The new crown epidemic has stirred up the stability of the global biopharmaceutical supply chain. Since the second half of 2020, the shortage of a series of key material consumables such as virus removal filters, chromatographic fillers, disposable consumables has once become a common phenomenon, and the domestic supply period has been extended from 2 months to 10 months. Behind the lag in supply of
, the current situation of upstream equipment and consumables in my country's biopharmaceuticals being "bottlenecked" is exposed: Globally, the supply of upstream equipment and consumables in biopharmaceuticals is monopolized by a few multinational giants. Although China has jumped to become the world's second largest pharmaceutical equipment market, the domestic production of core process equipment and consumables in biopharmaceuticals is low. With limited resources, multinational giants are more inclined to meet their own needs rather than China.
According to the calculations of the domestic upstream equipment and consumables market by CICC on the 2020 domestic biopharmaceutical upstream equipment and consumables market, the domestic production rate of chromatographic fillers/chromatography media in China is less than 10%, the domestic production rate of culture medium is less than 20%, the domestic production rate of disposable bioreactors is only 10%-20%, and the domestic production rate of disposable reaction/liquid storage/mixing bags is only 20%-30%.
Under this market structure, geopolitical frictions are intensifying, and China's upstream supply chain of biomanufacturing is experiencing unprecedented challenges.
In September 2022, US President Biden increased its investment and signed the "Biotechnology and Biomanufacturing Plan" to encourage biomanufacturing and its supply chain to return to the United States, further aggravating the risks of China's upstream biomanufacturing supply chain.
Against this background, the security of the upstream supply chain of China's biomanufacturing upstream supply chain has risen to the height of national strategy, and the domestic substitution of the upstream supply chain of biomanufacturing has also entered an unprecedented period of development opportunities.
disposable bioreactor (Source: Shanghai Duaning Biological Official Website)
In January 2022, the " "14th Five-Year Plan" Pharmaceutical Industry Development Plan " jointly released by nine national ministries and commissions clearly stated that in the next five years, the development of the pharmaceutical industry will be stable and controllable.
Unlike innovative drugs, the research and development of highly relies on scientific discoveries, the emergence and development of life science tools have always been accompanied by capital power. Multinational giants such as Danach , Satoris , Thermo Fisher S. have established a huge industrial layout through continuous investment, mergers and acquisitions, thus monopolizing global market share.
Nowadays, under the tension of the world's "decoupling" with each other, China's life science tool industry is experiencing an unprecedented climax of "domestic substitution". Referring to the growth path of multinational giants, with the help of capital mergers and acquisitions, China may give birth to new life science tool "king of mergers and acquisitions".
M&A integration: The "kingdom" of life science tools
Review the century-old development history of global life science tools, which is a magnificent history of industrial mergers and acquisitions.
Unlike the pharmaceutical industry, a single blockbuster can achieve annual revenue of 10 billion US dollars. There are many sub-sectors in the life science tool industry, but the market size of each category is not too large, and the user group is very concentrated and the user stickiness is high. This determines who can establish a complete solution of multiple categories through mergers and acquisitions as soon as possible, and whoever can obtain the largest market share and achieve economies of scale.
At the practical level, the growth process of multinational giants also confirms that mergers and acquisitions are the "kingdom" of the development of the life science tool industry.
The latest multinational giant Danaher with a market value of more than US$190 billion has acquired more than 600 companies in the 35 years from 1986 to the end of 2021. With the average annual ultra-fast merger and acquisition pace of 20 companies, Danaher has established a huge empire across life sciences, diagnosis and environmental applications.
Another multinational giant, Thermo Fisher, with a market value of over US$200 billion, also has a similar development path for mergers and acquisitions integration. Thermo Fisher was predecessored by The American thermoelectric company , and later entered the instrument and equipment industry with the field of air monitoring. In the 1990s, Thermo Fisher completed the layout of analytical instruments, monitoring instruments, new energy, life sciences, process equipment and other fields through a series of mergers and acquisitions. In 2006, Thermo Fisher merged with Feishi Technology, the leading supplier of reagents and consumables, to become Thermo Fisher, and transformed from a single field to a platform-based scientific service giant.In 2013, Thermo Fisher acquired Life Technologies to further expand the scope of life science business.
Biotechnology multinational giant Sedolis has made great efforts to rely on mergers and acquisitions and integration. In 1870, when Sadolis was just a precision instrument (industrial weighing balance) workshop. In more than 150 years of development, Sadolis has continuously expanded the boundaries of life science business through mergers and acquisitions and integration, starting at the upstream of the drug research and development stage, and then entered the downstream of the industry through membrane filtration. Then it extended to disposable bioreactor , consumables, cell culture dishes, centrifuge , chromatography systems, filler products and other fields, and grew into a platform-based life science service leader.
In contrast, although the industrialization of China's life science tool industry, especially capitalization, mergers and acquisitions, started late, and multinational giants still controlled the main share of various market segments, local companies such as Doning Biotechnology have made advance arrangements and took the lead in establishing multi-product and one-stop biotechnology solutions through mergers and acquisitions in 4 years. Taking advantage of the favorable wind of the macro environment and the sub-track track, Doning Biotechnology is entering the fast lane of accelerated growth.
Create a "one-stop platform" in China
When it was established in 2005, Doning Bio was just a startup company focusing on the development and production of serum-free culture media, especially the antibody market.
However, with the rise of Chinese biopharmaceutical companies and related CXOs, the demand for biotechnology products in the Chinese market is not limited to single products such as serum-free culture medium . Duaning Bio is based on its core business of serum-free culture medium and extends to the upstream and downstream supply fields of biopharmaceuticals through mergers and acquisitions.
Since 2018, Duaning Bio has completed multiple rounds of financing, attracting support from many well-known investors such as WuXi Bio Industry Fund, Qingchi Capital, Sequoia Capital, China, and Huitianfu Capital, and successfully acquired many companies such as Guangzhou Qizhi, Lianghei Technology, Jinke Filter, Shanghai Ximai, and ATS Antuosi. In addition to the acquisition of
, Doning Bio is very flexible in seeking external expansion and cooperation, including wholly-owned holding, equity participation, strategic cooperation and other forms. It has a very complete layout in various sub-tracks of biotechnology, which can not only achieve the purpose of industrial cooperation, but also advance or retreat, and can recover excellent profit opportunities.
Through mergers and acquisitions and integration and external cooperation, Doning Bio has evolved from a pioneer of domestic cell culture media to a leader in biological process solutions, forming a biological process platform solution across multiple fields such as vaccines, antibodies and advanced treatments.
Doning Bio's continuous foreign mergers and acquisitions are not just pursuing the expansion of the company's scale or simply pursuing short-term financial investment returns. Instead, based on insight into industry needs, it improves the product portfolio to build more complete solutions, realizes business collaboration, and forms scale effect. M&A integration reduces the cost of trial and error, improves the accumulation of market awareness and customer resources, and accumulates innovation capabilities at the source.
Doning Bio's merger and acquisition integration focuses on market demand, laying out the two dimensions of "horizontal" and "vertical" to establish a platform-based company:
Horizontal,Doning Bio has grasped the "long slope" feature of the core business of culture medium, that is, the culture medium has a certain technical threshold, and the customer's cultivation cycle is long, which generally takes 8-10 years. At the same time, the culture medium customers are highly sticky, and the manufacturer will generally not be replaced after using the culture medium.Doning Bio expands different categories such as filters and disposable bioreactors based on the horizontal layout of the industrial chain, providing users with a richer product portfolio, deeply tapping into user value, and truly realizing the "thick snow and long slope" of enterprise development.
vertically, Duaning Bio will also lay out the vertical industrial chain of core business products in the future. For example, after the acquisition of the filter company, it will further develop the merger and acquisition layout in the membrane material company or the raw material company of the culture medium upstream of the industrial chain. In addition to the merger and acquisition of
, Duaning Bio is also building technical capabilities and enriching product pipelines through independent research and development to achieve the growth and development of the " endogenous + merger and acquisition" model. For example, Duaning Bio helped Lianghei Technology independently develop membranes, pipelines, etc., and successfully put into production.
platform solution (Source: Duaning Biotech Prospectus)
In addition to domestic business, Duaning Biotech is also actively expanding and laying out overseas markets. On July 26, 2021, Doning Bio completed the acquisition of ATOS. ATOS was established in 2001. It focuses on the development and process development of nano-scale homogeneity, emulsification and crushing equipment. It has accumulated rich overseas markets. Over the past 20 years, it has provided homogeneous emulsification equipment to more than 2,000 customers, covering Hong Kong, Macao and Taiwan, as well as the United States, France, Italy, South Korea and New Zealand and other countries.
On March 1, 2022, Doning Bioscience signed a "Merger and Acquisition Contract" with SALUS Bioscience. SALUS started in Boston in Massachusetts, USA in 2009. It is run by a team with deep technical knowledge and experience in the field of purification. It provides products and services to front-line research institutions and pharmaceutical companies in North America, Europe and Latin America. Doning Bioscience uses this to expand its European and American market layout and accelerate the promotion of overseas markets. The next day, Duaning Biosciences successfully acquired Lefeng Bio. Lefeng Biosciences has been focusing on the laboratory water pure water for more than ten years. Its products have been internationalized very early and have been sold in dozens of countries and regions around the world. It has the strength to fight against the global market oligarch . It won the patent lawsuit with Merck Millipore in 2017 in the Belgian court, and won the lawsuit again in Beijing in 2020. This is another tool for Duaning Biosciences to internationalize.
In addition to the overseas business layout, Doning Bio is in an unprecedented period of opportunity for the development of life science tools, especially the biotechnology segmentation track. Combined with the rapid development of Chinese biopharmaceutical companies and CXO companies served by Doning Bio may be able to recreate the "king of mergers and acquisitions" myth of companies such as Sadolis and Danah in China.
Following the growth of biomanufacturing "world factory"
The new crown epidemic has spawned a large demand for biopharmaceuticals. During the epidemic, life science tools, especially biotechnology products, were once in short supply. Stimulated by huge market demand, multinational giants have sniffed market opportunities and focused on the biotechnology market through splitting and reorganization, looking for opportunities for rapid performance growth.
In September 2022, multinational giants just announced that they would combine Pall, the leading biotechnology company acquired for US$13.8 billion in 2013, and Cytiva, which was acquired for US$21 billion in 2020 (then known as GE Healthcare Life Sciences), to create the "Biotechnology Group" to create the "broadest" and "deepest" product portfolio in the field of biotechnology.
Although Duaning Bio does not have the experience and advantages accumulated by multinational giants first, it has huge development dividends brought by deepening its roots in the Chinese market.
In the first half of 2022, the "Wuzhou Intelligence" companies WuXi Biologics and WuXi AppTec ranked among the top five global CROs with a total revenue of US$3.726 billion in the first half of the year. As a representative company in the upstream biotechnology field of CRO, Doning Bio has established a deep strategic investment relationship with WuXi Biotech, the leading CRO company.
On April 24, 2019, Duaning Biotech completed nearly 100 million yuan in A+ round financing, with WuXi Biotech Industry Fund as one of the core investors. At the same time, WuXi Biotechnology and Doning Biotechnology also reached a strategic cooperation agreement on . The two parties jointly built a serum-free culture medium development platform in Shanghai to develop new serum-free culture medium suitable for Fed-Batch and perfusion culture; at the same time, they also provide personalized culture medium development services for Biomedical customers, allowing customers to realize their dream of having their own exclusive culture medium formula. In addition to establishing cooperation with the leading CRO, Duaning Bio has also taken advantage of the opportunity of shortage of biotechnology products during the COVID-19 pandemic to actively establish cooperative relationships with many leading local innovative drug companies such as BeiGene , Junshi Biologic , Innobi , Innobi , Kangfang Biologic , Kangfang Biologic , and Kangfang Biologic . It has used its own product strength to solve the supply chain problems of innovative drug companies and accumulate a closer customer base.
Just like China has spawned a series of "fruit chain" listed companies for the OEM production of Apple . With China leaping into the "world factory" of biomanufacturing, not only CRO companies like WuXi can rank among the top five CROs in the world, but multinational giants will also be born in the biotechnology field in the upstream of its industry.
Doning Bio has completed 9 mergers and acquisitions in 4 years, making it the first company in China to establish the most complete biotechnology industry chain through clear merger and acquisition logic.
Referring to the path of mergers and acquisitions and integration successfully verified by multinational giants, riding on capital and market dividends, following China's leap into the "world factory" of biomanufacturing, the next biological process "M&A Star" - Doning Biotechnology is rising slowly in China.
This article is from the Medical Rubik's Cube
