The company has 5 domestic subsidiaries and 1 overseas subsidiary, and indirectly controls 6 subsidiary companies through Guangdong Feipeng International and indirectly controls 2 overseas subsidiary companies through Feipeng International.

(Report Producer/Analyst: Guolian Securities Zheng Wei)

Feipeng Biotech is an industry-leading in vitro diagnostic (IVD) overall solution provider. The main business is the research and development, production and sales of core raw materials for IVD reagents. At the same time, it has independently established a comprehensive platform of diagnostic raw materials, instruments and reagents to provide customers with overall solutions for IVD instruments and reagents.

.1 Using diagnostic raw materials as the cornerstone to create a diagnostic industry ecosystem

The company has gone through three stages of development since its establishment:

1) 2001-2008, building IVD The raw material core technology platform has broken the long-term monopoly of foreign brands in the field of upstream diagnostic raw materials, achieving localized large-scale supply of diagnostic raw materials and export sales to developed regions in Europe and the United States;

2) 2009-2016, building the underlying platform and expanding The application platform provides customers with products and services from raw materials to solutions;

3) From 2017 to the present, it has developed instruments and reagent platforms, actively promoted the construction of diagnostic platforms, and gradually formed a comprehensive overall solution.

.2 The company’s equity structure is stable and the management has rich industry experience.

The company’s holding structure is concentrated: the actual controllers of are Chairman Cui Peng and his spouse Cao Fei. As of this issuance (according to the prospectus updated on March 30, 2022 books), directly holding 12.04% and 1.24% of the company's shares, and indirectly controls 56.96% and 23.56% of the company's shares through Wenbo Investment and Baiao Technology respectively, and controls a total of 93.8% of the company's voting rights (direct and indirect total shareholding 85.79%).

company has 5 domestic subsidiaries and 1 overseas subsidiary, and indirectly controls 6 subsidiary companies through Guangdong Feipeng International and indirectly controls 2 overseas subsidiary companies through Feipeng International. Among them, Guangdong Feipeng is responsible for the research and development, production and sales of IVD reagent raw materials and reagent semi-finished products; Feipeng Diagnostics mainly provides IVD reagents and instrument solutions; Runpeng Biotech is still in the research and development stage of a fully automatic molecular diagnostic system; Feipeng International Mainly responsible for the export and sales of related products of the issuer and its holding subsidiaries.

core management team has rich industry experience: Cui Peng, He Zhiqiang and Fan Lingyun, the core technical staff of company, all graduated from biology-related majors at key universities and have nearly 20 years of experience in the scientific research industry. At the same time, they serve as chairman and chairman of the company's management team respectively. The positions of general manager and deputy general manager ensure the company's technological development and strategic direction.

.3 Regular business growth accelerated, new crown business contribution increased

The company has shown rapid development in recent years. 's overall revenue in 2021 is 2.332 billion yuan, a year-on-year increase of 118.44%, and the operating income CAGR from 2017 to 2021 is 80.17%; the company's net profit attributable to the parent company in 2021 is 1.476 billion yuan, a year-on-year increase of 133.1%.

Excluding the impact of COVID-19, regular business growth accelerated. Company is the main supplier of raw materials for COVID-19 nucleic acid testing and antigen detection reagents in China. The revenue from COVID-19 related products in 2020 and 2021 was 697 and 1.587 billion yuan respectively. Excluding the impact of the new crown epidemic, revenue in 2021 will be 722 million yuan, a year-on-year increase of 95.12%. The revenue CAGR of regular business from 2017 to 2021 is 34.42%, showing a rapid growth trend.

Diagnostic raw materials are the main source of income, and the proportion of semi-finished products of instruments and reagents has increased. The main business of company includes core raw materials, reagent semi-finished products and instrument solutions; the core raw materials are divided into antigen , antibodies, diagnostic enzymes and other reagent raw materials. In the past two years, with the change of the company's strategic layout and the expansion of new businesses, the proportion of semi-finished products of instruments and reagents has gradually increased, but diagnostic raw materials are still the company's main source of revenue, accounting for 77% of revenue in 2021. Affected by the fluctuations of the COVID-19 epidemic, the revenue of the antibody business increased significantly in 2021, while the revenue of antigens and diagnostic enzymes declined year-on-year.

The company has high gross profit margin, and the increase in revenue scale will bring about an increase in net profit margin.The overall gross profit margin of company has been stable at more than 90% all year round. Except in 2021, the gross profit margin of semi-finished reagents has dropped significantly (mainly due to the increase in the proportion of new crown detection reagents), which has made the company's overall gross profit margin 88.5%. By business line, except for the new instrument business, the gross profit margin of the other businesses exceeded 80%, maintaining a relatively high level.

The decline in the company's gross profit margin in 2021 is mainly due to changes in the product structure. The proportion of COVID-19 testing reagents with lower gross profit margins has increased, resulting in a decrease in the gross profit margin of the reagent semi-finished product business; but from a single product perspective, the company's main products have experienced obvious declines in 2021. Prices have dropped, but the drop in gross profit margin is not obvious, mainly because demand has increased significantly, and at the same time, scale effects have appeared, and costs have also been reduced accordingly, thus ensuring the stability of gross profit margin.

The company's net profit margin has continued to rise since 2018. In 2020 and 2021, due to the substantial increase in COVID-19-related income, the scale effect is significant, and the net profit margin has increased to 59.3% and 64.5% respectively.

In vitro diagnostics (IVD, In-Vitro Diagnostics) refers to the detection of human samples (blood, body fluids, tissues, etc.) outside the human body. Clinical diagnostic information, and thus products and services that assist doctors in judging diseases or body functions, have now become important auxiliary tools in clinical diagnosis and treatment.

The in vitro diagnostic industry can be further subdivided into biochemical diagnosis, immunodiagnosis, molecular diagnosis, microbial diagnosis, hematology diagnosis, etc. From the perspective of the industrial chain, the in vitro diagnostic industry can be divided into upstream raw materials, midstream production and circulation, and downstream testing service use links, with the market size increasing step by step.

.1 The growth momentum of the in vitro diagnostic industry continues, and the new crown promotes the prosperity of the sub-industry.

The global IVD market is growing steadily, and the growth rate of the domestic market is significantly higher than that of the world.

In vitro diagnostics, as an important auxiliary tool in clinical diagnosis and treatment, has been developing rapidly. Benefiting from the discovery of innovative markers, advances in diagnostic technology, and increased demand for precision medicine, the global market has grown steadily and is expected to reach US$71.9 billion in 2020. The CAGR from 2015 to 2020 is 5%. The domestic market of

started late, and as the demand for medical services increases, its growth rate has been significantly higher than that of the global market in recent years.

China's in vitro diagnostics market size has grown from 42.8 billion yuan in 2015 to 90.4 billion yuan in 2020, with a CAGR of 16.2%; it is expected that by 2025, China's in vitro diagnostics market size will grow to 198.8 billion yuan.

From the perspective of market segments, biochemical testing entered the country earlier, with a high localization rate and a relatively mature market; while immunodiagnosis with chemiluminescence technology as the core, and molecular diagnosis with tumor-targeted drug companion diagnosis as the main application , and POCT rapid diagnosis, which are segments with large market space and high growth potential in the IVD sub-industry.

After the COVID-19 epidemic, the level of public health diagnosis and treatment has been further improved, and immunodiagnostics and molecular diagnostics with low localization rates are expected to usher in new development opportunities.

2.1.1 The growth rate of the chemiluminescence market is higher than that of the IVD industry, and there is a large space for domestic substitution

Chemiluminescence is the mainstream technology of immunodiagnosis. Due to the characteristics of no radioactive contamination, automation, high sensitivity, and high specificity, it has gradually replaced enzyme-linked enzyme linkage. Immunology technology has become one of the highest-growing sub-industries in the field of in vitro diagnostics.

China Chemical Luminescent immunodiagnostics market size was approximately RMB 22.06 billion in 2019, and is expected to grow to RMB 63.3 billion in 2025, with an annual compound growth rate of 15.1% during the period, which is higher than the overall growth rate of the in vitro diagnostic industry.

The localization rate of China's chemiluminescence market is relatively low. Imported brands represented by Roche, Abbott , Siemens , Beckman occupy the main market. In 2019, the market share of domestic manufacturers was approximately 24%, and there are still Lots of room for growth.

At present, the leading companies in domestic chemiluminescent immunodiagnosis include New Industry, Antu Biotechnology , Mindray Medical , Mike Biotechnology , Yahuilong, etc. However, the market share of a single company is not high, so it is difficult to control the future. Companies with core technologies, high product quality, and strong channel capabilities still have a lot of room for growth.

2.1.2 The molecular diagnostic market has been significantly driven by the epidemic, and there is still a lot of room for growth.

The most important technologies for molecular diagnosis currently include PCR and gene sequencing technology:

1) China's PCR diagnostic market has developed rapidly, and the market size has rapidly increased from 23.7 in 2015. billion increased to approximately 5.93 billion yuan in 2019, with a CAGR of 25.8%. The COVID-19 epidemic in 2020 has brought huge testing needs, and China's PCR industry has experienced rapid growth. Calculated at ex-factory prices, the market size is expected to exceed 10 billion yuan in 2020.

The epidemic has driven a large number of PCR instruments to be hospitalized, and with the gradual normalization of nucleic acid testing , the PCR diagnostic industry will enter a new stage of development. The PCR diagnostic industry is expected to maintain a double-digit growth rate, with the market size reaching approximately 18.49 billion yuan in 2025, and a CAGR of approximately 20.9% from 2019 to 2025.

2) In the gene sequencing industry, due to the high cost of a single test, early applications were limited to scientific research fields; with the popularity of second-generation sequencing, the scope of clinical applications continues to expand.

According to Chishi Consulting data, the size of the diagnostic gene sequencing market in 2019 was approximately 2.13 billion yuan. With the successive launch of domestic gene sequencing platforms and the increasing awareness of the clinical application of gene detection , the market size is expected to increase rapidly. It is expected that China's gene sequencing diagnostic market will reach 5.37 billion yuan by 2025, with a CAGR of 18.8% from 2020 to 2025.

Similar to the chemiluminescent immunodiagnostic market, China's molecular diagnostic market is dominated by imported brands, with domestic brands rapidly following suit. In the relatively mature PCR industry, the overall market share of domestic brands is 60%, but the localization rate of reagents is high and the localization rate of instruments is low; the overall localization rate of gene sequencing is very low, including sequencing instruments, consumables, and reagents. alternative opportunities.

.2 The market for in vitro diagnostic raw materials is still a blue ocean. Domestic manufacturers have emerged and domestic substitutes are expected.

Benefit from the rapid development of the downstream in vitro diagnostic industry, the demand for upstream raw materials continues to be strong, and the industry is booming. At the same time, due to the wide variety of products and high customer stickiness, the industry is relatively fragmented. Overseas companies have occupied the main market for many years, and domestic leading companies have great room for growth in the future.

2.2.1 The in vitro diagnostic raw materials industry has large space and rapid growth

In vitro diagnostic raw materials broadly include bioactive/non-bioactive materials used to prepare diagnostic reagents, and components required for the development of diagnostic equipment.

In vitro diagnostic reagent raw materials refer to the reaction system raw materials used for biochemical, immunological or molecular diagnostic reagents, including active reagents participating in the core reaction system such as antigens, antibodies, and diagnostic enzymes, as well as magnetic beads that provide reaction carriers and signal systems, NC membrane, luminescent reagents and other raw materials.

The stability and reliability of the quality of raw materials are related to the quality of the product, and the quality of the product is related to the accuracy of the test results, thus affecting the clinician's judgment and subsequent treatment plans. Therefore, raw materials affect the whole body. They are the source of the entire diagnosis and treatment chain and are of vital importance.

Benefiting from the rapid development of the downstream IVD industry, the domestic upstream diagnostic raw material industry maintains rapid growth, with a CAGR of 25.9% from 2015 to 2019, a market capacity of 10 billion yuan in 2020, and an expected CAGR of 18.6% from 2020 to 2024, with a market size of 200 billion in 2024. billion.

According to our previously released industry in-depth report " Biological Reagents , Set Sail", we estimate that the global diagnostic raw material market capacity in 2020 (RMB) = 800 billion diagnostic market * 65% diagnostic reagents * 15% raw materials * 75% activity Raw materials = 58.5 billion yuan; CAGR is expected to be 6.9% from 2020 to 2026, and the market size in 2026 will be approximately 87 billion.

2.2.2 Competition in the in vitro diagnostic raw material market is fragmented and still a blue ocean

At present, the global in vitro diagnostic reagent raw material market is prominently characterized by numerous participants, small individual scale, and highly fragmented industries. Even companies like Feipeng Biotech, HyTest, The global market share of leading companies such as BBI Solution and Meridian is only about 5%, while a large number of small and medium-sized laboratories occupy a place in the industry by supplying several special projects.

At present, the localization rate of the domestic diagnostic raw material market is low. In 2019, domestic production accounted for only 12%. Among them, Feipeng Biological, the largest Chinese product brand, has a market share of only 3.3%, and there is still broad space for such products to go overseas. Domestic There is huge growth potential for related companies.

The inherent characteristics of the upstream raw material industry have created a fragmented competitive landscape in the industry:

1) Technical level: There are many types, easy to enter, but difficult to scale.

Because almost all downstream detection reactions are involved, the development and preparation of antigens, antibodies and diagnostic enzymes require complex and diverse technical platforms and technologies. It is difficult to have multiple technical platforms at the same time, thus forming high barriers. For example, antibody preparation technology includes polyclonal antibody preparation technology, hybridoma antibody preparation technology and genetically engineered recombinant antibodies. There are many kinds of raw material products, Know how there are many. Some well-known overseas manufacturers can form unique advantages in a certain field after years of accumulation, but it is difficult to master them all.

2) Commercial level: Upstream and downstream are tightly bound, and industrial customers are highly sticky.

According to the " In Vitro Diagnostic Reagent Registration and Filing Management Measures " Chapter 5, Section 1, Article 78: Registered second and third class in vitro diagnostic reagent products, their design, raw materials, and production processes If there are substantial changes in the in vitro diagnostic reagents, scope of application, usage, etc., which may affect the safety and effectiveness of the in vitro diagnostic reagents, the registrant shall apply to the original registration department for registration change procedures; if other changes occur, the registrant shall apply to the original registration department within 30 days from the date of change. Registration department filing.

Changes in core raw materials require re-conducting non-clinical research, clinical research and product registration. In addition to those listed in the "Catalogue of In Vitro Diagnostic Reagents Exempted from Clinical Trials", the reaction principle is clear, the design is finalized, and the production process is mature. The same type of in vitro diagnostic reagents on the market have been used clinically for many years and have no records of serious adverse events. Products that do not change their regular use can be exempted from clinical use.

This makes IVD companies more cautious in selecting upstream raw material suppliers, especially key raw materials such as antigens and antibodies. The cost of replacement is very high and once determined, they will not be changed easily. Therefore, IVD companies usually maintain stable cooperative relationships with upstream raw material suppliers.

2.2.3 Diagnostic raw material industry trend: strong demand for domestic substitution

1) Technological progress has become a necessary guarantee for domestic substitution: Domestic biological reagent companies were generally established after the 20th century, later than foreign companies, but the gap is gradually narrowing. As product quality continues to improve and product types continue to enrich to meet customer customization needs, the popularity of domestic brands is gradually increasing.

2) Domestic substitution is of great significance to downstream strategies: Since upstream raw materials play a decisive role in the quality of end products, it is crucial to give control of upstream raw materials to domestic manufacturers.

3) black swan events such as the epidemic and international relations accelerate domestic substitution: The epidemic and Sino-US trade friction have led to instability in the international supply chain, and the surge in demand has objectively pushed some production capacity to be transferred domestically, accelerating domestic substitution.

Feipeng Bio is an industry-leading in vitro diagnostic overall solution provider. It can currently provide different products and services such as "core bioactive raw materials + overall reagent development plan + innovative instrument platform" The solution covers biochemical detection, fluorescence quantitative PCR, , chemiluminescence, fluorescence POCT, molecular sequencing and other detection platforms.

continues to expand the boundaries of the market, build platforms and ecology, and has a huge future space. company has gone through three stages of development, from raw materials to overall solutions, covering a wide range and providing complete products and services. The current product system includes more than 1,300 raw material products, more than 80 independently successfully developed reagent solutions, and 4 instrument products that have reached mass production conditions, laying a good foundation for the company's sustainable development.

.1 The leading position in raw materials is solid, with obvious advantages in category and scale.

Diagnostic reagent raw materials are rich in variety: company takes diagnostic reagent raw materials as its cornerstone business. After two decades of development, it has built a complete core technology platform for bioactive raw materials, comprehensively Covering mainstream raw material screening and testing platforms such as immunology, molecules, and biochemistry, it provides more than 1,300 product categories, and is a technologically leading supplier of diagnostic raw materials in the industry.

Diagnostic raw materials have a leading position and significant scale advantages: Feipeng Biotech’s raw material business has been in a leading position in the industry for many years. In the past two years, due to the rapid research and development and continuous iterative upgrades of raw material products related to COVID-19 testing, raw material business revenue has continued to grow rapidly.

According to the statistics of Chishi Consulting, the market size of China's diagnostic raw materials in 2019 was 6.29 billion yuan, and the company's domestic revenue of in vitro diagnostic raw materials was 205 million yuan. Based on this, its market share is estimated to be about 3.3%; at the same time, according to Frost & Sullivan statistics , Chinese brands account for about 12% of China's diagnostic raw materials market. Referring to this ratio, Feipeng accounts for about 27.5% of the market share among domestic brands in China's in vitro diagnostic raw materials market.

company has focused on the field of raw materials for many years, and its raw material business accounts for the highest proportion all year round.

Among peer companies, due to different strategic positioning and product layout, most companies are not as focused on the field of in vitro diagnostic raw materials as Feipeng. Among them, Novozan and Kangwei Century focus on molecular enzymes and other raw materials for molecular diagnosis; Yiqiao Shenzhou is engaged in the production of antibodies and recombinant proteins. Its antibodies are mainly used in the research and development and production of reagents. During the COVID-19 period, due to large overseas orders, revenue There has been a surge; Nanotechnology’s diagnostic raw material-related products include magnetic beads, latex microspheres, fluorescent microspheres and other microsphere materials. Due to the late layout and small scale, they will only contribute 4% of total revenue in 2021.

.2 The overall solution of instruments and reagents broadens the growth boundary

Since the company established the development strategy of overall solutions in 2017, it has continuously promoted the coordinated development of open instrument platforms, reagent solutions and reagent raw materials. Empower the in vitro diagnostic industry chain with an open platform, provide diagnostic industry customers with overall diagnostic solutions that meet different application scenarios, help customers complete product development and market supply efficiently and economically, and promote cost reduction and efficiency improvement in the entire industry.

3.2.1 The instrument solution has achieved initial results, and multiple detection platforms are moving forward

At present, chemiluminescence is mostly a closed detection system, that is, the instrument and reagents must use the same manufacturer's products.

Due to the large number of testing items, it is often difficult for a single manufacturer to achieve full menu coverage. Medical institutions usually need to configure instruments from different manufacturers to ensure full coverage of testing items, resulting in additional expenses and burdens.

Therefore, the market has actual demand for a compatible, scalable, full-menu detection platform. In terms of in vitro diagnostic instruments,

has deployed instrument platforms such as chemiluminescence, high-throughput gene sequencing, POCT molecular diagnosis, and fluorescence immunoassay, and uses an open operation model to connect upstream developers and downstream users to accelerate technology and product innovation. and iteration to meet the urgent needs of many in vitro diagnostic companies and end users.

Among them, the chemiluminescence instrument developed and produced by the holding subsidiary Yingkai Biotechnology has been mass-produced and sold in 2020, with sales revenue growing rapidly; the holding subsidiary Runpeng Biotechnology has completed the registration inspection of the first mass-produced PCR analyzer model and is waiting for it. The registration certificate was approved; the wholly-owned subsidiary SequLITE has completed the research and development of the first desktop mid-low-throughput gene sequencer functional prototype, and is currently testing and optimizing the beta model in the commercialization stage.

The main performance indicators of the company's mass-produced medium and low-flux chemiluminescence instruments are at the leading level among similar products. 183 units and 1,088 units were sold in 2020 and 2021 respectively. The revenue from instrument solutions increased from 25 million yuan in 2020 to 2021. 103 million yuan in the year.

As of the end of 2021, the company has signed chemiluminescence instrument cooperation agreements with more than 100 customers, 16 of which are long-term cooperative customers; according to the sales of domestic chemiluminescence instruments in 2021, the company's instrument business still has considerable room for growth.

3.2.2 The reagent solution is in its infancy, and there is a lot of room for growth in conventional business.

In terms of in vitro diagnostic reagent solutions, the company focuses on the development of semi-finished products for chemiluminescence, molecular diagnostics and biochemical diagnostic reagents, and provides customers with reagent development solutions. At present, More than 80 types of reagent solution reserve projects have been successfully developed, some of which are of high level. The

reagent solution has just started. The main product is the semi-finished product of the new coronavirus detection reagent (lyophilized enzyme raw material is the core component). Since it does not require cold chain transportation, can be exported overseas at room temperature and sells well overseas. In 2021, the revenue from COVID-19 products of reagent solutions will be 389 million yuan, and the regular business will be 20 million yuan. The COVID-19 business has played a very good role in demonstrating the regular business. Several projects in the regular business are in the research status, and there is still a lot of room for the future.

3.2.3 The three businesses work together to significantly increase the platform value

1) Raw materials are the "core" of reagents. The company's deep raw material development experience and rich raw material project reserves provide a solid foundation for reagent development and promote reagent development efficiency. Improvement; at the same time, during the reagent development process, raw materials are screened and adapted, and mature reagent projects will simultaneously drive demand for raw materials.

2) The company's chemiluminescence instruments and chemiluminescence reagents have good compatibility. After the reagent project is stable and mature, it is expected to realize linked sales and provide it to customers in the form of an overall solution of raw materials, instruments and reagents to better satisfy customers. One-stop shop for technology and product needs.

3) The company supplies chemiluminescence instruments to third-party reagent development teams. After third-party independent developers successfully develop reagents on the company's instrument platform and form large-scale sales, it is expected to drive demand for raw materials; at the same time, third-party independent developers will start work with the company Cooperative marketing and mutual customer referrals are expected to further promote the company's sales of instruments and raw materials in the future.

.3 Outstanding R&D innovation capabilities, continuous improvement of brand and channels

The company's R&D expenses and R&D expense rate are at the leading level in the industry: before 2020, the company's R&D expense rate was close to 40%, much higher than peer companies; in 2020 and 2021 In 2017, due to the surge in demand for raw materials brought about by COVID-19 testing, revenue grew rapidly, resulting in a decrease in R&D expense ratios. However, in terms of absolute amounts, it was still ahead of its peers. The company's research and development expenses will reach 185 million yuan in 2021, a year-on-year increase of 65%.

The company attaches great importance to the training and construction of technical teams: As of the end of 2021, the company has 381 R&D personnel, accounting for 38.92%, which is at the leading level in the industry; the talent team is reasonably and stable, and the core personnel are leading technical talents in this segment. , is the supporting force for core technology research and industrial application.

company has a complete intellectual property protection system: company attaches great importance to the intellectual property protection of and . Currently, there are more than 520 authorized patents and patent applications (including public and non-public patents); according to the statistics of Smart Bud patent search database, As of the end of 2021, the company has disclosed 383 authorized patents and patent applications, including 322 invention patents. The total number of patents and invention patents is far ahead of other well-known peer companies.

COVID-19’s rapid response reflects the company’s R&D strength: relies on profound technological accumulation, the company quickly developed COVID-19 raw material products to meet market demand; the company’s COVID-19 product line has a wide layout, a rich number of products, and outstanding upgrade and iteration capabilities, which can quickly Respond to market changes and continue to launch products that meet different customer needs.

As of the end of 2021, a total of 296 types of antigens and diagnostic enzymes and 69 types of antibodies have been launched, covering all molecular, immune, biochemical and other platforms, and are in a leading position in the market.

At present, the company's new coronavirus antibody has been upgraded to the fourth generation product, with continuous improvement in sensitivity and specificity. It can not only meet customers' R&D and production needs in a timely and rapid manner, but also enable customers' kits to continuously iterate to improve accuracy and maintain core competitiveness.

brand advantage is industry-leading, and industrial customers are tightly bound: In the past two years, the revenue of Feipeng Biotech's top five customers has grown rapidly, and the revenue share of the top five customers has also increased year by year. Consider that on the one hand, the COVID-19 products have brought about the accumulation of large orders; on the other hand, as the company's brand awareness has increased, downstream industrial customers have become more sticky with the company, and their repurchase willingness and order amount have increased.

Domestic and foreign marketing systems have gradually improved, and market coverage has been continuously improved: As a leading domestic enterprise, the company has broken the long-term monopoly of foreign brands in the field of upstream diagnostic raw materials, achieved localized large-scale supply of diagnostic raw materials and supplied them to developed regions in Europe and the United States. export sales. It has won the trust and support of more than a thousand in vitro diagnostic companies and research institutions around the world, and its business covers approximately 40 countries and regions on six continents.

's overseas sales revenue accounted for more than 34% in both 2020 and 2021, which is an increase from 2019. On the one hand, it is mainly due to the continuous improvement of the company's overseas market layout and the gradual improvement of brand awareness. The company's products are more favored by overseas customers. On the other hand, due to the impact of the global new crown epidemic, the company's exports of reagent raw materials and reagent semi-finished products have increased significantly.

The funds raised will be used for the development of the company's main business, including expanding the company's product production capacity, improving product upgrade iterations and new product development capabilities, building an R&D center and conducting forward-looking research, and building a marketing network. and other projects; at the same time, the company plans to supplement working capital to cope with the working capital needs after business growth.

In vitro diagnostic reagent core raw material construction project: This project is expected to have a total investment of 530 million yuan. It plans to build a new production and R&D site with a planned construction period of 3 years. It includes two aspects: First, expand raw material products such as antigens, antibodies, and enzymes. production capacity to enhance the company's core raw material production capacity; second, iteratively upgrade existing raw material products and promote the independent development of new products, enhance the independent development capabilities of raw material products, and further enrich the product pipeline.

In vitro diagnostic instruments and supporting reagent solutions R&D and production project: This project is expected to have a total investment of 876 million yuan and a construction period of 3 years. It is planned to build a new production and R&D site for in vitro diagnostic instruments and reagent solutions, and expand chemiluminescence instruments. As well as the production capacity of semi-finished reagents such as chemiluminescence, molecular diagnostics, and biochemical diagnostics, we can meet the growing market demand, enhance core competitiveness, and consolidate our industry position through enriched product categories and innovative technical support.

R&D center technology platform construction project: This project is expected to have a total investment of 260 million yuan and a construction period of 3 years. It plans to build its own R&D center to promote the development of immune platforms and molecular platforms and conduct forward-looking research. After the completion of the

project, it will further enrich the company's technology platform, enhance the overall research and development level, promote advanced technology reserves, accelerate product upgrading, and thus more efficiently meet customer application needs and ensure the company's technical advantages and product competitiveness.

marketing network construction project: This project is expected to have a total investment of 195 million yuan and a construction period of 3 years. It will be deployed in 8 regions including Shanghai, Beijing, India, Brazil, Africa, Wuhan, Suzhou, Qingdao. Established sequencing, chemiluminescence display and computer verification laboratories, totaling 1,600 m2; marketing outlets have been set up in 12 regions including Shanghai, Beijing, India, South Korea, Brazil, the United States, Germany, Africa, Zhejiang, Jiangsu, Guangzhou and Wuhan, totaling 1,400 m2. The company plans to acquire the project land through leasing.

➢ The risk of performance fluctuations caused by reduced demand for COVID-19 related products The global COVID-19 epidemic has been widely controlled and effective treatments have emerged. There is a risk of subsequent decline in demand for COVID-19 research and testing, which may lead to The demand for COVID-19 detection-related antigens, antibodies, and enzyme raw material products has declined.

➢ Risks of intensified market competition With the continuous improvement of domestic technology level, the number of companies in the biological reagent industry has increased, and industry competition has intensified, which may affect product prices and reduce the company's profit level.

➢ Risks of international trade friction The biological reagent industry is crucial to the life science field. The intensification of Sino-US trade friction may restrict Chinese companies' export of biological reagent products overseas and affect the company's overseas layout.

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