The bottleneck problem that shackles WuXi Biologics, the opportunity for domestic manufacturers to explode!

The items that caused WuXi Biologics to be included in the "Unverified List" of the U.
S.
Department of Commerce finally surfaced.
BIS is mainly for single-use bioreactor controllers and hollow fiber filters
.

Although WuXi Biologics' emergency suspension in the early trading yesterday was aimed at eliminating market misunderstandings and panic, the nearly 10% increase in early trading once gave investors hope of regaining lost ground, but it did not stop the short-term capital selling

A stone stirred up a thousand waves
.

Although some experts have pointed out that WuXi's source items included in the list are not multi-core things for the United States, they will have little impact on future domestic companies importing products in related fields

However, this incident has also made CDMOs and pharmaceutical companies feel guilty.
It is foreseeable that everyone is preparing an emergency list to replace US suppliers to prevent emergencies; at the same time, downstream pharmaceutical companies will be more More consideration should be given to purchasing domestic bioreactor equipment, parts and related consumables
.

In the long run, this is not only an opportunity to increase the recognition of the domestic bioreactor and pharmaceutical equipment industry, but also to attract the resonance of market sentiment
.

I remember the incident that Thermo Fisher imported the culture medium to carry the new crown virus, which also reminded the importance of independent and controllable market supply chain, and started a small climax in the upstream sector of the life science industry
.

With the continuous increase in the volume of monoclonal antibodies led by PD-1, and the launch of new macromolecular drugs such as ADCs and double antibodies, it is the general trend for a large number of biopharmaceutical companies and CXOs to expand their production capacity
.

Under the frenzy of capacity expansion, the opportunity for subdivision of bioreactors cannot be ignored
.

(Statistical data source: R&D customer)

1.

Bioreactors are also hailed by the industry as "the cornerstone of domestic high-end biopharmaceutical R&D and production".
They play an indispensable role in biopharmaceutical production and can help companies improve production efficiency and reduce production costs
.

According to Markets and Markets statistics, the global market space for disposable bioreactors, disposable bags and their accessories will reach US$1.
7 billion in 2020, and it is expected to increase to US$3.
9 billion by 2025, with a compound annual growth rate of 18%
.

The elasticity of the Chinese market is undoubtedly even more astonishing
.
According to Zheshang Securities, the current market space for bioreactors and disposable bags in China is 3 billion to 4 billion yuan.

Although it seems that the market size of bioreactors is not large, it is the equipment end entrance for the integration of the pharmaceutical equipment consumables industry chain, which can be understood as the concept of diversion
.

In the entire pharmaceutical process, many special consumables are used with fixed instruments.
Bioreactors are used as the inlet equipment for upstream cell culture.
If the manufacturer's product performance and categories are comprehensive enough, it will naturally occupy a certain joint sales advantage
.

Taking the giant Sartorius as an example, it initially built its core competitiveness around the upstream field of pharmaceutical equipment such as disposable bioreactor equipment and consumables, and then expanded its downstream (purification and ultrafiltration, etc.
) business of biological drugs to form an integrated biological drug production.
platform
.

2.
Differences in the selection of CXO and large pharmaceutical equipment

According to the material, bioreactors can be divided into disposable bioreactors and stainless steel bioreactors
.

The construction time, cost and advantages of the two are quite different
.

The planning, construction, confirmation and licensing of large stainless steel bioreactor facilities may take three to five years or more.
Generally, Biotech with a thin pipeline in the later stage will not choose the capacity planning of stainless steel tanks.
If the production line is approved and these approved products require large production capacity, then rashly investing in construction may cause large investment risks
.

Conversely, single-use reactor facilities are the best alternative to stainless steel tanks, and small modular single-use bioreactors can be constructed faster and require much less capital and time than stainless steel bioreactor facilities
.
Manufacturers can start building facilities in the mid-to-late clinical stage when there is greater certainty of drug pipeline approval, reducing the risk of prematurely entering large-scale capacity

Most CDMO companies represented by WuXi Biologics prefer to use disposable bioreactors to reduce batch-to-batch contamination in order to meet customer requirements at different pipeline stages
.

For large pharmaceutical companies with existing pipelines for commercial production, stainless steel bioreactors are more likely to be used
.

According to the 2021 H1 financial report, the production capacity construction of domestic pharmaceutical companies is dominated by disposable reactors, most of which are 2,000 liters of production scale
.
In response to the price reduction pressure in the PD-1 medical insurance negotiation, BeiGene and Innovent have begun to turn to the construction of stainless steel bioreactor production lines (with lower average production costs per unit), which will further reduce the production cost of biological drugs

3.
Opportunities for domestic pharmaceutical equipment players

At present, the localization rate of domestic bioreactors is still less than 20%.
On the one hand, there is still a big gap between the performance of domestic manufacturers and imported manufacturers; on the other hand, if stainless steel tank facilities are one-time investment, the price advantage of domestic products is insufficient.
In order to shake the purchasing decision of downstream customers
.

When the opportunity comes, domestic manufacturers are also struggling to catch up
.

Tofflon can be said to be one of the companies with the highest abundance of biopharmaceutical equipment products in China.
In the field of bioreactors, its products in the market not only cover stainless steel systems and disposable reaction systems, but also acquired Suzhou Haiwei, Qianpure Bio has strengthened the integration of consumables and fillers
.

It is worth mentioning that in the field of single-use bioreactors, compared with imported manufacturers of Tofflon products, the company's single-use cell expansion system has approached the level of overseas equipment in some key parameters
.

As of the end of July 2021, Chutian Technology has covered stainless steel reaction fermentation systems, chromatographic separation and purification systems, liquid dispensing systems and other related products in the upstream field of biopharmaceutical preparation.
Subsequently, the company has newly launched wave bioreactors, fully automatic microcarriers Suspension culture bioreactors, basket bioreactors, etc.
, further enhance the richness of the product portfolio, and newly cover CGT therapy R&D customers
.
In addition, the company is also building a new plant of 6,000 square meters in Shanghai, planning to develop and produce products such as disposable bioreactors, liquid dispensing bags, liquid storage bags and their membrane materials, which are expected to be sold this year

Hong Kong-listed Morison International also has abundant product line reserves in bioreactor/fermenter systems, and exports overseas services to internationally renowned pharmaceutical companies such as vaccines, monoclonal antibodies, and insulin.

In addition to the above-mentioned companies, unlisted competitive players such as Jinyi Shengshi, Lechun Bio, and Duoning Bio are also eyeing the bioreactor market

Since the disposable bioreactor is composed of an external support vessel, a bioreactor bag and a control system, the reaction bag is a consumable that needs to be replaced
.

Among them, the reactor membrane is the core and difficult point of technology, and it is particularly important to have its own production patents.
For example, imported consumables manufacturers such as STOFAN and Sartorius have patent protection
.

Lechun Bio not only owns membrane patents, but also is the invisible leader of domestic disposable bioreactors, reaction bags and other products.
Its disposable reaction/storage/stirring bags have occupied 20-30% of the market
.

Following the vine, Jiangsu Bosheng, a subsidiary of Shisiyao, surfaced.
Its disposable multi-layer co-extruded biofilm has long been monopolized by overseas manufacturers and is the core raw material for downstream disposable bags and bioreactors
.

Conclusion: Just as Huawei and other companies have been blocked by the United States in the chip field, with the lessons learned, China's independent and controllable capabilities in the upstream supply chain of life sciences will only become stronger and stronger.
Don't miss this opportunity
.