The Chinese CRO unicorn WuXi AppTec was officially listed on Shanghai Stock Exchange on May 8, with stock code of 603259 and issue price of RMB 21.60/share, and it hit the daily upper limit when opened, with quote of RMB 31.10 and total market value reaching RMB 32.406 billion. WuXi AppTec took 50 days from the pre-disclosure update on February 6 to submission, second only to Foxconn that took 36 days for submission.
WuXi AppTec, the leading CRO in China, positions itself as a platform, is the largest lead compound R&D company in the world that covers and involves each link of new drug R&D, and is also the drug R&D service company that has the largest number of certification from global authoritative institutions, with a total 26 global R&D and production bases and branches, and having served more than 3,000 global innovation partners. Its main business income reached RMB 7.765 billion in 2017, and its compound annual growth rate exceeded 25.9% in 2015-2017.
Operating income
Hidden worries of the CRO industry under rapid development: "low-end laboratory"?
The global CRO industry could be traced back to 1974 when the founder of Quintiles: Dr. Gillings undertook the biostatistical analysis projects of many pharmaceutical companies in his office at University of North Carolina, and then the business mode of CROs as professional contract service institution rapidly developed in the world.
China has been constantly integrating into the global pharmaceutical product R&D system in recent years. There is a broad spectrum of disease and sufficient clinical trial samples in China owing to its huge population base. According to statistics, the study and trial costs in preclinical and clinical trial stages of China are only 30%-60% of those of developed countries, showing a significant cost advantage. In the context that the global new drug R&D costs are sharply rising, China has attracted the international R&D outsourcing orders of a large number of multinational pharmaceutical companies, and is becoming one of the core R&D outsourcing bases of global pharmaceutical enterprises.
Comparatively speaking, Chinese CRO industry started late. Distinct features of CROs in their early development include small scale, single services, and business mode generally of the simple "Cash on Delivery" traditional mode. Many clinical CROs undertake outsourcing orders for non-core parts stripped from the huge R&D projects of multinational pharmaceutical enterprises.
In view of this, the hidden worries that Chinese CRO industry serves as the "low-end laboratory" of multinational pharmaceutical enterprises have always been there. Indeed, if Chinese CROs were always satisfied with low-end services of pharmaceutical R&D during the labor division and collaboration on global pharmaceutical industry chain, then eventually they would be very likely to be reduced to the processing plant for pharmaceutical product R&D of multinational pharmaceutical companies, which is an issue worth paying attention to. Here, I’d like to discuss this issue from perspectives of the rise stage of innovative drugs in China and CRO business mode changes in China.
Chinese innovative drugs are rising, CROs are breeding new drugs
Chinese innovative drugs represented by apatinib, conbercept and icotinib, etc. are rising in recent years. The above new drugs are secondary innovation targeting the known mechanisms or drug targets and based on the original drugs, and belong to the me-too innovation, compared to the first-in class. According to insiders based on the development stage of Chinese pharmaceutical industry, me-too innovation is the main path for the independent innovation of the Chinese pharmaceutical industry currently and in the near future.
A clear trend at present is that the Chinese-produced me-too innovative drugs are achieving the import substitution of the original drugs, which will continue in the future. Take the icotinib of Betta Pharmaceuticals for instance, gefitinib of AstraZeneca was marketed in China in 2005, with...
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