(This report is copyrighted by Dalian Guagu Technology Co., Ltd. For the complete report, please refer to the company’s official public account: Guagu)
Complete table of contents of the report:
Business overview
BGI is a biogenetic company established in 1999. It is a gene A leading player in the sequencing services industry. After two decades of development, the company's business has covered more than 100 countries and regions around the world, including more than 2,000 scientific research institutions and more than 2,300 medical institutions in China, including more than 6,500 tertiary hospitals. It cooperates with more than 3,000 overseas medical and scientific research institutions in Europe, America, Asia-Pacific and other regions. A network layout that “covers the whole country and radiates around the world” has been formed.
① Performance composition
By product classification, BGI’s current main businesses include “Basic Research and Clinical Application Services on Reproductive Health” (referred to as “Reproductive Health”), “Basic Research and Clinical Application Services on Infection Prevention and Control” (referred to as “Infection Health”) Prevention and Control"), "Multi-omics Big Data Services and Synthesis Business" (referred to as "Big Data and Synthesis"), "Tumor Prevention and Control and Translational Medicine Services" (referred to as "Tumor Prevention and Control"), and newly separated in 2019 The five major projects of " precision medicine detection comprehensive solution" (referred to as "precision medicine"). In 2019,
company added the precision medicine project to its financial report. After investigation, this project is a support project for other previous projects and echoes the national strategy of "precision medicine". For the sake of comparability requirements in each period, we temporarily restored the precision medical performance back to each project. It can be seen that in the three years from 2017 to 2019, the proportion of each business in revenue has basically remained unchanged. The operating income generated by reproductive health accounts for half of the total revenue and is the core business of BGI. With the development of the epidemic in 2020, the demand for new coronavirus detection kits in various regions around the world is increasing. The company's infection prevention and control business volume has surged, with a year-on-year growth of 724.22% (if the precision medicine business is divided separately, its surge is also due to this reason).
By region, before the epidemic, BGI’s business in mainland China was as high as 80%. After the epidemic, due to the globalization of the new crown epidemic, BGI’s global revenue share became more balanced, with sales from the Americas, Europe, Africa and Asia. The revenue share has increased. The growth in business volume in Asia is particularly obvious.
② Main business introduction
Business 1: Reproductive health
The main market segments of "reproductive health" include non-invasive prenatal genetic testing (NIPT) and preimplantation genetic testing (PGT). BGI mainly focuses on the NIPT market segment. . NIPT is mainly based on high-throughput sequencing technology (NGS), which can detect the relevant genes of pregnant women, fetuses and newborns in the four stages of pre-pregnancy, prenatal, newborn and children, thereby discovering hidden genetic risks. Providing necessary intervention and treatment in a timely manner is BGI's traditional core business. Its market share in the industry remains at 30% to 35% year-round, making it one of the two giants.
Compared with traditional prenatal screening and diagnostic technology, NIPT combines the advantages of non-invasiveness, short detection cycle, convenient operation, high safety, and high accuracy. Among them, at present, 21-trisomy syndrome and The detection rate of trisomy 18 can reach 100%, and the specificity is 97.9-99.7%. The detection principle is to collect the venous blood of pregnant women, use high-throughput sequencing technology (NGS) to sequence the cell-free DNA fragments (including fetal cell-free DNA) in maternal peripheral plasma, and conduct bioinformatics analysis on the sequencing results to obtain the fetal Genetic information , thereby detecting whether the fetus has chromosomal abnormalities , which is mainly used for 3 genetic diseases with abnormal chromosome number: Trisomy 21 (Down syndrome), Trisomy 18 (Edwards syndrome), Trisomy 13 Trisomy syndrome (Patau syndrome).
Business 2: Cancer prevention and control
This service can provide genetic mutation information of tumor patients, combined with pharmacogenomics related information, to assist clinicians in selecting appropriate treatment drugs for cancer patients and formulating a complete treatment plan to the greatest extent possible. to meet the individualized treatment needs of patients.At present, this market is an emerging segment of gene sequencing with fast growth and broader market space. The company's service, OseqTM-T detection product, was completely independently developed by BGI and has applied for multiple patents. This technology uses high-throughput sequencing methods to conduct relevant gene analysis on cancer tissues from tumor patients, and can detect 508 tumors at one time. Related genes, interpretation of 88 types of tumor drugs, comprehensive, systematic and accurate interpretation of the relationship between tumor drugs and genes, and can assist doctors to select appropriate treatment drugs and formulate individualized treatment plans based on the individual differences of patients to prolong patient survival time and improve the quality of life. Current tumor detection products include hereditary tumor screening and a one-time detection kit for 508 tumor-related genes. Currently, BGI still leads the field in this field, but there are many competitors, and BGI's overall advantage is not as obvious as in the core field of NIPT.
Business 3: Comprehensive solution for precision medical testing
BGI's "precision medicine" business provides laboratory construction solutions for medical institutions or third-party testing companies, providing high-throughput sequencing platforms, high-resolution mass spectrometry platforms, and traditional testing platforms , life big data and other technical support enable testing institutions to independently complete gene sequencing services locally. The specific product introduction is as follows:
The company's precision medicine business is a further system solution for the original reproductive health business, tumor detection business, and infection prevention and control business. From "submission for inspection" to medical institutions, they can realize "self-service" through their own platform. "Inspection", by transferring the original business to the precision medical business, it can achieve both improvement in unit price and added value. This business is more of a test of the company’s terminal sales capabilities based on its other product strengths.
In addition, although the infection prevention and control business has surged, due to the greater impact of the epidemic, the sustainability of the performance is not strong, so this business and the industry it is in will not be focused on analysis.
③ Company business development and planning
Business development:
From the official launch of the " Human Genome Project " in 1990 to 2021, BGI's business development history can be divided into four eight years:
The first eight years (1990 -1998) Topic: Track/Follow
BGI’s first eight-year development process, focusing on the field of BT (biotechnology) scientific research, and actively preparing to participate in the Human Genome Project. Strictly speaking, it is a scientific research Follow the behavior. The gene sequencing technology we were exposed to at that time was also relatively primitive gel electrophoresis, which was high-cost and low-efficiency. It could only produce up to 200 base per day. The second eight years of
(1998-2006) Theme: Participation/Integration with
In the second eight years, with the advancement of sequencing technology, BGI’s BT+IT (biotechnology + information technology) scale production The model is initially taking shape. The capillary sequencing method used at that time was ten times more efficient than the original gel electrophoresis, and the basis for large-scale output was already in place.
The third eight years (2006-2014) Theme: Synchronization/Beyond
In the third eight years starting from 2006, BGI has reached a new level, from BT+IT in the previous eight years The scale is beginning to take shape and has developed into the in-depth integration of BT+IT, big science and big data. In 2013, BGI acquired Complete Genomics, an American instrument and equipment manufacturer, to realize the localization of genetic technology and equipment, getting rid of BGI's dilemma of being restricted by others in terms of core instruments. The fourth eight years of
(2014-2022) theme: leapfrogging/leading
In the fourth eight years, the company plans to strengthen the advantages of the entire industry chain through mergers and acquisitions. BGI has different investments in subdivisions such as reproductive health, tumor genetic testing, synthetic biology, consumer genetic testing, bioinformatics analysis, ophthalmology diagnosis and treatment, and metagenomics. As of December 31, 2018, the representative companies in which the company has completed investments include British Congenica (bioinformatics analysis), Ginga Technology (tumor gene detection), Qinglan Bio (synthetic biology), Hongxun Bio ( Synthetic biology), Zaozhuo Technology (i.e. Microgene, consumer-grade genetic testing), Judao Technology (precision medical data platform), He's Ophthalmology (precision ophthalmology diagnosis and treatment), etc.
Product Description
BGI mainly belongs to the midstream of the gene sequencing industry. The business process is roughly to purchase sequencers and supporting reagents from upstream suppliers, then perform sequencing work on samples collected by customers, and then combine bioinformatics analysis to generate conclusion reports to add value to services. The entire profit expansion process can be simply summarized as: purchasing sequencing equipment and reagents - channel establishment - providing services.
① Resources and raw materials
From the cost structure of the entire gene sequencing industry, equipment costs are the core costs of genetic products and services. Sequencers, PCR machines and other equipment are upstream core production materials and occupy a large proportion, especially in research. More than 2/3 of the scientific and technological service products of human samples. Specific to the field of non-invasive prenatal genetic testing, reagent and instrument losses account for 55%. It can be seen that sequencers and supporting consumables are the main component of the cost.
Because the production barriers of sequencers are very high, they require a high degree of integration of multiple disciplines, including optics, fluids, mechanics, electronics and automation, software algorithms, biochemistry, semiconductors, etc. If any one aspect is deficient, high-quality data output cannot be achieved. In addition, the American company Illumina has a monopoly in the sequencer mass production industry, with a market share of more than 80%. Therefore, domestic sequencing companies are generally subject to upstream suppliers.
BGI was Illumina’s largest customer in the early years. In order to get rid of its dependence on upstream, it acquired Complete Genomics, another American sequencer manufacturing company, at a price of US$3.15 per share in 2013, and in 2017, it launched domestic sequencers. The mass production of "BGI BGISEQ-500 Gene Sequencing System" (second-generation sequencer), but the current equipment products are under BGI (an affiliated company of the same controlling shareholder). In September 2021, it was listed on the Science and Technology Innovation Board Listed separately, stock code A20644.SH). According to the company's financial report, as of the end of 2020, BGI's sequencers accounted for as high as 95%. However, compared with the industry leader Illumina, the technical gap between CG's technology and that of industry leader Illumina is very obvious. Its biggest shortcoming is that the read length of the sequencer is too short (affecting detection accuracy, speed, etc.). As can be seen from the figure below, the current industry's advanced sequencers have already After developing into the fourth generation, BGI is still stuck in the second generation technology.
Taken together, sequencers are the core and key of the gene sequencing industry. Although the current sequencer business is not within the listed company, under the same actual controller, MGI has a crucial impact on the competitiveness of BGI. However, the upstream technical barriers are high, and BGI's own technical foundation is limited, and its technical reserves and development are far inferior to the leading Illumina. Judging from the prospectus of MGI, BGI's main customer in 2019 was BGI. By 2020, BGI's share has dropped to less than 20%, indicating that it has opened up the external market. From this perspective, its technology Maybe it's not as weak as imagined. As for the related party BGI, the company's current situation seems to have got rid of its dependence on upstream compared to its peers. In fact, it may not have a greater competitive advantage than Berry and Kang, which cooperates with Illumina to produce sequencers. The former costs more. low, but the latter is of higher quality.
② Service process
We can understand the gene sequencing company as an independent third party. Sequencing mainly has three links: library preparation, sequencing, and analysis. Currently, library preparation and analysis also have some technical requirements for personnel. The hospital does it by itself except purchasing equipment. In addition, it is necessary to train relevant professionals, which is expensive. Moreover, for many non-large tertiary hospitals, there is not much demand for gene sequencing, which further increases the cost of doing gene sequencing on their own. Therefore, there are companies like BGI. A company that specializes in providing sequencing services to hospitals. As for precision medicine services, it is stationed in some large tertiary hospitals, helping the hospitals to prepare their own libraries, purchase sequencers and other related equipment, and establish their own gene sequencing and analysis rooms.
The business of normal gene sequencing service companies has relied on professionals to provide simple data interpretation. Relevant professionals often need to understand both biology and genetics knowledge as well as computer programming and data analysis. There seems to be a certain threshold, but let's take a look Among the employees of the three giants, BGI has the highest quality. The other two giants, Berry and Kanghe, and Daan Gene, , have low overall employee education levels, which may also expose the problems of this industry. In essence, it has a negative impact on people. The requirements are not that high (it is said that one can start the job after only 2 months of junior college training). The reason why BGI’s overall personnel quality is high has a certain relationship with its further extension into the field of in-depth data services, which further proves that the barriers to the traditional gene sequencing service industry are average.
In-depth data interpretation is actually a further extension of gene sequencing services and provides more value-added services to downstream. This link is driven by computing and storage capabilities and often belongs to the capabilities of software companies and data companies (the participants are basically software company), BGI is not good at it, but because it is in a field with low barriers, it attaches great importance to it. BGI independently developed the all-in-one machine HALOS, which is not only used internally but has shipped 400 units. BerryHonder and Novogene do not have the ability to independently develop the all-in-one machine and need to cooperate with Bioinformatics to manufacture it. However, its related party MGI is currently also engaged in the all-in-one computer business. The MegaBOLT all-in-one computer developed by the company is not weak in terms of technical strength in terms of publicity, forming a horizontal competition relationship. The company did not provide further explanation for this.
In terms of cloud computing platform, BGI established BGI online in 2015. As soon as the platform was launched, a scandal involving plagiarism from Seven Bridges Genetics in Washington was revealed. Its security white paper and production process were copied from Seven Bridges Genetics' platform. But it is not a complete copy of the technology. On January 17, 2020, BGI’s BGI online platform (relying on Alibaba Cloud ) set a new world record. It only took 15 minutes to complete a high-precision personal complete The whole process of genome sequencing generally took 120 hours in the industry before. However, it is currently cooperating with Huawei, which shows that it still needs data storage and processing. It is not unique in its own R&D strength, but its results are still among the best in the industry. Considered ahead.
③ Sales
BGI mainly focuses on direct sales, supplemented by agents. Government-related projects are conducted through bidding. The breadth of channels is that BGI’s business currently covers more than 100 countries and regions around the world, with a total of more than 7,300 medical institutions at home and abroad. It has established cooperative relationships with scientific research institutions, more than Berry and Kang (more than 4,000); in people's livelihood projects, BGI has cooperated with Hebei Province, Wuhan City, Qingdao City , Ji'an City , Yiyang City , Linyi City , Dongguan City , Yuanling County , etc. cooperate to carry out people's livelihood projects. Berry and Kang have not launched people's livelihood projects for the time being; BGI's products are included in the scope of Shenzhen's medical insurance, and Berry and Kang's products are included in the scope of Beijing's medical insurance. .
④ Product evaluation
Domestic companies are currently not as good as foreign companies in terms of detection speed, but they can detect more microdeletions and microduplications. There is not much difference in the overall comparison between domestic companies from all angles.
In 2018, an article on Huxiu.com titled "BGI Cancer Change" sparked heated discussion. A woman with Down syndrome gave birth to a baby due to a false negative. But in the final analysis, there is still exaggerated propaganda. The public lacks a correct understanding of non-invasive prenatal screening and blindly worships NIPT. Various companies have missed tests, but the probability of missed tests with NIPT is indeed much lower than that of traditional serum screening.
(3) Judgment of key capabilities
The upstream suppliers in this industry are mainly manufacturers of various genetic testing related equipment and supporting consumable reagents; there are many midstream companies, which can be roughly divided into companies that provide gene sequencing services and companies that provide data services. categories; downstream customers can be divided into institutional customers such as scientific research, hospitals, pharmaceutical companies, and individual customers.
In the early days of its establishment, BGI mainly provided gene sequencing services, and its profit unit was located in the middle reaches of the industry chain.The barriers to the sequencing industry the company is in are not high. You can basically purchase sequencers and train a few professionals to get started. In this case, it will be difficult to attract customers if you don't do marketing to expand your brand influence, so marketing is crucial. BGI's extension upstream and downstream is partly to improve its own moat, so the research and development link is also more important.
(This report is copyrighted by Dalian Guagu Technology Co., Ltd. For the complete report, please refer to the company’s official public account: Guagu)
