WuXi PharmaTech (02359.HK) released its 2019 results on the afternoon of the 24th.
Editor’s note: This article comes from “Eide Securities Futures”, author of Eide Securities Futures Research.
WuXi AppTec (02359.HK) released its 2019 results on the afternoon of the 24th. Data show that the company’s operating income in 2019 was 12.872 billion yuan (RMB, the same below), an increase of 33.89% compared to 9.614 billion in 2018, and net profit attributable to the parent was 1.855 billion, a decrease of 17.96% compared to 2.261 billion in 2018, and a non-net profit of 19.14 Billion, a year-on-year increase of 22.82% compared to 1.559 billion in 2018.
All business segments are growing rapidly
WuXi AppTec’s main business is mainly divided into four sections: laboratory services in China, laboratory services in the United States, CDMO / CMO services, clinical research and other CRO services. In 2019, China’s laboratory service revenue was 6.473 billion yuan, an increase of 26.59% year-on-year. It is the company’s largest revenue segment, but the revenue growth rate is the slowest among the company’s four business segments. Clinical research revenue was 1.063 billion yuan, an increase of 81.79% year-on-year. It was the smallest revenue segment of the company’s four main business segments, but the fastest-growing segment.
YuXi AppTec’s revenue and growth rate in various business segments in 2019
Source: Company performance announcement
From 2015 to 2019, the company’s revenue increased from 4.883 billion yuan to 12.872 billion yuan, net profit attributable to mothers increased from 349 million yuan to 1.855 billion yuan, and non-net profit after deduction rose from 180 million yuan to 1.914 billion yuan. The compound growth rates reached 27.42%, 51.84% and 80.58%, respectively. Since 2015, the company’s revenue and deductions have increased significantly.
WuXi AppTec’s revenue and non-net profit from 2015 to 2019
Source: Company performance report
R & D investment continues to increase
In 2019, the company’s R & D investment was 590 million yuan, an increase of 35% over 2018 and accounting for 4.59% of revenue. The proportion of R & D investment in revenue has gradually expanded. The company has 17,872 R & D personnel, an increase of 28.2% over 2018. Staff accounted for 82.19% of the company’s total number of employees. WuXi AppTec’s performance growth is largely due to the company’s continued increase in R & D investment.
Construction in progress
As of December 31, 2019, the company’s project projects with a budget of 4.866 billion yuan are under construction. The project budget of Changzhou Hexin Pharmaceutical Production and R & D Center is 2.8 billion yuan, and 67.22% has been completed; Chengdu base budget is 3.5 100 million yuan, 88% of the construction has been completed; the Suzhou Drug Safety Evaluation Center expansion project budget is 727 million yuan, which has been completed by 35.72%; the Tianjin Chemical Research and Development Laboratory expansion and upgrade project budget is 564 million yuan, which has been completed by 42.49%; Nantong laboratory project budget is 2.61 100 million yuan, 99% completed; the Philadelphia base construction project budget of 164 million yuan, 65% completed.
Industry Overview
The company belongs to the pharmaceutical R & D service industry and provides new drug R & D and production services for global pharmaceutical, biotechnology and medical device companies, which is closely related to the development of the global pharmaceutical industry and investment in new drug R & D. According to the Frost & Sullivan report forecast, the size of the global pharmaceutical market has increased from US $ 1,0425 billion in 2014 to US $ 13,285 billion in 2019, with a compound annual growth rate of 5.0%; it is expected to increase to US $ 1,595.3 billion by 2023, 2019 The compound annual growth rate to 2023 is 4.7%.
With the increase of the scale of the pharmaceutical industry, the R & D investment in the global pharmaceutical industry will maintain a steady growth, and the outsourcing ratio will further increase. According to the Frost & Sullivan report, the global pharmaceutical industry’s R & D investment has increased from US $ 141.6 billion in 2014 to US $ 182.7 billion in 2019, with a compound annual growth rate of 5.2%; it is expected to increase to US $ 216.8 billion by 2023, 2019 The compound annual growth rate to 2023 is 4.4%.
At the same time, companionsAs large pharmaceutical companies will seek more external cooperation to improve research and development efficiency and reduce research and development costs, and more and more small and medium-sized biotechnology companies, virtual companies and individual entrepreneurs will promote research and development through external cooperation. Process, the proportion of global R & D investment outsourcing will further increase. According to the Frost & Sullivan report forecast, the global outsourcing ratio of pharmaceutical R & D investment has increased from 33.7% in 2014 to 39.5% in 2019, and is expected to increase to 49.3% by 2023.
In addition, China’s pharmaceutical industry has shifted its strategy from imitation to innovation, and it is expected that R & D investment will maintain rapid growth. With the continuous advancement of a series of policies such as the reform of China’s pharmaceutical and medical device review and approval system, the market licensor system (MAH), the evaluation of generic drug consistency and volume purchases, and the negotiation of innovative drugs and medical insurance, it will drive the domestic innovative drug R & D and production market Demand continues to grow. According to the Frost & Sullivan report forecast, China’s pharmaceutical industry R & D investment has increased from US $ 9.3 billion in 2014 to US $ 21.6 billion in 2019, a compound annual growth rate of 18.4%; it is expected to increase to US $ 49.3 billion by 2023, 2019 The compound annual growth rate to 2023 is 22.9%. The domestic pharmaceutical R & D service industry, especially the platform companies with global new drug R & D and production service capabilities, is expected to benefit from the rapid growth of China’s new drug R & D investment.
Comparison of the four major CRO, CDMO / CMO listed companies
WuXi AppTec, Kanglong Chemical (03759.HK), Tiger Pharmaceuticals (300347.SZ), Gloriam (002821.SZ), the four largest Chinese CRO, CDMO / CMO companies with market capitalization, according to the performance report Data show that in 2019, Kanglong Chemical’s revenue was 3.757 billion, a year-on-year increase of 29.2%, and net profit was 547 million, a year-on-year increase of 64.3%; Tiger Pharmaceuticals’ revenue was 2.823 billion, a year-on-year increase of 22.71%, and net profit was 848 million, a year-on-year increase of 79.55%. ; Gloria British revenue was 2.461 billion, a year-on-year increase of 34.11%, net profit was 556 million, a year-on-year increase of 29.75%.
Revenues and net profits of the top four companies in the market value of China’s pharmaceutical R & D services
In 2019, the company’s R & D investment was 590 million yuan, an increase of 35% over 2018 and accounting for 4.59% of revenue. The proportion of R & D investment in revenue has gradually expanded. The company has 17,872 R & D personnel, an increase of 28.2% over 2018. Staff accounted for 82.19% of the company’s total number of employees. WuXi AppTec’s performance growth is largely due to the company’s continued increase in R & D investment.
Construction in progress
As of December 31, 2019, the company’s project projects with a budget of 4.866 billion yuan are under construction. The project budget of Changzhou Hexin Pharmaceutical Production and R & D Center is 2.8 billion yuan, and 67.22% has been completed; Chengdu base budget is 3.5 100 million yuan, 88% of the construction has been completed; the Suzhou Drug Safety Evaluation Center expansion project budget is 727 million yuan, which has been completed by 35.72%; the Tianjin Chemical Research and Development Laboratory expansion and upgrade project budget is 564 million yuan, which has been completed by 42.49%; Nantong laboratory project budget is 2.61 100 million yuan, 99% completed; the Philadelphia base construction project budget of 164 million yuan, 65% completed.
Industry Overview
The company belongs to the pharmaceutical R & D service industry and provides new drug R & D and production services for global pharmaceutical, biotechnology and medical device companies, which is closely related to the development of the global pharmaceutical industry and investment in new drug R & D. According to the Frost & Sullivan report forecast, the size of the global pharmaceutical market has increased from US $ 1,0425 billion in 2014 to US $ 13,285 billion in 2019, with a compound annual growth rate of 5.0%; it is expected to increase to US $ 1,595.3 billion by 2023, 2019 The compound annual growth rate to 2023 is 4.7%.
With the increase of the scale of the pharmaceutical industry, the R & D investment in the global pharmaceutical industry will maintain a steady growth, and the outsourcing ratio will further increase. According to the Frost & Sullivan report, the global pharmaceutical industry’s R & D investment has increased from US $ 141.6 billion in 2014 to US $ 182.7 billion in 2019, with a compound annual growth rate of 5.2%; it is expected to increase to US $ 216.8 billion by 2023, 2019 The compound annual growth rate to 2023 is 4.4%.
At the same time, companionsAs large pharmaceutical companies will seek more external cooperation to improve research and development efficiency and reduce research and development costs, and more and more small and medium-sized biotechnology companies, virtual companies and individual entrepreneurs will promote research and development through external cooperation. Process, the proportion of global R & D investment outsourcing will further increase. According to the Frost & Sullivan report forecast, the global outsourcing ratio of pharmaceutical R & D investment has increased from 33.7% in 2014 to 39.5% in 2019, and is expected to increase to 49.3% by 2023.
In addition, China’s pharmaceutical industry has shifted its strategy from imitation to innovation, and it is expected that R & D investment will maintain rapid growth. With the continuous advancement of a series of policies such as the reform of China’s pharmaceutical and medical device review and approval system, the market licensor system (MAH), the evaluation of generic drug consistency and volume purchases, and the negotiation of innovative drugs and medical insurance, it will drive the domestic innovative drug R & D and production market Demand continues to grow. According to the Frost & Sullivan report forecast, China’s pharmaceutical industry R & D investment has increased from US $ 9.3 billion in 2014 to US $ 21.6 billion in 2019, a compound annual growth rate of 18.4%; it is expected to increase to US $ 49.3 billion by 2023, 2019 The compound annual growth rate to 2023 is 22.9%. The domestic pharmaceutical R & D service industry, especially the platform companies with global new drug R & D and production service capabilities, is expected to benefit from the rapid growth of China’s new drug R & D investment.
Comparison of the four major CRO, CDMO / CMO listed companies
WuXi AppTec, Kanglong Chemical (03759.HK), Tiger Pharmaceuticals (300347.SZ), Gloriam (002821.SZ), the four largest Chinese CRO, CDMO / CMO companies with market capitalization, according to the performance report Data show that in 2019, Kanglong Chemical’s revenue was 3.757 billion, a year-on-year increase of 29.2%, and net profit was 547 million, a year-on-year increase of 64.3%; Tiger Pharmaceuticals’ revenue was 2.823 billion, a year-on-year increase of 22.71%, and net profit was 848 million, a year-on-year increase of 79.55%. ; Gloria British revenue was 2.461 billion, a year-on-year increase of 34.11%, net profit was 556 million, a year-on-year increase of 29.75%.
Revenues and net profits of the top four companies in the market value of China’s pharmaceutical R & D services
The company belongs to the pharmaceutical R & D service industry and provides new drug R & D and production services for global pharmaceutical, biotechnology and medical device companies, which is closely related to the development of the global pharmaceutical industry and investment in new drug R & D. According to the Frost & Sullivan report forecast, the size of the global pharmaceutical market has increased from US $ 1,0425 billion in 2014 to US $ 13,285 billion in 2019, with a compound annual growth rate of 5.0%; it is expected to increase to US $ 1,595.3 billion by 2023, 2019 The compound annual growth rate to 2023 is 4.7%.
With the increase of the scale of the pharmaceutical industry, the R & D investment in the global pharmaceutical industry will maintain a steady growth, and the outsourcing ratio will further increase. According to the Frost & Sullivan report, the global pharmaceutical industry’s R & D investment has increased from US $ 141.6 billion in 2014 to US $ 182.7 billion in 2019, with a compound annual growth rate of 5.2%; it is expected to increase to US $ 216.8 billion by 2023, 2019 The compound annual growth rate to 2023 is 4.4%.
At the same time, companionsAs large pharmaceutical companies will seek more external cooperation to improve research and development efficiency and reduce research and development costs, and more and more small and medium-sized biotechnology companies, virtual companies and individual entrepreneurs will promote research and development through external cooperation. Process, the proportion of global R & D investment outsourcing will further increase. According to the Frost & Sullivan report forecast, the global outsourcing ratio of pharmaceutical R & D investment has increased from 33.7% in 2014 to 39.5% in 2019, and is expected to increase to 49.3% by 2023.
In addition, China’s pharmaceutical industry has shifted its strategy from imitation to innovation, and it is expected that R & D investment will maintain rapid growth. With the continuous advancement of a series of policies such as the reform of China’s pharmaceutical and medical device review and approval system, the market licensor system (MAH), the evaluation of generic drug consistency and volume purchases, and the negotiation of innovative drugs and medical insurance, it will drive the domestic innovative drug R & D and production market Demand continues to grow. According to the Frost & Sullivan report forecast, China’s pharmaceutical industry R & D investment has increased from US $ 9.3 billion in 2014 to US $ 21.6 billion in 2019, a compound annual growth rate of 18.4%; it is expected to increase to US $ 49.3 billion by 2023, 2019 The compound annual growth rate to 2023 is 22.9%. The domestic pharmaceutical R & D service industry, especially the platform companies with global new drug R & D and production service capabilities, is expected to benefit from the rapid growth of China’s new drug R & D investment.
Comparison of the four major CRO, CDMO / CMO listed companies
WuXi AppTec, Kanglong Chemical (03759.HK), Tiger Pharmaceuticals (300347.SZ), Gloriam (002821.SZ), the four largest Chinese CRO, CDMO / CMO companies with market capitalization, according to the performance report Data show that in 2019, Kanglong Chemical’s revenue was 3.757 billion, a year-on-year increase of 29.2%, and net profit was 547 million, a year-on-year increase of 64.3%; Tiger Pharmaceuticals’ revenue was 2.823 billion, a year-on-year increase of 22.71%, and net profit was 848 million, a year-on-year increase of 79.55%. ; Gloria British revenue was 2.461 billion, a year-on-year increase of 34.11%, net profit was 556 million, a year-on-year increase of 29.75%.
Revenues and net profits of the top four companies in the market value of China’s pharmaceutical R & D services