Author: Gypsy 007
CRO Industry Annual Report Comments - WuXi AppTec 2020 Annual Report Comments
CRO (CDMO) companies I am most concerned about several indicators:
. Growth rate of number of employees
. Per capita output and per capita profit
. Production capacity Release growth
. Order funnel
WuXi AppTec was originally a company listed on the US stock market. After delisting, it was divided into 3. The WuXi AppTec of Big A and H + the of Hong Kong stocks WuXi Biologics + the merger of the New Third Board Quan Pharmaceutical (delisted and classified as WuXi AppTec holds 97.9% of the shares).
WuXi AppTec is mainly responsible for preclinical CRO, small molecule CDMO, cell and gene therapy CTDMO and large clinical. The current market value is 360 billion yuan.
WuXi Biologics is mainly responsible for macromolecule CDMO (company description: providing comprehensive, integrated and highly customized content services for the discovery, development and manufacturing of biological agents). The current market value is 442.5 billion Hong Kong dollars, and the exchange rate is based on 1 Hong Kong dollar = 0.8442 yuan, which is approximately 373.6 billion yuan.
WuXi, headed by Li Ge, has a total market value of 733.6 billion yuan.
WuXi’s vision is:
We can pass on health from generation to generation in the future, and making medical health better is our common vision.
We firmly believe that there will be no difficult medicine or disease in the world. (Every drug can be made and every disease can be treated.)
After finishing the pie, we started our annual report reading journey.
1. Company profile and main financial indicators
Main financial indicators
Revenue, profit and cash flow
Revenue was 9.61 billion in 2018, 12.87 billion in 2019, 16.54 billion in 2020, -year compound is 31.2%, in the new COVID-19 situation It is not easy to achieve such a growth rate.
profit was 2.26 billion in 2018 (excluding non-profit 1.56 billion), 1.85 billion in 2019 (excluding non-profit 1.91 billion), and 2.96 billion in 2020 (excluding non-profit 2.385 billion). It can be seen that WuXi AppTec non-recurring gains and losses, the part dominated by investment income fluctuates very much and is very unstable. We still look at the non-recurring situation. The compound growth rate in 2 years is 23.6%, which is still weaker than the income side. .
The sum of cash flows in the past three years is 16.4+29.2+39.7=8.53 billion, and the sum of net profits is 7.07 billion. The cash flow is good.
Assets and liabilities
Net assets were 17.69 billion in 2018, 17.31 billion in 2019, and 32.49 billion in 2020, with a 2-year compound annual growth rate of 35.5%. Net assets increased by 15.1 billion in 2020, while the net profit that year was about 3 billion. Considering that Kant's dividend rate is about 30%, the net assets increased by 2.1 billion. Based on this calculation, the company's equity financing in 2020 will be approximately 13 billion.
found
on pages P79-P80 - On July 29, 2020, the Company's new placement shares were placed to qualified independent investors ("Placees") at HK$108.0 per placement share (the "Placement Price"). An additional 68,205,400 H shares were issued. Completed on August 5, 2020. ( raised HKD 7.366 billion )
- In September 2020, the company non-publicly issued 62,690,290 RMB ordinary shares (A shares), and it was processed at the Shanghai Branch of China Securities Depository and Clearing Co., Ltd. on September 23, 2020. Complete the share registration procedures. The issue price was found to be RMB 104.13 per share. ( raised 6.53 billion )
added up to almost 13 billion, which is similar to the calculation.
The ROE indicator that is most concerned about is very unsatisfactory, mainly because the proportion of 13 billion raised last year (accounting for 42.6% of net assets) was too high, which significantly lowered the performance of ROE.
Looking at the quarterly situation, the fourth quarter revenue is the highest among the four quarters, but there is no obvious quarterly difference. The relative anomaly in the income statement is the second quarter. It is estimated that the investment income is too high.If you look at the situation of deductions and penalties, the performance in the second quarter is really overwhelming, but the good times do not last long. A good business is a normal business. You really can't just look at a good quarter and then praise it to the sky. If it is not good, then you can't do it.
In this section, both Zhaoyan and Kant list non-recurring profits and losses. Let's take a look at them together. For more detailed information, you can directly search for the corresponding items in the annual report.
Non-recurring profits and losses are mainly two pieces of government subsidies and investment income. Government subsidies are relatively stable, and they are actually growing steadily, with 114 million in 2018, 147 million in 2019, and 207 million in 2020. Investment income, etc. were 610 million in 2018, losses were 196 million in 2019, and 458 million in 2020. I have to say that and WuXi AppTec are really disappointing in the investment sector. How can they lose money in 2019? Then look down.
The impact of fair value changes on net profit is 884 million, which is not a small proportion. This part of the assets was 14.42 billion at the end of 2020 (an increase of 7.53 billion, which is really not a small proportion. You must know that the net assets are only 32.5 billion).
financial assets are up to 4.62 billion + 6.72 billion = 11.33 billion, and the impact of this part on net profit is almost 1.88 billion.
saw something similar to Zhaoyan, 's productive biological assets 's ending balance was 419 million (an increase of 58.62 million in this period), and the impact on profits was 81.65 million. The closing balance of consumable biological assets was 502 million (an increase of 148 million in this period), which had an impact on profits of 210 million.
Let’s first look at WuXi AppTec ’s definition of productive biological assets and consumable biological assets (whether it is the same as pig breeding.
Consumable biological assets refers to experimental cynomolgus monkeys held for sale and macaques . Experimental cynomolgus monkeys and macaques are initially measured according to cost.
Productive biological assets refer to the cynomolgus monkeys and macaques used for breeding. Monkeys and macaques are initially measured according to cost.
The definition of Zhaoyan’s new drug : Experimental animals used for breeding are classified as productive biological assets , while experimental animals used for preclinical research of drugs are classified as consumable biological assets .
WuXi AppTec 's biological assets at the end of the period were 921 million, with a fair value of 292 million, accounting for 31.7%; Zhaoyan's biological assets at the end of the period were 54.73 million, with a fair change of 54.73 million, accounting for 63.0%.
Zhaoyan's productive biological assets:
Yes It can be seen that the price of monkeys has increased, while the price of mice has not changed. At the beginning of the period, Zhaoyan was mainly monkeys.
Kant did not disclose these data in detail. Seeing that the fair change is so large, the normal inference should be that monkeys increased their prices . 2. Company Business Overview
Kant disclosed this part in detail. Some important information is excerpted as follows.
has 26,411 employees, including 24,633 in China, 1,703 in the United States (not too few), and 75 in Europe.
The company has repeatedly emphasized that it has It can be end-to-end, "Currently, most pharmaceutical R&D service companies in the world focus on a certain stage of new drug research and development, such as pre-clinical CRO, clinical trial CRO, CDMO, etc. In addition, there are a few including companies" integrated, end-to-end ” R&D service platform can provide customers with one-stop new drug R&D and production services. "
Then there are some industry data:
According to the Frost & Sullivan report, China's pharmaceutical industry R&D investment has increased from US$11.9 billion in 2016 to US$25.3 billion in 2020, with a compound annual growth rate of approximately 20.8%. China Pharmaceuticals The proportion of R&D investment in outsourcing has increased from 29.8% in 2016 to 36.8% in 2020.
Let’s take a look at what the company can brag about:
Looking forward to the future, the company will continue to invest heavily to further strengthen PROTAC, oligonucleotide drugs, peptide drugs, antibody drug conjugates (ADC), dual antibodies, cell and gene therapy With service capabilities for new molecule types , we can seize new business opportunities and empower global pharmaceutical innovation.
During the reporting period, the world's top 20 pharmaceutical companies accounted for approximately 32.8% of the company's overall revenue. The company's customers are highly sticky. From 2015 to December 31, 2020, the retention rate of the company's top ten customers was 100%. During the reporting period, the company's revenue from original customers accounted for 93.8%, and revenue from new customers accounted for 6.2%.
There are more other contents. Friends who are interested can take a look.
3. Discussion and analysis of operating conditions
3.1 Analysis of operating performance
Income by business segment.
The income of the past four years is listed here. It can be seen that the total income was 7.765 billion in 2017, 9.61 billion in 2018, 12.87 billion in 2019, and 17.53 billion in 2020. The income is compounded every three years (the annual compounding below refers to 3 years Compound) is 31.2%, which is stable and fast.
Among them, laboratory services in China account for the largest proportion, with revenue of 8.55 billion accounting for 51.7% in 2020, with an annual compound rate of 27.6%, which is slightly slower than the overall growth rate. The growth rate this year is not bad, at 32%.
The second largest business is CDMO, Hequan Pharmaceutical's small molecule business, which accounted for 30% of the revenue in 2020 of 5.28 billion, with an annual compound rate of 35.8%, which is faster than the overall growth rate. This year's growth rate is the fastest among the segmented sectors. , it is estimated that production capacity will be released relatively quickly.
The U.S. laboratory services are 1.52 billion, with an annual compound rate of 10.1%. The growth rate in 2019 is good, but it is unsatisfactory in other years.
Clinical research and other CRO revenue is 1.17 billion, with an annual compound rate of 48.6%. The growth rate is very fast, but the size is still small.
Other description details can be found on pages P16-18 of the annual report and will not be excerpted. Let’s take a look at the gross profit margin situation.
China laboratory services and CDMO businesses are the majority of the company's revenue, and the gross profit margin is very stable and basically maintained at around 40%, with a slight increase this year. However, the gross profit margins of laboratory services in the United States and domestic clinical research and CRO are not good. This year they were 22% and 15%, respectively, and last year they were 30.4% and 24.3%. These two areas are still affected by the new crown. The personnel cost in the United States is probably still too high. It is still necessary to compare clinical cro with Tiger.
Major clinical revenue growth rate of Tiger is slightly faster than that of Kant, one is 14% and the other is 9%. In terms of gross profit margin, Tiger is clearly dominant. Tiger's comprehensive gross profit margin is 47%, while Kant's was only 24.3% in 2019. Looking at it this way, in terms of clinical practice, there is still a lot of gap between Kant and Tiger.
3.2 What is the future development trend of the industry?
According to Frost & Sullivan report forecasts (the same below), the size of the global pharmaceutical market has grown from US$1,153.6 billion in 2016 to US$1,384.1 billion in 2020, with a compound annual growth rate of approximately 4.7%; it is expected to grow to US$16,395 by 2024. billion, with a compound annual growth rate of approximately 4.3% from 2020 to 2024.
The global pharmaceutical industry's R&D investment has increased from US$156.7 billion in 2016 to US$190.8 billion in 2020, with a compound annual growth rate of approximately 5.0%; it is expected to grow to US$227 billion by 2024, with a compound annual growth rate from 2020 to 2024 The growth rate is approximately 4.4%.
The proportion of global pharmaceutical R&D investment in outsourcing has increased from 36.3% in 2016 to 40.7% in 2020, and is expected to increase to 50.6% by 2024.
China’s pharmaceutical industry R&D investment has increased from US$11.9 billion in 2016 to US$25.3 billion in 2020, with a compound annual growth rate of approximately 20.8%; it is expected to grow to US$47.6 billion by 2024, with a compound annual growth rate of 2020 to 2024. The growth rate is approximately 17.1%.
The proportion of China’s pharmaceutical R&D investment in outsourcing has increased from 29.8% in 2016 to 36.8% in 2020, and is expected to increase to 47.6% by 2024.
is summarized into a table:
. Anyway, the growth rate is relatively fast among the subdivided industries, and domestically is faster than foreign countries.
3.3 Production capacity situation
CDMO We need to pay attention to the production capacity construction, as well as the animal room of Anping. Let’s take a look at the situation of WuXi AppTec .
Note: Other decreases are mainly due to the transfer of intangible assets, the transfer of long-term deferred expenses and exchange gains and losses.
It can be seen that the total amount transferred to fixed assets in 2020 is 2.07 billion. Except that it is not clear what the 785 million transferred to other projects is, the rest are mainly transferred from large to small in order: Changzhou Hequan 150 million ( Progress 87%), Chengdu base 179 million (progress 57%), Tianjin expansion 165 million (progress 55%), Shanghai R&D platform 160 million (progress 40%), Suzhou safety assessment center 122 million (progress 40%, this Do you want to be neighbors with Zhaoyan? ), Hequan’s global support is 76 million (79%), and Hequan’s small molecule upgrade is 75.8 million (40%). The total investment in the
project is 8.38 billion, of which 3.9 billion has been invested (other projects have incomplete disclosure and will not be considered), and there is still about 4.4 billion invested.
3.4 Mainly participates in the profit of the holding company
The investment income is really quite a lot, hahaha. The core companies are Shanghai WuXi AppTec and Changzhou Hequan Pharmaceutical.
3.5 Investment assets
The investment business of WuXi AppTec is really not doing well, so let’s take a look at what medicines they sell in their gourd?
WuXi AppTec ’s investment assets mainly include trading financial assets of 4.62 billion, other non-current financial assets of 6.72 billion, long-term equity investments of 760 million, and goodwill of 1.39 billion.
There is nothing good to say about this part, it is financial management and structured deposits.
The situation of non-current financial assets is as follows:
The company has a detailed description of the investment performance (investment status analysis) on pages P26-29.
The key is equity instruments, which account for a relatively large proportion of the equity category. The company has listed them ( If you are impatient, you can Directly look at the following summary table ):
① JW (Cayman) Therapeutics Co. Ltd ("JW Cayman", HKEX: 02126)
During this reporting period, JW Cayman was listed on the main board of the Hong Kong Stock Exchange (stock code: 02126). As of December 31, 2020, the Group held approximately 9.86% of its equity, with a fair value of RMB 763 million (accounting for 1.65% of the company's total assets).
JW Cayman’s lead product candidate relmacabtagene autoleucel (“relma-cel”) is a CD19-targeted CAR-T cell therapy product for relapsed or refractory (“r/r”) B-cell lymphoma, and is regulated by the National Drug Administration The FDA has accepted the new drug marketing application for relma-cel as a third-line therapy for DLBCL ("diffuse large B-cell lymphoma") in June 2020. Relma-cel is expected to become China's first approved Class 1 new drug biological product and continue to lead the cell therapy product team.
② Lyell Immunopharma, Inc. ("Lyell")
Lyell is headquartered in south of San Francisco , California, USA, and is a pre-revenue cell therapy company. It is mainly aimed at the treatment of solid tumors that are currently unsolved by cell therapy. As of December 31, 2020, the Group held approximately 3.17% of Lyell's equity, with a fair value of RMB 613 million (accounting for 1.32% of the company's total assets).
③Genesis Medtech Group Limited (“Genesis”)
Genesis focuses on the research and development, production and sales of high-quality medical device products. As of December 31, 2020, the Group held 13.87% of its equity, with a fair value of RMB 468 million (accounting for 1.01% of the company's total assets).
④Hygeia Healthcare Holdings Co., Limited ("Hygeia", HKEX: 06078)
Hygeia is committed to providing one-stop comprehensive diagnosis and treatment services to cancer patients in non-first-tier cities, insisting on developing cancer-centered businesses, and developing multiple businesses around the core cancer business. Subject medical services. As of December 31, 2020, the Group held approximately 1.84% of its equity, with a fair value of RMB 467 million (accounting for 1.01% of the company's total assets). Hygeia is China's largest oncology medical group. During the reporting period, Hygeia has been listed on the main board of the Hong Kong Stock Exchange.
⑤iKang Healthcare Group ("iKang")
iKang ("iKang Guobin") is China's leading physical examination and health management group, providing high-quality medical services including physical examinations, disease detection, dental services, private doctors, vaccinations and anti-aging . As of December 31, 2020, the Group held approximately 3.88% of its equity, with a fair value of RMB 435 million (accounting for 0.94% of the company's total assets).
iKang was previously listed on the Nasdaq stock exchange and subsequently went private in January 2019. As of December 31, 2020, iKang operated 157 physical examination centers in 57 cities. iKang also cooperates with more than 700 medical institutions in more than 200 cities in China to provide one-stop national physical examination and health management services.
is summarized as follows:
It’s really annoying. WuXi Junuo and Hygeia are in English. WuXi Junuo and Hygeia are all converted from level one to level two. Not particularly good, just passable. After Aikang Guobin is delisted, will it be listed again?
4. Several indicators of concern
The number of people has grown very steadily, basically maintaining a growth rate of 20+%. Then let’s take a look at the unit output, net profit contribution per person, and net profit contribution after non-deduction, as shown in the table below.
's single-person income increased from 527,000 to 626,000. The minimum non-net profit for a single person was 66,000. The new high in 2020 reached 90,000, which is not bad.
5. Conclusion
The annual report has been analyzed more, and I can read it faster and see more relatively important details.
As the leader of domestic preclinical CRO and small molecule CDMO, WuXi AppTec now has 26,000 employees, full orders, output of more than 600,000 per person, and net profit of 90,000 per person. Employees continue to grow steadily, and investment business Average.
now has a market value of 360 billion. In 2020, non-net profits of 2.4 billion and investment income of 600 million will be deducted. The investment income is estimated based on the 10 times limit of the investment of 6.7 billion, which is approximately 67 billion. Then the market value of the main business part is 293 billion, and the valuation is approximately 122 times. If we directly deduct non-net profit, it is estimated to be 150 times. If we use net profit, it is estimated to be 121 times, which is basically consistent with the separate estimation.
is really too expensive, too expensive! ! !
That’s it for talking about WuXi AppTec annual report. If you have any questions, you can discuss them in detail (it’s best to provide more detailed data instead of talking in general terms, thank you).
