Taige pharmaceutical plans to go public for nearly 100 billion yuan, and it is still difficult to enter the first echelon of CRO

category:Finance
 Taige pharmaceutical plans to go public for nearly 100 billion yuan, and it is still difficult to enter the first echelon of CRO


Since the beginning of this year, the stock price of TEG has continued to rise, up as high as 83.68%. By the end of the afternoon of July 23, Taige pharmaceutical reported 115.6 yuan / share, with a market value of 86.637 billion yuan.

Photo source: Snowball

Liu Shengyu, the managing partner of Gaohe investment, told Time Finance on July 22 that having a listing platform at the same time in A-shares and Hong Kong shares will be more conducive to the companys brand building, business acquisition and personnel motivation. Tiger pharmaceutical just takes the opportunity of listing in Hong Kong stock market to continuously deepen its global layout.

However, tiger pharmaceutical is still in the second echelon in the domestic cro market, and there is still a certain distance from the first echelon of yaomingkant and yaomingbio, which have a market value of over $200 billion.

A + H shares listed

It is a very long process from R & D to marketing. Because of the complicated process of clinical trials and the relatively simple business, many pharmaceutical enterprises outsource this part of the business, especially when foreign pharmaceutical companies enter the Chinese market, they need to carry out clinical trials in China. The business of OEM clinical trials is cro.

From 2017 to 2019, tiger pharmaceutical has completed more than 400 clinical R & D outsourcing projects. If calculated by revenue in 2019, TEG pharmaceutical can be considered as one of the top ten clinical cros in the world.

In 2012, tiger pharmaceutical was listed on the Shenzhen Stock Exchange, mainly providing services such as phase I-IV clinical trials, data management and biostatistics, registration and application, etc. for the development of pharmaceutical products. On December 13, 2019, tiger pharmaceuticals board of directors deliberated and approved the H-share listing plan, and passed the hearing of the Hong Kong Stock Exchange on July 19, which is expected to become the third a + H company in the domestic cro field.

According to the prospectus, the funds raised by Tiger pharmaceuticals IPO in Hong Kong are mainly used to enhance the operation capacity, meet the increasing demand of overseas market, provide funds for future potential acquisition or investment, supplement existing business, etc.

Liu Shengyu told Shidai finance and economics that affected by domestic pharmaceutical innovation, procurement with volume, consistency evaluation and other policy dividends, the overall prosperity of domestic cro, cdmo (contract R & D and production service) and other pharmaceutical outsourcing fields is relatively high. Enterprises including Yaoming Kant and tiger pharmaceutical are all beneficial industrial chains, and will continue to benefit in the next few years.

The crisis of Goodwill under frequent M & A

Time finance and economics has noted that many cro enterprises, including tiger pharmaceutical, Yaoming Kant and KANGLONG Huacheng, have maintained a high compound growth rate of 25% - 35% in the past three years.

Among them, the revenue of TEG has increased from 1.683 billion yuan to 2.803 billion yuan in the past three years, but the growth rate is slowing down year by year, with a year-on-year growth of 21.91% in 2019 and 36.67% in 2018.

While the growth of revenue slowed down, in 2019, the net profit attributable to parent company of tiger pharmaceutical increased by 78.24% year-on-year. The reason is that nearly half of the net profit of tiger pharmaceutical comes from outside of operation, including 185 million profit and loss from fair value change and 180 million from investment. Both of these two incomes are attributed to the appraisal income generated by Taige pharmaceutical in the process of equity trading of its subsidiaries.

In fact, Taige pharmaceutical has made frequent mergers and acquisitions since its listing. From 2015 to 2019, TEG acquired dozens of companies, including Fonda pharmaceutical, Beiyi Renzhi, dreamcis, Jietong Tairui, etc,

In 2019 alone, tiger pharmaceuticals acquired Beijing yashencheng, Fangda Suzhou, RMI and bri at a cost of 119 million yuan, 41.7 million yuan, 31.95 million yuan and 20.26 million yuan respectively.

In 2015, the companys goodwill was 470 million yuan. By the end of the first quarter of 2020, its book goodwill increased to 1.363 billion yuan, accounting for 16.54% of the total assets. This means that once the target of M & A can not complete the performance of the bet, it is likely to cause the impairment of goodwill.

According to the statistics of time finance and economics, from 2015 to 2019, Renzhi of Beiyi, dreamcis of South Korea and Jietong Tairui all failed to fulfill their commitments. Among them, the net profits of tiger jet from 2016 to 2018 were 30.27 million yuan, 21.03 million yuan and 24.93 million yuan respectively, which only achieved 75.67%, 43.81% and 43.28% of the performance commitment.

Liu Shengyu said, the impact of the epidemic on the cro industry is very large, many clinical trials can not be carried out normally, and the number of hospital outpatient services has also decreased significantly.

TEG is still in the second tier

According to the public data, up to now, the total number of domestic cro enterprises has exceeded 525, including 262 pre clinical cro enterprises, accounting for 50%, including yaomingkant, KANGLONG Huacheng and Zhaoyan new drugs; 248 clinical cro enterprises, accounting for 47%, including tiger medicine and Boji medicine (SZ: 300404).

Among them, yaomingkant (21.81%), TEG (7.26%) and KANGLONG Huacheng (7.09%) are in tripartite confrontation, accounting for about 36% of the domestic market share.

According to Liu Shengyu, although there are a large number of domestic cro enterprises, their main business coverage is different and the competition is relatively small.

According to the times finance and economics review, Yaoming Kant is mainly engaged in chemical drug research and drug manufacturing, Yaoming bio mainly involves macromolecular cdmo, Fangda holdings focuses on clinical trial research and biological preparations, and KANGLONG Huacheng is more inclined to pre clinical drug production and manufacturing. There is no obvious competition relationship between Yaoming Kant and the preclinical and clinical trial research involved in TEG medicine.

In addition, tag bio has 66 subsidiaries, covering almost all the business of clinical cro.

However, the perfect business layout of clinical cro does not mean that the layout of pharmaceutical outsourcing field is complete.

In the whole drug research and development, in addition to preclinical cro and clinical cro, there are also follow-up CMO / cdmo process development. At present, the field of pharmaceutical outsourcing is in the pattern of one super and many strong. The Yaoming system, represented by Yaoming Kant and Yaoming bio, basically covers preclinical cro, clinical cro and chemical drug manufacturing, becoming the first echelon in cro field. However, tiger pharmaceutical only occupies the business of clinical research I-IV of clinical cro, and other parts of business are basically not involved.

This is also reflected in the personnel structure and R & D investment. In 2019, the number of R & D personnel of Wuxi apptec is 17872, and that of TEG is 468, which is 37 times of that of TEG. In terms of R & D investment, the total R & D investment of yaomingkant in 2019 is 590 million yuan, accounting for 4.59% of the revenue; the R & D investment of tiger pharmaceutical is 124 million yuan, accounting for 4.43% of the revenue, and the absolute value of investment is still far less than that of Wuxi Kant. From the perspective of revenue composition, at present, 9.907 billion yuan of the revenue of YaoMing Kant in 2019 comes from overseas, accounting for 76.96%. The main customers are global large multinational pharmaceutical companies and start-up biotechnology companies. In contrast, TEGs customers are concentrated in China, and the proportion of overseas revenue in 2019 is only 42.92%, which shows a downward trend year by year (62.66%, 57.22%, 46.35% and 42.92% respectively from 2016 to 2019). This also means that if you want to catch up with Yao Ming Kant and become the absolute leader in the cro field, the listing of Hong Kong stock and opening up the overseas market are the key steps for tiger pharmaceutical. Source: time weekly editor: Yang Bin_ NF4368

This is also reflected in the personnel structure and R & D investment. In 2019, the number of R & D personnel of Wuxi apptec is 17872, and that of TEG is 468, which is 37 times of that of TEG. In terms of R & D investment, the total R & D investment of yaomingkant in 2019 is 590 million yuan, accounting for 4.59% of the revenue; the R & D investment of tiger pharmaceutical is 124 million yuan, accounting for 4.43% of the revenue, and the absolute value of investment is still far less than that of Wuxi Kant.

From the perspective of revenue composition, at present, 9.907 billion yuan of the revenue of YaoMing Kant in 2019 comes from overseas, accounting for 76.96%. The main customers are global large multinational pharmaceutical companies and start-up biotechnology companies. In contrast, TEGs customers are concentrated in China, and the proportion of overseas revenue in 2019 is only 42.92%, which shows a downward trend year by year (62.66%, 57.22%, 46.35% and 42.92% respectively from 2016 to 2019).