Up 28.07%! Prosperity Pharma breaks the spell of breaking, CXO spring is here again?

Undoubtedly, the current period is the golden age of many CROs/CDMOs in China, and most mini enterprises can achieve considerable revenue
by relying on one or two major products.

Prosperity Pharma has lived well
only by the development and production of a drug of ticagrelor.

ticagrelor is a new, small-molecule antiplatelet drug
developed by AstraZeneca.
The drug is a reversible ADP receptor antagonist, directly acting without metabolism, plasma half-life of about 12 hours, approved by the FDA in the United States in July 2011, approved for marketing in China in November 2012, the product name is "Belinda"
.
The ticagrelor compound patent expires
at the end of 2019.

In 2019, Belinda's global sales were US$1.
581 billion, a year-on-year increase of about 20%; In the same period, the sales of Chinese public medical institutions in the Chinese market were 1.
479 billion yuan, an increase of 45.
36%, and the market scale was large and growing rapidly
.

ProsperityBio is one of the world's largest suppliers of
ticagrelor intermediates.

In August 2020, 6 enterprises were selected for the third batch of national collection tigreglut tablets, and Prosperity Pharmaceutical was the qualified supplier of 5 of them; 3 of the 4 selected enterprises in the fourth batch of national collection of ticagrelor tablets are customers of Prosperity Pharmaceutical; By the end of 2021, the submission of ticagrelor DMF (Drug Master Files) has 19 foreign companies, of which Prosperity Pharma is a qualified supplier
of 15.

The main customers of ticagrelor intermediate business include CSPC Group, Salubris, Sun Pharmaceutical Pharmaceutical Industries Ltd, and Dr.
Reddy's Laboratories Limited, etc
.

According to the corresponding data, the average market share of ticagrelor intermediates in China is 55.
74%.

▲Telgrelo intermediate revenue in 2021 Source: Prospectus

As one of the earliest CRO companies in China to provide preclinical drug R&D for international customers, Prosperity Pharma has more than 10 years of experience in small molecule drug R&D services and production, and as of the end of 2021, it has assisted many overseas biopharmaceutical companies to successfully develop 21 clinical drug candidates, of which 3 have been approved for marketing, 2 are in clinical phase III, 2 are in clinical phase II, 6 are in clinical phase I, 4 are in the declared clinical stage, and 4 are in the preclinical stage
.

Compared with large CROs such as WuXi AppTec and Kanglong Chemical, Prosperity Pharma's drug discovery and process research and development revenue is smaller and its business coverage is limited
.
There are also some business segments that are not covered, such as drug safety evaluation, drug analysis, material science/preformulation, formulation development and production and analysis development services
.

Compared with Medici, which is similar in size, Hongbo Pharmaceutical's drug discovery and process research and development business customers have long been dominated by foreign customers, while the revenue of foreign customers of Medici's entire business has only accounted for 27.
40%, 8.
45% and 22.
15%
respectively in the past three years.
From 2019 to 2021, the gross profit margin of its drug discovery business was 45.
02%, 43.
85% and 41.
13%, respectively; During the same period, the gross profit margin of Medici's drug discovery and pharmaceutical research business was 36.
22%, 7.
14% and 42.
18%,
respectively.

However, the disadvantage of Prosperity Pharma among peers is also obvious, and its R&D expense rate continues to decline
.
From 2019 to 2021, the R&D expense rates of Prosperity Pharma were 4.
3%, 4.
18% and 3.
83% respectively, while the average level of the same industry has been maintained at more than 7%, which is still a big gap
with the average level of the same industry.

▲R&D expenses and proportion of Prosperity Pharmaceutical Source: Prospectus

The strength of the head is not bad