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Recently, IVD instrument CDMO successfully passed the meeting and is expected to become the "first stock of IVD instrument CDMO"
.
According to market rumors, minimally invasive former OEM system enterprises will also enter the capital market
.
The capital market is always the most enthusiastic about new things, and the currently scarce device CDMO varieties may become the next "water sales track"
to take over the baton of pharmaceutical CXO.
It's up to us to unveil its mystery
.
01 The trend and barriers of device CDMO
01 The trend and barriers of device CDMO The more inward the downstream rolls, the more opportunities there are upstream
.
.
Looking back at the rise of pharmaceutical CXO, in 2018, China began to pilot the centralized procurement of drugs, the logic of generic drugs began to collapse, pharmaceutical companies turned to transform innovative drugs, and 2019 was the first year
of the collective rise of pharmaceutical CXO companies.
Under the double-click of "overseas orders continue to increase" and "domestic demand continues to increase", the improvement of industry performance and the improvement of industry valuation have created the previous round of CXO prosperity
.
We may be on the same eve of the rise of device CXOs, especially CDMOs
.
.
Before the centralized procurement, most equipment manufacturers grew savagely & had rough internal control, and production and inventory management were not stable, resulting in low efficiency of resource and capital turnover and serious
waste.
Similarly, under the continuous expansion of the centralized procurement of medical devices, device manufacturers only have two major roads, one is to resist the decline in profit margins through product innovation, and the other is to reduce costs and increase efficiency
through refined operations.
Manufacturers in the industry will inevitably lead to differentiation, some manufacturers are good at innovation, some manufacturers are better at production & internal control, and turn to upstream transformation, doing accessories, OEM\ODM, CDMO
.
Why is device CDMO more barrier-worthy than device CRO?
Why is device CDMO more barrier-worthy than device CRO? On the one hand, device CRO is more human-intensive and more susceptible to external squeeze and subversion; The device CDMO not only relies on talents, but also on resources, such as capital, laboratory equipment, and production equipment, and the industry threshold is higher
.
On the other hand, the domestic device CDMO industry is in the early stage and the competition pattern is good
.
According to the prospectus of Kaishi Biologics, the CDMO model of domestic diagnostic instruments started late, after 2000, the domestic began to gradually carry out professional division of labor, the number of enterprises with multi-platform research and development capabilities and large-scale production capacity is limited, different enterprises have their own characteristics and advantages in the subdivision of application fields, and the industry competition intensity is lower
than that of the downstream diagnostic reagent industry.
than that of the downstream diagnostic reagent industry.
From the perspective of industry capacity, the overall size of the domestic medical device market exceeds 500 billion, as a part of the industrial chain R & D outsourcing service industry, arterial network estimates that the relevant market size in 2019 will reach 10 billion yuan, and it is expected that the average annual compound growth rate will exceed 20% in the future, far exceeding the global average annual growth rate
of 10%.
From a global perspective, device CDMO has become a relatively mature business model, and multinational giants such as Medtronic and Johnson & Johnson have chosen to gradually divest their own production load and choose to entrust CDMO production from
a cost perspective.
For example, in the IVD instrument market, the CDMO model is relatively mature in the world, forming a diagnostic instrument CDMO service provider
mainly represented by well-known enterprises such as Hitachi, Olympus, and Nippon Electronics.
Among them, Hitachi develops and produces instruments for Roche, Nippon Electronics develops and produces instruments for Siemens, Canon Medical develops and produces instruments for Abbott, and Beckman acquires Olympus diagnostic instrument business
.
02 Kaishi Biologics, the first share of in vitro diagnostic CDMO, what is the color geometry?
02 Kaishi Biologics, the first share of in vitro diagnostic CDMO, what is the color geometry? At present, there are no A-share listed companies whose main business is device CDMO and in vitro diagnostic instrument CDMO, and the IPO of Kaishi Biologics occupies the "first-mover advantage"
of scarcity.
Since its establishment in 2009, Kaishi Biologics has been positioned as a "third-party R&D and manufacturing company for in vitro diagnostic instruments", providing customers with services and products
such as instrument research and development, design transformation, registration, and precision manufacturing through the CDMO model.
In 2016, Kaishi established a subsidiary, Boyu Biologics, to enter the R&D and production
of laboratory supporting consumables.
From 2018 to 2021, the revenue of Kaishi Biologics was 95 million, 132 million, 259 million and 573 million respectively, and its revenue began to grow explosively in
2020.
Although Kaishi Biologics has developed instrument products with multi-technology platforms such as immunodiagnosis, microbial diagnosis, pathological diagnosis, POCT, and coagulation diagnosis, from the perspective of business model, it is difficult to provide downstream customers with customized development instrument services, sales of instruments and accessories, etc.
It is difficult to have explosive growth, and the only business that can provide the company with explosive points must be consumables
.
Based on the development of the industry, the significant increase in the volume of new crown testing, the introduction of the company's accumulated instrument customer resources and other factors, the company's consumables business expanded rapidly in 2020, and established cooperative relations with a number of internationally renowned in vitro diagnostic reagent manufacturers and third-party laboratories, from 25.
7423 million in 2019 to 373 million
in 2021.
This explosive performance growth also has "sequelae"
.
.
The significant increase in consumables revenue has broken the balance of the original business structure, and the scale of overseas consumables business has declined in the first half of 2022, and the sales revenue of the top five overseas customers accounted for 23.
5% and 41.
47% of the current period revenue from 2020 to 2021, respectively, and this proportion decreased to 15.
95%
in the first half of 2022.
The explosion of the consumables business is the core help for
the company's IPO.
the company's IPO.
According to the prospectus of Kaishi Biologics, the first echelon of device CDMO companies are mainly Japanese and Korean enterprises, including Hitachi, Canon, Olympus, Nippon Electronics, etc.
, and the second echelon is only Kaishi Biologics and Comes, and the number of participants forming a certain scale in the domestic market is small
.
The more than 720 million yuan to be raised in this IPO can not only solve the problem that Kaishi instrument products are in a tight balance in the past two years, but also expand the scale of production capacity (the scale effect is likely to bring about a decrease in cost), occupy the industry opportunity compared with other competitors, and expand a broader customer base, laying a good foundation
for the sales of consumables products.
For the company's laboratory consumables business, it does not belong to the scope of CDMO in an accurate sense, but at present, the domestic related market is still dominated by imported products, and listed companies also have Jiete Bio as a benchmark, and Kaishi Bio is less than Jiete Bio
in terms of product category.
However, another difference between the two is that the main revenue of Jiete Bio comes from overseas and is relatively stable, while Kaishi Bio comes more from domestic and has poor
stability.
The valuation of Kaishi Biologics' consumables can fully match the benchmark Jiante Biologics (4.
239 billion market capitalization, 25 times static P/E ratio), and it does not rule out that Jiedbio will be driven
by the upward sentiment after Kaishi Biologics' IPO.
If the instrument CDMO business of Kaishi Biologics can be proved to be an effective starting point for the introduction of the company's consumables business into customers, it is possible to obtain higher premium recognition in the market and form synergy
.
03 Listed companies bound to large customers have verified the platform capabilities?
03 Listed companies bound to large customers have verified the platform capabilities? Like pharmaceutical CDMO companies, device CDMO companies binding large customers can indeed bring qualitative take-off, and the gold content of downstream customers can also verify the "intelligent manufacturing" platform capabilities
of a device CDMO company.
Combined with the materials of various listed companies, giant manufacturers often review the high-standard, long-term (such as 3 years) CDMO suppliers of equipment consumables, and once the cooperative relationship is determined to change the supplier, it is less likely to sign a long-term contract of more than 5 years; Taking Roche as an example, in 2020, it conducted more than 400 on-site audits of suppliers, of which production quality audits accounted for more than 85%.
In A-shares, there are many hidden "potential stars"
of device CDMO.
Adopt shares is the domestic veterinary syringe / needle product market share of the first leader, through ODM / OEM to provide products to customers, although the industry is a low-value consumables track, but the profitability is not weaker than the general device enterprises, the net profit level in the past two years has been increasing, close to 30%.
。 After ensuring the leading position of veterinary device products and binding large customers such as Neogen & Thermo Fisher, the company extended its product line to medical products and laboratory consumables products, adding new internationally renowned customers such as Medline, McKesson, Herry Schein and maintaining long-term cooperation
.
Changhong Technology is a leading polymer consumables manufacturer in China, committed to providing customers with one-stop service
from product design, mold manufacturing, automated production to assembly.
Due to the large number of varieties, strong customized attributes, difficult processes and other factors in the polymer life science consumables industry, the growth driving mode of related manufacturers is actually similar to that of CDMO manufacturers, and it is necessary to complete the integration and realization of production processes by undertaking ODM orders from overseas giants, so as to achieve a leap
in scale.
In November 2021, Changhong's subsidiary Bai Mingsheng cooperated with Roche Diagnostics, and Changhong Technology also entered the global supply chain system of many giant manufacturers, giving feedback on its core competitiveness
.
In 2020, the export ratio of Changhong Technology exceeded 70%.
Haitai Xinguang is a leading enterprise in the manufacture of fluorescent endoscopes in China, with revenue of ODM products (OEM sales) reaching 214 million yuan (accounting for 69.
2%) in 2021, mainly including high-definition endoscopic instruments, including laparoscopes, endoscopic light source modules and endoscopic camera adaptation lenses and a small number of optical products
.
The two companies have cooperated for more than ten years, and Haitai Shinguang is the only supplier
of high-definition fluorescent laparoscope, high-definition fluorescence camera adaptation lens and fluorescent light source module of AIM of Stryker's first fluorescent machine system.
In addition, Haitai Xinguang is mainly based on overseas revenue (in 2021, it achieved revenue of 247 million yuan, accounting for 79.
71%), of which the core customer Stryker contributed the most
.
In the third quarter of 2022, with the global promotion of Stryker 1688 fluorescent endoscope in North America, Japan and Europe, Haitai Xinguang's new products have entered a high-speed delivery cycle accordingly, and it is expected that ODM orders for optical components will jump in
the third and fourth quarters.
Conclusion: The growth of equipment CDMO is the inevitable result of the division of labor in the mature development of the domestic equipment industry, and enterprises rush forward desperately before the involvement, and the chances of victory must be greater
.
