Underrated CRO force! Three-year profit compound growth rate of 137% of Via bio, the future of the industry giant look like?

Guide: CRO industry feng shui, the former servant of the army, who is the successor! The core view of Via Bio's main business is to provide biotech companies with outsourcing services for drug discovery, using CFS (technical services for cash) and EFS (technical services for equity) dual performance-driven model of high-speed operation, 2019 net profit increased by 54% YoY, the company is in a period of rapid development.
outbreak has led to the rapid growth of the company's EFS (Technical Services for Equity) business, from the opportunity of the outbreak to more high-quality outsourcing projects.
However, the company's helm does not meet the existing dual drive, actively develop downstream CMO business, the company's strategy sword refers to the industry leader, the future aims to provide more customers with drug discovery, clinical pharmaceutical production and other one-stop pharmaceutical outsourcing platform.
01 Via Bio, the cradle of global innovative pharmaceutical companies, was founded in 2008 and since its inception has focused on outsourcing services in the discovery phase of innovative pharmaceuticals.
services include: all requirements for early drug discovery include target protein expression and structure studies, drug screening, pilot compound optimization until clinical candidate compounds are identified, and the use of the company's patented core technology to effectively reduce the average time it takes for drug discovery.
two of the company's business drivers, CFS (Technical Services for Cash) and EFS (Technical Services for Equity), providing the cradle of incubation for innovative biotech companies around the world.
to promote the growth of start-up biotech companies and enjoy the ups and coming from their intellectual property while generating steady cash flow from the CFS business.
Chen Mao, the largest shareholder of Vivia Bio, is also the chairman and CEO of the company and directly owns 30% of the company.
addition, the company's executive directors have senior industry experience, in drug research and development experience of more than 10 years.
02CRO industry development certainty 1, innovation drug market outbreak, "shovel man" pharmaceutical outsourcing winding up by the global aging process accelerated, multi-country policy advantages and other factors, the global innovation drug market compound growth rate of 4.8%, is expected to exceed 1037.9 billion U.S. dollars in 2022, innovative drug market will become a "super big mac."
In the development and manufacture of innovative drugs need to consume a lot of time and capital costs, so most small and medium-sized biotechnology companies will choose professional pharmaceutical outsourcing companies to cooperate to provide ideas and scheduling plans, with the least cost, the fastest time to obtain the right to develop new drugs after waiting for large pharmaceutical companies to acquire, to achieve rapid profitability.
first we need to know what outsourcing services for drug discovery are: pharmaceutical outsourcing is divided into contract research and development organizations (CRO) and contract manufacturing organizations (DMOs), two models that complement each other.
cro is that you give me money, I help you with clinical studies and things like that.
CMO is you give me money, I give you you you need in the production process of process development, formulation development, clinical trial drugs and other services.
all in all, you spend money on me, you have money, I have a research and development team, each take what you need.
global CRO market is expected to grow at a compound annual rate of about 10%, CMO market is expected to grow at a compound annual growth rate of about 12.7%, both markets are growing at a very fast compound rate, with very considerable market potential.
Our country since 2018 the Drug Administration and the capital market continue to carry out policy reforms, 4 plus 7 with the volume of procurement and generic drug consistency evaluation so that generic drugs lost the original profit margin, in order to maintain profit margins of most enterprises to transform innovative drugs, so that innovative drug research and development outsourcing market demand continues to expand, China's innovative drug market in 2022 growth rate will exceed the global average growth rate of 2 times, can be said to be a fertile ground for the development of innovative drugs.
From the pharmaceutical company's cost structure, pharmaceutical research and development market expenditure is expected to reach 45.8%, the proportion of expenditure seems to be expanding the proportion of outsourcing services, more pharmaceutical companies will come up with nearly half of their total expenditure to pharmaceutical outsourcing services companies to help themselves complete the process of innovative drugs, while increasing the profits of pharmaceutical outsourcing companies.
2, CRO business, is standing in the wind mouth of the global CRO market is mainly supported by Biotech (biotech) company.
According to the FDA, the development of targeted cancer drugs since 2009 has outstripped the development of cytotoxic drugs at Biotech, which is dependent on CRO business.
CRO is mainly used in preclinical and clinical periods, preclinical CRO mainly from drug discovery, pharmaceutical research, preclinical research and other three aspects of service, through preclinical research the last step of safety evaluation of the drug can continue clinical CRO services until the market.
why did the emerging Biotech company choose the CRO business? Because the research and development process and success rate of innovative drugs are not affordable by small and medium-sized companies.
We look at several sets of data, the success rate of a single preclinical stage is about 70%, and if you are lucky enough to enter the clinical stage, then you are most likely to be killed in the most difficult clinical phase II, because the success rate of clinical phase II is 32%-34%.
then, that is, from the clinical first phase to the drug market average success rate of 11%, from the initial pilot compound to the market that is even more feng-haired angle, the average success rate is only 6.85%.
so-called high-risk, high-yield, although the probability of success is small, but once listed can be a million things.
, according to research reported by Frost Sullivan, there are multiple stages of drug development activities, and there are varying degrees of risk and cost of failure between them.
the 8-11 years of the drug's research, once the drug is clinically or even on the market, the annual rate of return will average 300 percent.
if companies effectively control the risks of early drug development, the certainty of achieving such gains will be higher.
capital will certainly not let go of this fat meat, so the global capital investment in the pharmaceutical market increased from 35 billion yuan in 2013 to 112.2 billion yuan in 2017.
Of course, the big drug companies in the market will not let go of this rare opportunity, large pharmaceutical companies through the acquisition of small Biotech (biotech) companies to broaden the product line to expand the size of the enterprise, but also to obtain better synergies.
best example of this is Eli Lilly's acquisition of Aur KaPharma for the AK-01 product line, the company's synergies, or Pfizer's acquisition of Anacor in 2016, of which $5.2 billion includes two pilot products.
large pharmaceutical companies tend to buy companies focused on developing innovative drugs, so the market environment is good for small Biotech companies, biotech's development has led to the development of the pharmaceutical outsourcing industry, capital is such a rotation.
3, Via bio's industry position CRO industry competition is very fierce, in China, the drug discovery market from the early development of fast-growing high-market accounting companies oligopoly.
China's 2017 revenue was approximately $69.83 billion, of which Via Bio accounted for 2.6%.
CRO uses synchrachron radiation as a necessary step in research when using structural biology studies to find biological agents that directly affect the human body, and this X-ray is produced by specialized equipment like a large accelerator.
this specialized equipment is generally provided by external service providers, in Shanghai has one of the world's best performance in the third generation of synchrron radiation device - Shanghai synchredron radiation device (SSRF).
Shanghai Light Energy is a very large provider of industrial beams, according to statistics since 2016 Shanghai Light Energy has used more than 67% of the industrial beam market, with four state-of-the-art synchronous acceleration centers SSRF, APS, Diamond and ALS, so he is also one of the most popular accelerator centers for industrial pharmaceutical users worldwide.
the industrial beam usage time disclosed by Shanghai Light Energy, Via creatures occupy an absolute advantage in duration.
2016-2018, the company uses about 70% of the industrial beam life of Shanghai light sources, but only meets 30% of the company's needs, and the company's growth continues to grow.
will soon be able to expand production capacity in cooperation with more light source centers in the future.
's proud dual-drive model is a new service model that combines traditional CFS and innovative EFS models to enable companies to maintain the continued inflow of outsourced services into cash flow while re-gaining equity through EFS, with both stable support and explosive benefits.
Based on data from early drug discovery services, systematic, scientific and modular programs can be established to manage risk while increasing capital utilization and increasing the value of equity-sharing intellectual property by fostering promising customers.
incubation model based on early drug discovery is rare in the Chinese market, and the core technology of rich experience and structural biology is an important prerequisite for reducing the risk of failure of incubation projects.
: From the industry point of view, large to innovative drug market, small to CRO segmentation has provided Via Bio's business with a very broad space for development.
the dual business-driven model of the chinese company CFS-EFS, while stabilizing the flow of cash flow, the high returns in the form of equity-based innovative drugs on the market.
expansion of production capacity determines that Via Bio will grow as fast as possible and become the industry leader.
03 Via's leading global core technology - SBDD1, what is SBDD? The company's CFS services mainly provide structure-based drug discovery services, structure-based drug discovery services (SBDD).
start with disease-related genes and produce target proteins through gene cloning, protein expression, and purification.
through the affinity selection spectrometization technique (ASMS) based on purified target protein, the medium target compound is gradually optimized to become a pilot compound or candidate compound.
the process of extracting medium-target compounds from fragment compounds is called fragment-based drug discovery (FBDD).
the process of target protein is membrane protein is found as membrane protein drugs.
In the process of developing medium-target compounds into pilot compounds, the structural information of X-ray crystallization helps to better understand the interactions between compounds and protein molecules, thus establishing the structural functional relationship (SAR) of compounds, which can significantly reduce the cost of finding drugs and speed up the process.
target protein membrane technology, 50% of the drugs are likely to be found on the protein membrane, and Viacom is the only company with IP and external services.
SBDD technology has become one of the most powerful drug discovery technologies after the development of X-ray and cryoscopic technology in recent years.
SBDD technology uses virtual databases from hundreds of thousands to millions to dramatically increase the success rate of drug development and reduce costs.
under the SBDD method, according to the structure of the target and known active compounds, the action between the target protein and the candidate compound is accurately detected, so as to achieve rapid drug discovery and is more conducive to subsequent optimization.
the successful development of Catolycil in 1981 revealed the great potential of SBDD, and by 2012 the technology had contributed to the development of 34 new drugs on the market, with a wide range of therapeutic areas.
3, the company's four major technology platforms based on fragment compound drug discovery (FBDD) is based on SBDD another means to improve the detection of compounds.
nature of FBDD is to find the best molecular fragments and binding mechanisms with target targets, which are cheaper and have a higher hit rate than traditional drug discovery methods.
the target of protein interaction is difficult to screen, and the problem of "false positive" is easily constructed and avoided.
drug discovery follow-up using FBDD is also easier to improve and optimize.
company owns four technology platforms, SBDD, FBDD, ASMS, target membrane protein drug discovery technology is a global leader.
addition, the company is known to have 23 drug research patents at the same time continue to develop and build new technology platforms, including frozen electron mirrors, computer science platforms and so on.
4, the company's CFS business development by virtue of the technology platform and first-in-the-first advantage, Via BioCFS business continued to grow rapidly.
with its early first-mover advantage, the company's CFS revenue reached 246 million yuan in 2019, up 59% year-on-year.
45% compound annual growth rate from 2016 to 2019, with more than 80% of research and development personnel, above the industry average.
employee turnover rate remained at around 5%, well below the industry average.
company earned $51,880 a person, 312 percent above the global average, and had a higher profit margin.
company has a very good bond with its customers, serving 370 biotech and pharmaceutical companies worldwide by 2019, and as the number of customers continues to grow, the number of re-purchases by established customers accounts for more than 80% of total revenue.
top 10 customers from the original 60% to 40%, customer structure continues to optimize, of which 75% from North America, 23% from China, the domestic market share needs to be improved.
re-purchase rate of large customers is 100% reflects the customer's high recognition of the company's services.
company's profits will explode as a result of the two main factors, the growth of superimposed orders and the constant rate of re-purchase.
5, the company's EFS business development situation outbreak on the company's impact is limited.
from the recovery rate, in February this year basically completed 90% of the resumption of work, and the impact of the outbreak on CRO is relatively limited, the company took the initiative to assume the cause of the outbreak after the laboratory stopped the demand for pharmaceutical companies.
the first half of 2020 to see orders continue to increase.
VC companies are becoming cautious about investing in the U.S. at the same time as the U.S. epidemic, allowing Via to explore more high-quality projects.
EFS program to invest in early drug discovery in exchange for equity.
because of the outsourcing company's natural advantages, the company has access to.