2020, followed by the clinical CRO segment of WuXi AppTec, accounting for 4.
2% of the overall market.
The market share of Ji Medicine, Fangen Medicine and other companies has dropped significantly
.

According to the Boston Matrix Principle, Tigermed's leading position in the clinical CRO field is still very stable at least at present

Image source: "CRO/CMO track - a 10-year-old sector, but you don't know? 》--Value Basket Knight Image Source: Snowball

In terms of clinical CRO content services, WuXi AppTec will provide clinical trial development services for a total of about 240 projects in 2021, helping customers to complete 19 clinical research applications and 12 marketing applications
.

Tigermed has 567 ongoing clinical programs (+178), including 231 Phase I and BE programs, 106 Phase II, 148 Phase III, 37 Phase IV and 45 IIT and real-world studies

However, this does not mean that Tigermed will be able to firmly hold the position of the boss
.

According to statistics on the revenue and year-on-year growth rate of WuXi AppTec and Tigermed in the clinical CRO field during the four-year period from 2017 to 2021, it can be seen that although the revenue volume of the former segment is less than that of the latter segment, its annual growth rate is slightly higher than that of the latter segment.

In general, Tigermed has been developing rapidly in recent years, but WuXi has also increased its weight in the field of clinical CRO, and its growth rate has been higher than Tigermed in recent years, and its entire industry chain layout is also very large.
To a certain extent, it has strengthened its customer adhesion, and it is likely to become Tigermed's largest domestic leading competitor in the future
.

Trend: Convergence, Development

Trend: Convergence, Development

Today, with the continuous expansion of domestic new drug research and development expenditures, coupled with the continuous support of policies for pharmaceutical innovation, the number of new drug projects has increased exponentially.
Thanks to this, the industry-wide development trend of the CRO industry is obvious
.

At the same time, the research and development process of a large number of preclinical new drug projects accumulated in the early stage has advanced, and clinical CRO has replaced preclinical CRO as the most anticipated component

According to a senior CRO person who did not want to be named, today's industry is more inclined to integrated development rather than emphasizing corporate advantages.
As the new drug industry has higher requirements for high-quality R&D links, the CRO industry needs to continue to expand the upstream and downstream areas of the industrial chain.

.
In recent years, the upstream and downstream of the CRO industry has been integrated, CRO has integrated into the comprehensive service of pharmaceutical outsourcing (CDMO), CDMO has integrated into CRO, CRO has integrated into pharmaceutical marketing outsourcing (CSO), and CRO has integrated into related industries, providing services ranging from front-end R&D to back-end production to One-stop service for related industries, and vertical integration has become an important strategic layout for outsourcing service leaders
.

In addition, with the improvement of CRO's professional service capabilities, the enterprise cooperation model has also changed
.
From the traditional contract delivery model, to the advanced partial execution model, to the joint R&D model at the strategic level, the degree of bundling between CROs and enterprises has gradually deepened
.
The CRO industry has changed its previous attitude of being outside the risk of new drug research and development.
While taking the responsibility with innovative companies, it will greatly raise the ceiling of CRO revenue.
It is expected that it will be the most important revenue model for CRO in the future
.

Finally, referring to WuXi AppTec and some companies focusing on pre-clinical CRO recently involved in the clinical CRO field, Tigermed will likely face competition from a large number of industry-extending CRO companies in the future.
Not surprisingly, the clinical CRO field is expected to be the next 5 -10 years the most competitive field in the CRO industry
.