In addition to the "CRO" medicine controlled by monkeys, it is deeply in the "smile curve"

The industry is a chain, one link is linked to the other, the upstream eats the middle, and the middle eats the downstream.
Who can control the source and who can achieve a monopoly?

According to the smile curve theory, the upstream of the industrial chain is often an industry with lucrative profits and moderate competition, because the upstream often has certain resources, such as minerals and core technologies, with high industry barriers
.

However, not all industries have an obvious smile curve theory.
The pharmaceutical industry in the past few years is an obvious example.
Since the midstream pharmaceutical manufacturing industry is at the core of the entire industry chain and has the most concentrated core technologies, the upstream has long been subject to changes in midstream demand.
, unable to effectively open up new market demand
.

However, in recent years, with the implementation of a number of major reforms in the state to encourage innovative drugs and control the profits of generic drugs, in the process of exchanging price for quantity, midstream companies are forced to reduce drug prices while reducing drug prices in order to seize the market.
In response to the needs of the upstream industry, the upstream industry successfully realized the control of the industrial chain in turn, and successfully completed the laying of the smile curve theory
.

Moreover, the above-mentioned changes are not only happening in the sub-industries affected by bulk purchases such as chemical medicines and traditional Chinese medicines.
According to news from some time ago, even the "CRO industry", which is far away from the centralized procurement battlefield, has also been held by the monkeys
.

Next, the author will take a closer look at the situation in which the CRO, chemical medicine, and traditional Chinese medicine industries are each shaken by the upstream industry

"Raising monkeys" has become the key to monopolizing the safety assessment business in the CRO industry

"Raising monkeys" has become the key to monopolizing the safety assessment business in the CRO industry

Everyone only knows that the development of CRO has propped up the rapid progress of China's innovative drug industry, but they do not know that the development of CRO is based on the sacrifice of thousands of "experimental monkeys".
destiny
.

You must know that any drug in the world needs to go through the safety evaluation of animal experiments, in which animal selection is the basis of the entire safety evaluation.
In addition to the well-known animals such as rats and beagle dogs, monkeys and humans Due to the similarity of genes, the immune response triggered by macromolecular drugs has similar targets and signal transduction pathways to humans.
Therefore, monkeys are often used in the safety evaluation of many drugs, especially biological drugs
.

At the same time, among all primates, cynomolgus monkeys and rhesus monkeys have the most similar or identical pathogenic genes to humans, and they are undoubtedly the best test subjects for drug safety assessment

In addition, the safety assessment business also has strict requirements on the experimental monkeys themselves.
Female monkeys can breed up to 10 young monkeys in their lifetime.
In addition, experimental monkeys generally take more than 5 years from birth to being available for testing.
The overall breeding is quite difficult
.

At the same time, the current policy also strictly prohibits the import, export and "any form" of all wild animals, including monkeys, further exacerbating the dilemma of the domestic experimental monkey stock

Insufficient stock is one of them.
Moreover, due to the different research programs of different drugs, the demand for monkeys for clinical trials of most drugs is usually more than a few dozen.
It is not uncommon for some new drug research to be stagnant due to the lack of monkeys available
.

Therefore, under the circumstance of serious imbalance between supply and demand, the price of experimental monkeys is increasing day by day, and now it has become sky-high, making the cost of safety evaluation projects for a large number of innovative drugs almost doubled

According to relevant data, due to different research programs for different drugs, the demand for monkeys for clinical trials of most drugs is usually more than a few dozen.
Under the condition of serious imbalance between supply and demand, the price of experimental monkeys is increasing day by day.
The cost of safety evaluation projects for a large number of innovative drugs has almost doubled
.

Taking cynomolgus monkeys as an example, the unit price has increased by nearly 20 times since 2014.

Of course, some CRO practitioners may say that the rise in monkey prices itself does not seem to have a particularly large impact on the profitability of CRO companies, because companies face the rise in the price of experimental animals, companies will refer to market conditions when quoting projects.
The quotation is adjusted reasonably (price increase)
.

The end result is only one price per day for the security evaluation project fees received by Biotech companies that partly rely on CXO (the quotation last year may be 5 million, and this year it may be close to 8 million or more)

But even if this is the case, investors and innovative pharmaceutical companies are not fools.
Since they know that the key to determining the project price is the monkey, when choosing a company for cooperation, why can't they take limited consideration of the cost control of the CRO company itself? In other words, whichever CRO company has more monkeys, uses them well, and offers low prices, can monopolize the domestic innovative drug safety assessment business
.

However, at present, the safety assessment data of domestic drugs must be issued by GLP institutions.
With the popularity of Sino-US dual reporting in recent years, laboratories with US GLP qualifications are even more scarce.
The entire CXO industry only has Zhaoyan, WuXi, It is owned by four companies, Kanglong and Medicilon
.

Following the rise in monkey prices in recent years, on the one hand, domestic and domestic CRO companies have begun to build their own experimental monkey production capacity, and the only companies that are left are companies that rely on Nanmo Biology, JiCui Yaokang, and Bio-Oceitu to make laboratory animals

The new production capacity of the 7,500-square-meter animal house in Suzhou has been put into operation, and the expansion and construction of the second phase of the project has begun.
A total of 25,000 square meters of construction area is planned to be increased;

Wuzhou, Guangxi, plans to add 565 mu of experimental monkey breeding base, with the ability to raise 15,000 experimental monkeys;

Guangzhou and Chongqing have newly built facilities of over 150,000 square meters for the construction of new safety assessment centers
.

The multi-regional production capacity layout and expansion across the country will definitely meet the medium and long-term expansion needs of Zhaoyan New Drug in the future, not only the full release of orders in hand, but may even become the foundation for Zhaoyan New Drug to monopolize the entire safety assessment business with "monkeys" in the future.

.

Of course, other CRO companies certainly can't sit still.

Data source: Gazelle Club, annual reports of listed companies

Finally, I summed it up in a sentence from a CRO industry person: "If you knew that raising monkeys would make so much money, why would you choose CRO? If you have monkeys in your hands, you haven't firmly shaken hands with CRO companies, so why are you holding back? Qu
.
" But he didn't know that compared with CRO, it might be a better choice to deploy upstream industries in the chemical and traditional Chinese medicine industries
.

APIs have embarked on the road of no return for "monopoly" preparations

APIs have embarked on the road of no return for "monopoly" preparations

Under normal circumstances, APIs in the pharmaceutical industry are mainly divided into three categories: bulk APIs, specialty APIs and patented APIs
.
With more and more drugs with expired patents in recent years, the variety and quantity of generic drugs have increased, which has boosted the demand for the entire API.
The dependence of many preparation manufacturers on API enterprises has increased significantly
.

Bulk APIs are not bad, because they are mainly antibiotics, antipyretic and analgesics, and preparations mainly exist in the OTC market.
The market demand is stable, and the supply-side production capacity is concentrated.
Although the price is still at a high level, the fundamental pressure is also natural.
It is passed to the further downstream of the industrial chain
.
However, characteristic APIs and patented APIs are another scene
.

The former is mainly used in cardiovascular, anti-tumor and other fields.
Due to the influence of volume purchases, the increase in consumption has greatly driven the growth of upstream raw material demand, but due to the impact of price reduction, preparation companies have required cost control.
Even more stringent, for some companies that do not have the production capacity of APIs, they are nothing more than putting the fate of the company in their hands, which is both resentful and helpless
.
Because the latter is mainly used for innovative drugs, it has a higher growth space than the former two.
The business model is mostly CDMO, with unique R&D capabilities as its core competitiveness, and the price attribute has little impact on innovative drugs.
Driven by growth, patented APIs continued to grow steadily
.

Then the upstream and downstream problems in the field of chemical drugs are basically attributed to generic drug projects.
As mentioned above, the dependence of generic drug companies on APIs has increased, and some "monopoly" price increases of APIs driven by pure interests have also occurred.
, Henan Provincial Market Supervision and Administration Bureau issued the first anti-monopoly investigation notice in Henan Province in 2021 to investigate the anti-monopoly case of Longxing Pharmaceuticals, and conduct investigations into the serious consequences of controlling downstream preparations and manipulating the price of raw materials.
severe punishment
.
Similar examples are not limited to a few.
Even Huahai Pharmaceutical, the leader in APIs, was punished last year for increasing the price of APIs
.
Since 2016, there have been more than 10 cases of price monopoly by operators of shortage drugs and APIs that have been punished by relevant departments
.

Under the final result, on the one hand, preparation companies want to produce their own APIs for their main products, and on the other hand, API companies are involved in the field of preparations, and the integration of API + preparations has become a common choice for the transformation of the two
.
But in any case, the importance of the quality and cost of raw materials is becoming more and more prominent, and high-quality raw material enterprises are logically choking the throat of the entire product chain
.

The price increase of Chinese herbal medicines stifles the future of Chinese patent medicine

The price increase of Chinese herbal medicines stifles the future of Chinese patent medicine

In recent years, news of the price increase of Chinese herbal medicines has come out frequently, and more than 60% of the 3,000 kinds of Chinese herbal medicines have experienced price increases of varying degrees.

The "cheap" feature of traditional Chinese medicine is gradually disappearing, and the people's love and trust in traditional Chinese medicine have gradually become complaints after purchasing Chinese patent medicines at high prices in pharmacies
.

It is true that the upstream of traditional Chinese medicine is the planting and breeding industry, and the supply is cyclical and vulnerable to uncertain factors such as natural disasters
.
At the same time, the independent pricing power of downstream industries has also led to the increase in the price of Chinese herbal medicines, which has led to the increase in the price of traditional Chinese medicine products, resulting in the same price increase logic as consumer goods in the traditional Chinese medicine industry
.

Image source: Titanium Media APP

Since the second half of 2021, the price of Chinese herbal medicines has increased significantly, and it is still in an upward trend
.
Moreover, on the one hand, the National Development and Reform Commission, the National Health and Family Planning Commission and other four departments jointly issued the "Notice on Printing and Distributing the Opinions on Promoting Drug Price Reform", which formed the OTC independent pricing power of proprietary Chinese medicines, which is forming more and more drawbacks.
The increase in the frequency of price and OEM products has caused deep resentment among the people
.
On the other hand, the centralized procurement of traditional Chinese medicine is gradually radiating to the whole country
.

At this stage, the price increase factor in the Chinese herbal medicine industry will become the most important indicator to determine the gross profit level of the sector.
It is not appropriate to take Pien Tze Huang and other health care products with heavy consumption attributes as an example, but daily medicines such as Xiao Chai Hu Granules are an example.
The reform restricts its pricing, and the upstream Bupleurum Chinese medicinal materials will ruthlessly curb the throats of all downstream industries
.

Summarize

Summarize

In conclusion, whether it is CRO, generic drugs or traditional Chinese medicine, the nodes of upstream and downstream relationship changes are the imbalance of supply and demand caused by policy and market factors
.
At the same time, this also means that this scenario of upstream controlling downstream cannot be sustainable, but as for when it will change, no one can say for sure
.

What we can do now is only survival of the fittest, so we can have the opportunity to see changes in the supply and demand relationship in the future, and then have a forward-looking layout.
As for whether we can discover the key nodes of change, it varies from person to person
.