(Producer/Author: CITIC Securities, Chen Zhu, Han Shitong, Wang Kaixuan)
Company Overview: The leading "one-stop" biological reagent and technical service platform
deeply cultivates R&D and technical services, and builds a leading domestic biological reagent industry
Yiqiao Shenzhou was established in 2016 and was listed on the Shenzhen Stock Exchange in 2021. It is a biotechnology company engaged in the research and development, production, sales and technical services of biological reagents. It is committed to providing high-quality biological reagent products and high-level technical services to global pharmaceutical companies and life science research institutions. The company's main products include recombinant proteins, antibodies, genes, and culture media. In addition, it also provides bioanalytical testing services and selects candidate clinical drugs for pharmaceutical companies and biotechnology companies. According to the company's 2021 annual report, Yiqiao Shenzhou currently produces and sells more than 52,000 spot products, including more than 6,500 recombinant protein reagents and about 14,000 antibody reagents, of which more than 4,900 monoclonal antibodies. After years of product research and development and marketing promotion, its customers have covered various domestic and foreign biological research and development units such as universities, research institutes, pharmaceutical research and development enterprises. With its comprehensive product structure and high-quality product quality, Yiqiao Shenzhou provides all-round product and service support to many customers in the basic research of life sciences, pharmaceutical development, production quality control and other aspects, and has become one of the leading technology companies in the biological reagent industry in the industry.
Yiqiao Shenzhou was separated by Shenzhou Cell Biotechnology Co., Ltd., and after the separation, it focuses on the biological reagent business. The parent company Shenzhou Cell Biotechnology Co., Ltd. was established in 2007. It supports Shenzhou Cell's biopharmaceutical business through the profits of its reagent business. Therefore, the research and development and market investment in the reagent business are limited. As multiple biological drug products of Shenzhou Cell enter the clinical research stage, investment in R&D and production lines has grown rapidly, and the surplus of the reagent business cannot meet the financial needs of the biological drug business. In view of the different development problems faced by the reagent business and the biopharmaceutical business, Shenzhou Cell Biotechnology Co., Ltd. decided to separate the two types of businesses. In 2016, the parent company conducted separation and separation, and after the separation, they were Shenzhou Cell and Yiqiao Technology respectively.
Founder of the company Xie Liangzhi Ph.D., has a technical background and has formed a professional team to engage in the research and development and production of biological reagents. The company's chairman, Dr. Xie Liangzhi, graduated from the Department of Chemical Engineering at MIT. He has served as a senior engineer of and researcher of , a researcher of in the United States. In order to solve the problem that my country's biological reagents rely mainly on imports and have high prices, Dr. Xie Liangzhi founded Beijing Yiqiao Shenzhou Biotechnology Co., Ltd. in 2007. By forming an independent team specializing in the research and development and production of biological reagents, he established a complete set of key technology platforms for protein and antibody biological reagents, and developed a series of biological reagent products. As of December 2021, Xie Liangzhi directly held 2.12% of the company's shares and indirectly controlled 50.42% of the company's shares through Lhasa Eliq, controlling a total of 52.54% of the company. The shareholding ratio is relatively high, it is deeply bound to the company's interests, and has strong control over the company.
The company's core team has strong professional background and outstanding R&D and management capabilities. The company has a R&D team with rich experience, high level, reasonable talent structure and strong professional and technical capabilities. It brings together experts and talents in the fields of immunology, cell biology, bioengineering , and other fields, providing strong talent guarantees for the company's new product research and development and technical services. The company's core technical team has obtained master's or doctoral degrees in related disciplines such as life sciences and medicine, and has many years of research experience. The core management team has also held management positions in well-known pharmaceutical companies and has rich professional experience. For example, Zhang Jie, general manager of the company, is a PhD in Neuroimmunology at the Peking University School of Medicine, , and has worked in the Einstein Medical School of Medicine, Columbia University School of Medicine, and the Feinstein Medical Institute of the United States. He has a total of 6 years of experience in immunology research.
Company is based on its own comprehensive production platform, continuously expanding its business areas.The company has developed tens of thousands of biological reagents through independent research and development of a series of comprehensive and efficient core technology platforms, which not only covers basic scientific research fields such as molecular biology, cellular biology, and immunology, but also provides channels for purchasing biological reagent products and related technical services for innovative drug research and development to meet the market's demand for biological reagents. According to the company's 2021 annual report, the company currently produces and sells more than 52,000 spot product types, of which more than 6,500 recombinant proteins, including more than 4,500 human cells express recombinant proteins, which can fully meet customers' needs for recombinant proteins that are close to the structure and properties of human natural proteins. In addition, the company can provide about 14,000 antibodies, about 32,000 genetic products and 16 culture media, covering multiple fields of life science research. Through continuous product and technological innovation and development, the company has continuously expanded its segments in life science research, medical research, new drug research, laboratory research, food safety and agricultural science and other business areas, providing a wide range of high-quality biological reagent products to many customers at home and abroad.
Relying on its advantages in protein and antibody research and development and production, the company can also provide customers with personalized technical support services. Since the research fields involved in basic research in life sciences and drug research and development are widely distributed and have a variety of application scenarios, there are many types of demands for various types of biological reagents, and the existing biological reagent database on the market cannot meet all their needs. Therefore, the company provides customized services such as recombinant protein expression purification, antibody development and production to scientific research institutions and pharmaceutical research and development and biotechnology companies to meet customers' personalized needs.
During the epidemic, new crown business has increased the company's performance, non-COVID business has vigorously developed
During the epidemic, the new crown business has increased the company's performance, and non-COVID business has accelerated its growth. The company's performance achieved a significant growth in 2020, mainly due to the fact that since the outbreak of the epidemic, the company has responded quickly and developed a series of biological reagent products such as epidemic virus-related proteins, antibodies, etc., which were purchased in large quantities by domestic and foreign customers. The company's operating income in 2020 reached 1.596 billion yuan, a year-on-year increase of 782.77%, and its net profit attributable to shareholders was 1.128 billion yuan, a year-on-year increase of 2996.89%, of which the contribution revenue of new crown-related products reached 1.342 billion yuan. In 2021, as the revenue contribution of epidemic-related products decreased, the company's operating income reached 965 million yuan, a year-on-year decrease of 39.53%, and the net profit attributable to shareholders was 720 million yuan, a year-on-year decrease of 36.15%. However, at the same time, global life science research is developing rapidly and market demand is strong. With the continuous increase in investment in R&D by various biomedical enterprises and scientific research institutions, the demand for biological reagent products continues to increase. In order to meet customer needs in a timely manner, the company relies on its own research and development and independently mastered core technology platform to continuously enrich products and services. Relying on a comprehensive and efficient core technology platform, it has developed tens of thousands of biological reagent products while providing services such as protein, antibody expression purification. Under strong downstream demand, the company's non-COVID-related business has flourished - in 2021, the company's non-COVID-related business revenue was 359 million yuan, a year-on-year increase of 41.41%, and the CAGR of non-COVID-type products from 2017 to 2021 was 37.31%.
recombinant protein and antibody products contribute absolute revenue, and CRO service and medium products are growing rapidly. The company's operating income mainly comes from recombinant proteins and antibody reagents. Among them, the company's explosive growth in 2020 was mainly due to the contribution of New Coronavirus -related products. By product, recombinant protein reagent achieved revenue of 476 million yuan (329 million yuan of new Coronavirus products), a year-on-year increase of 326.55%, accounting for 29.81% of the revenue that year; antibody reagent revenue was 1.038 billion yuan (1.01 billion yuan of new Coronavirus products), a year-on-year increase of 5088.24%, accounting for 65.03% of the revenue that year; the year-on-year growth rates of genes, culture medium and CRO services were 79.35%, 15.72%, and 92.98% respectively.In 2021, the revenue contribution of the new coronavirus-related businesses decreased significantly due to factors such as changes in the epidemic, prevention and control policies, and market competition. The company's recombinant protein reagents achieved revenue of 310 million yuan in 2021 (we expect that the new crown-related products will be RMB 113 million and non-COVID products will be approximately RMB 197 million, an increase of 34.37% year-on-year), a decrease of 34.94% year-on-year, accounting for 32.12% of the revenue that year; the antibody reagent revenue will be RMB 529 million (we expect that the new crown-related products will be RMB 492 million and non-COVID products will be approximately RMB 37 million, an increase of 31.16% year-on-year), a decrease of 49.04% year-on-year, accounting for 54.82% of the revenue that year; the year-on-year growth rates of genes, culture medium and CRO services will be -20%, 58.82%, and 76% respectively.
High gross profit margin product drives the company's comprehensive gross profit margin to maintain a high level. The comprehensive gross profit margins of the company's main business in 2019-2021 were 83.99%/96.88%/93.97%, of which the gross profit margins of the new crown-related businesses in 2020 were about 98.19%, and we expect about 98% in 2021; while the gross profit margins of the non-new crown-related businesses in 2020 were about 89.95%, and we expect about 88% in 2021. Among them, by product, the gross profit margin of recombinant protein, antibody and gene products is relatively high, reaching more than 80%; the gross profit margin of CRO service and culture medium products is between 60% and 80%.
The new crown epidemic has driven high performance growth, gross profit margin and net profit margin show an upward trend, and the period expense ratio continues to be optimized. From 2017 to 2019, the company's net profit margin was less than 30% and there was a downward trend, mainly due to the increase in sales expenses and management expenses; from 2020 to 2021, the net profit increased significantly, with an increase of 70.6%/74.6% respectively, mainly due to the significant increase in the company's operating income scale under the catalysis of the new crown. At the same time, the scale effect led to a significant decline in the period expense ratio and an increase in product prices. With the rapid growth of the company's revenue scale, the company's various expense rates have continued to be optimized. In 2019-2021, the company's sales expense rates were 24.37%/5.83%/8.44% respectively. The sharp decline in the sales expense rate in 2020 was mainly due to the impact of the new crown epidemic and the sharp increase in business scale. The year-on-year increase in the sales expense rate in 2021 was mainly due to the decline in the new crown virus-related businesses and the decrease in the company's revenue scale. The administrative expense ratio increased in 2021, which was related to the increase in the company's labor costs. From 2017 to 2021, the company's R&D investment continued to grow, and its growth trend matched its business scale. The company's financial expense ratio was relatively stable from 2017 to 2021, and the financial expenses were mainly foreign exchange gains and losses, which had little impact on the company's operating performance.
comprehensive gross profit margin occupies a leading position in the same industry. From 2018 to 2021, the company's average gross profit margin far exceeds the average comprehensive gross profit margin of other companies in the same industry. From 2019 to 2021, the company's gross profit margin was 84.00%/96.88%/93.97% respectively. On the one hand, the company has independently established a complete product library with a large scale, providing customers with a "one-stop" channel for procurement of biological reagents and services; on the other hand, the company has the ability to develop and prepare core raw materials, which can effectively improve R&D efficiency and output rate, and reduce R&D and production costs.
Company analysis: Master the R&D technology of core biological reagents, and the business ushers in a period of rapid development
independent technology platform and relatively closed-loop R&D system
Company R&D team has a deep technical background and rich R&D experience. The company has a high-quality and large-scale technical and management team, bringing together experts and talents in the fields of immunology, cell biology, bioengineering, etc. As of December 31, 2021, the company had 122 full-time R&D personnel, including 7 doctoral students and 109 undergraduate students or above. It is a R&D team with rich experience, high levels, reasonable talent structure and strong professional and technical capabilities, providing strong talent guarantees for the company's new product R&D and technical services. In addition, the company has established market and technical support teams in China, the United States and Europe, which can quickly grasp market trends and efficiently follow up customers' consulting and service needs for product selection, technical parameters and experimental development. The number of personnel in the company's R&D team is lower than the industry average, but its scientific research capabilities are relatively outstanding. From 2019 to 2021, the number of employees of the company's R&D team was: 89, 102, and 122.
The company continues to innovate technology and continues to empower core platforms.As a high-tech enterprise, the company always attaches importance to R&D investment in new products and new services. With continuous R&D investment, it continuously improves its innovation capabilities, optimizes existing technology platforms and develops new technologies and new products. The company's independently developed series of core technology platforms are comprehensive, efficient, cost-controllable, and highly universal. Relevant technology platforms can be applied to the research and development and production of different products of the same type, helping the company to develop high-quality and diversified biological reagents with high throughput, rapid, efficient and low-cost development and large-scale production. At the same time, it can support the company to fully and quickly meet customers' needs for diversified biological reagents and technical services. Its core technology is highly competitive and irreplaceable. The company's R&D expense ratio from 2018 to 2019 was higher than the average of other companies in the same industry, mainly due to the company's continuous improvement of competitive advantages, enriching product types, and maintaining high R&D investment; while the R&D expense ratio from 2020 to 2021 was lower than that of other companies in the same industry, mainly due to the impact of the new crown epidemic, the revenue of new crown-related products increased significantly.
As a high-tech enterprise driven by R&D, the company currently has 4 core technology platforms. Through years of R&D and technical accumulation, the company has established a core technology platform, which can efficiently develop diversified biological reagent according to market demand, and provide relevant technical services in a timely manner according to customer personalized needs. At the same time, based on the original technology and experience, the company continues to carry out technical platform optimization and product research and development, and continuously improves the core technology platform to maintain technological advancement and competitive advantages. As of the end of 2021, the company's core technology platform has successfully completed the development of more than 6,500 recombinant protein products, and the number has reached the international leading level.
Company has strong advantages in large-scale production and cost control. Large-scale production capacity is the key to price competition. With the high-throughput rapid shake flask system and large-scale production system, the company can achieve large-scale production of more than 100 liters. The scale effect is obvious, which can significantly save labor costs while improving the output rate, and reduce the material cost per unit of unit expansion production, further effectively control product costs. From 2018 to 2020, the company's unit cost of recombinant protein was reduced year by year, mainly due to the decrease in the proportion of labor costs, manufacturing costs, etc. relative fixed costs in costs.
's core raw material development and preparation capabilities constitute the technical support for the "internal closed loop". The company has developed a large-scale library of protein and antibody reagents, and has independently mastered the development and preparation of many key raw materials during the production process, and has been exported to meet internal self-use needs. Through the technical support of the "internal closed loop", the independent preparation of various core raw materials such as culture medium, protein antigen, and expression vector can be achieved, which greatly reduces external procurement and effectively reduces product research and development and production costs. Thus, while ensuring product quality, it has price competitive advantages, and can also reduce the impact of external uncontrollable factors on product development and production, ensuring the efficiency of product development and timeliness of supply.
Company has the industry-leading category number, and the overseas market is actively expanding. Before the separation of the company, it began to develop and produce recombinant protein biological reagents since 2007. R&D Systems, a leading company in the industry, was established in 1976 and PeproTech was established in 1988. With its comprehensive and efficient core technology platform advantages, the company has gained certain advantages in recombinant protein product types compared with well-known domestic and foreign manufacturers. As of the end of 2021, the company has independently developed a large-scale library of protein and antibody reagent products (spot products), of which more than 6,500 protein reagent products, about 14,000 antibody reagent products, and nearly 32,000 spot gene products, and can independently produce a variety of culture media for culturing HEK-293, insect cells, etc., among which the number of protein products is in the industry leading position.
High customer recognition in the company's product, it can support domestic and foreign researchers to conduct high-level scientific research in the field of life sciences and medicine.According to statistics from the company's official website, since 2017, the company's products have supported various scientific research institutions to publish more than 4,300 papers, including 80 papers published in the world's top journals in the life sciences field Science, Nature and Cell. As of the end of 2020, a total of 407 officially published or pre-published academic articles mentioned the use of Yiqiao Shenzhou's new coronavirus-related proteins, antibodies and other biological reagents or technical services, providing full support for the basic research of the new coronavirus.
Company has been continuously increasing its market development efforts. While maintaining existing customers, it vigorously develops new customers. Since the outbreak of the new crown epidemic in 2020, the company has quickly developed many recombinant proteins, antibodies and gene products related to the new coronavirus based on years of technical accumulation and experience in viral biological reagent product research and development, which has won the recognition of customers. Among them, the number of recombinant protein customers increased by 58.00% year-on-year, the number of antibody customers increased by 79.07% year-on-year, and the number of CRO customers increased by 61.36% year-on-year, and the company's brand influence continued to increase.
The company's sales team has continued to increase and has strong market competitiveness. The company's sales staff in 2021 was about 114, a year-on-year increase of 48%. In recent years, the company has built a high-quality domestic and foreign sales team, and the number of domestic and foreign sales personnel has grown rapidly. The sales team has a high proportion of people with postgraduate background in life science majors and has strong professional capabilities. They can provide timely and professional services for customers' product selection, use and after-sales process. The company's sales staff serves direct sales customers and assists dealers in technical support and product after-sales service. In 2019, the company's product sales were mainly direct sales, accounting for more than 60%, and the direct sales and distribution revenue accounted for stable; after the outbreak of the epidemic, the company's new coronavirus-related biological reagent products were directly purchased by downstream bio-customers in 2020, and the direct sales ratio increased significantly, with a growth rate of 1093.51%. Excluding the impact of the epidemic, the company's direct sales and distribution revenue growth rate exceeded 30%.
The global market is accelerating its layout, and the company's overseas revenue accounts for a high proportion. Basic scientific research and pharmaceutical research and development activities related to biotechnology in overseas markets are highly active and have a high demand for biological reagent products. The company's penetration rate of and sales base in overseas markets is relatively low. With the establishment of the company's overseas sales subsidiaries, the efforts to develop overseas markets have increased, and overseas sales revenue and proportion have steadily increased. The company's wholly-owned subsidiaries Sino US and Sino Europe were established in the United States and Germany in 2017 and 2018 respectively. As of 2020, the company had authorized dozens of dealers around the world; on November 29, 2021, the company's full-owned subsidiaries completed the establishment registration. From 2019 to 2021, overseas revenue accounted for 52.47%, 81.48% and 78.13% of total operating income. Overseas revenue gradually increased, and product advantages were recognized overseas. The company continues to enhance its global market competitiveness by relying on its own cost-effective advantages and the number of recombinant protein products. After the company went public, it continued to expand its overseas market and increased its market and sales team layout through mergers and acquisitions and reorganizations. By the end of 2021, the company's products have been sold to more than 90 countries or regions around the world.
New crown products demonstrate the company's strength. Under the catalysis of the epidemic, the company ushered in rapid development
quickly responded to the research and development demand for the new coronavirus biological reagents, and the revenue side ushered in explosive growth. In 2020, the company used its technological platform advantages in the research and development of recombinant proteins and antibody reagents and its years of accumulated experience in the research and development of viral reagent products to respond quickly and quickly developed more than 360 key reagent products such as related recombinant proteins, antibodies and genes that are urgently needed for the development of new coronavirus, providing key reagent support for the basic research of the new coronavirus, vaccine and drug research and development, and virus antigen and antibody detection. Among them, the company successfully expressed the important target protein of the new coronavirus on January 22, 2020, which was 11 days away from the date of the first announcement of the new coronavirus sequence (January 11), and became the first scientific research reagent of the new coronavirus recombinant protein that was announced on the market in the world. The company's sales revenue of new coronavirus products in 2020 reached 1.342 billion yuan, accounting for 84.07% of the total revenue in 2020.In 2021, the company completed a series of work from molecular construction to cell culture, protein purification, quality assurance in just 6 days for the Omicron mutant strain that triggered a new wave of the world's epidemic. It successfully produced the RBD protein reagent of the Omicron mutant strain RBD protein reagent, and provided it to relevant institutions for research as soon as possible. The company's sales revenue of new coronavirus products in 2021 reached 606 million yuan, accounting for 62.76% of the total revenue in 2021.
Company's new crown products are widely used in global basic and medical research, new drug and vaccine research and development, and clinical diagnosis. As the epidemic continues to repeat and the virus mutations more rapidly, the company continues to rapidly increase the research and development of new crown-related reagents to support scientific anti-epidemic. According to incomplete statistics from the company, the company's new crown-related products are used in the new crown research of scientific researchers in more than 50 countries and regions; relevant institutions have published more than 900 new crown academic papers, of which more than 170 papers have been published in Science, Nature, and Cell. The company continues to develop and produce new products, with a richer number of new crown products and a high product coverage. With the continuous deepening of research on the new coronavirus, new demand for biological reagents such as proteins and antibodies continues to emerge; at the same time, since the RNA virus is prone to mutation during the replication and transmission process, there have been multiple mutated strains of the new coronavirus, and different strains have different mutation sites, which have also put forward new demands for biological reagents. The company continues to develop new products based on market and research needs. In 2021, the company has newly developed and launched 323 new coronavirus-related biological reagents, covering 33 major mutant strains in full. The product coverage has always been a leading position among the mainstream biological reagent suppliers around the world, meeting customers' new diverse needs for various new coronavirus reagent products.
The company's stable product performance and comprehensive and timely product supply have effectively enhanced customer stickiness. Due to the certain differences in sequence and performance of different manufacturers' products, in order to minimize the volatility caused by differences in biological reagents during R&D, production, and quality control, industrial customers tend to continue to purchase new coronavirus biological reagents from the same company. During the epidemic, the company has fast research and development speed, timely supply, comprehensive product categories and high product quality, ensuring that customers can timely purchase various biological reagents needed for basic research on the new coronavirus, vaccine and drug research and development, and virus testing, etc. In the early stage of the outbreak, it has gained many industrial customers by relying on its rapid response speed. We believe that in the later stage of the epidemic, customers will continue to cooperate with the company in subsequent cooperation, and their performance is expected to remain stable. Continuous expansion of production capacity meets customer needs. The company's production capacity is mainly recombinant protein and antibody products. In 2018-2019, the company's production capacity was 16,400 liters, with a utilization rate of more than 70%. In order to adapt to the company's gradual expansion of production scale, the company introduced new production equipment in 2019 and completed equipment debugging in early 2020. With the rapid growth of production and sales of new coronavirus-related products in the company in 2020, some equipment were introduced in the second and third quarters of 2020 to moderately expand production capacity. The company's production capacity and capacity utilization rate in 2020 increased rapidly; at the same time, the reproduction of recombinant proteins and antibodies is expressed and secreted by cells. Under different processes and technical parameters, the quality of products produced per unit culture volume may vary greatly. Due to the concentrated sales of recombinant proteins and antibody products related to the new coronavirus, the company has carried out systematic optimization of production processes for a few popular products, which has promoted the continuous increase in the amount of reagents produced per unit culture volume. In addition, the output of antibody products per unit culture volume (by mass) in the cell culture production process is generally much higher than that of protein products. Therefore, the company's production capacity is sufficient to support the rapid increase in antibody production and meet customers' large demand for new coronavirus-related antibody products.
company plans to make full use of the existing protein and antibody technology platforms to develop protein and antibody diagnostic reagent raw materials in market demand, open up diagnostic raw materials product lines, break the monopoly of imported raw materials, and supply global diagnostic reagent manufacturers. Culture medium is an important raw material for the company to develop and produce biological reagents, and is also one of the company's products.The company plans to develop a dry powder culture medium product line based on existing technology and product accumulation to meet the needs of long-distance transportation and low-cost storage, thereby further improving the supply capacity of culture medium products and expanding the customer base.
Tasan Stone: Global Bioreagents and Research Service Leader Bio-Techne
Bio-Techne Corporation (NASDAQ:TECH) was founded in 1981 at Minneapolis , Minnesota, , formerly known as Techne Corporation. It currently owns a series of sub-brands such as R&D Systems, Novus Biologicals, Tocris, etc. The company has integrated and utilized multidisciplinary professional knowledge to provide overall solutions and implement strategic acquisitions to expand the scope of professional products, providing high-quality reagents, instruments, and customized biotechnology for life sciences and clinical diagnosis researchers. Production and testing services help to reveal the nature, diagnosis and progress of a specific disease. Service customers include pharmaceutical companies, biotechnology companies, scientific research institutions, hospitals, governments, etc. According to the company's 2022 financial report, as of the end of August 2022, Bio-Techne had more than 3,000 employees worldwide, with more than 500,000 products developed and more than 350,000 citations in journals.
Before 2018, Bio-Techne's market value grew steadily. Since 2018, the company's market value has shown a rapid growth trend. As of the end of August 2022, its market value has exceeded US$12 billion. Bio-Techne's operating income reached US$1.106 billion in fiscal 2022 and operating profit was US$297 million. The company provides the highest quality of protein-related reagents and services in the world, and its antibody research level is also among the forefront in the world. In the fiscal year 2013-2018, the compound growth rate of Bio-Techne's revenue was 15.67%, and in the fiscal year 2018-2022, the compound growth rate of operating profit was -2.72%. However, as the company adjusted and integrated various product business lines and departments after the merger and acquisition, synergies and scale effects gradually emerged, and the compound growth rate of the company's operating profit in the fiscal year 2018-2022 was 21.48%.
After 40 years of technological development and acquisition expansion, Bio-Techne further innovates its core product technology to fill the gaps in scientific research. The company's business is becoming more diversified. The reagents, equipment and related services it provides cover many fields of natural science. Currently, the company's main business is the production and sales of consumables, and its main service customers are pharmaceutical and biotechnology companies. The corresponding market of
Bio-Techne business is mainly divided into the following seven parts, with a cumulative corresponding global terminal market size of about US$14-20 billion. Specifically:
1. Proteomics research reagents: The total market size is about US$3 billion. Bio-Techne expects the market growth rate to be medium-digit growth. This part is Bio-Techne's main business, with a market share of about 10%, and a business growth rate of 9%~11%. The products of proteomic research reagents are mainly proteins and antibodies, including high-quality proteins with high biological activity, full-length proteins with natural protein structure, monoclonal antibodies with specific functions, etc., which can be used in cell growth differentiation and immunoassay related research. Bio-Tech currently offers approximately 6,000 proteins and 425,000 antibody variants to meet customer needs more comprehensively. Its brands include R&D Systems, Tocris, Novus, etc.
2. Proteomics Research Tool: The total market size is 2 billion to 3 billion US dollars. Bio-Techne expects the market growth rate to be medium single-digit growth. Bio-Techne's business growth rate in this aspect is about 15%, and its market share is close to 10%. The main products of proteomic research tools include immunoassays, Westernblot, and bioprocessing instruments, which can achieve rapid quantitative analysis, reduce manual operations and other interferences, and improve the accuracy of analysis results. It mainly provides corresponding products through the two brands R&D Systems and ProteinSimple.
3. Cell culture and gene therapy: With the development of cell therapy technology, the total market size is about US$3 billion to US$5 billion. Bio-Techne expects the market growth rate to reach 20%, while Bio-Techne's market share is only 1%. However, the company has a clear strategic plan and overall layout for this business, and the growth rate of future business development is expected to gradually increase. Bio-Techne expects the growth rate of this business to be about 50%.Using B-Mogen's transposon-based nonviral gene editing technology and Quad's cell activation technology, the company has a complete workflow for cell and gene therapy, with the ability to provide new products and technologies in this field.
4. Histopathology: The market size is between 1 billion and 2 billion US dollars, Bio-Techne expects the market growth rate to be medium-digit growth, Bio-Techne's market share is about 5%, and its business development speed exceeds 20%. Using RNAscope, a novel in situ hybridization (ISH) technology, to detect target RNAs in intact cells, provide high sensitivity and specific spatial information at single-cell resolution, the genomic analysis reagent of Advanced Cell Diagnostics is used for related research and development.
5. Liquid biopsy: The total market size exceeds US$3 billion, Bio-Techne is expected to grow by more than 20%, Bio-Techne's market share is about 1%, and its business is growing rapidly by about 50%. The company also regards it as its focus for future development. Using Exosome Diagnostics technology, it can complete relevant detections through exosome extraction, purification, amplification and analysis, and can also monitor the biological processes in which the cells are located in real time.
6. Molecular Diagnosis (Genomics & Oncology): The total market size is around US$1 billion. Bio-Techne expects the market growth rate to grow at low double-digit growth. The company's market share is less than 5%, but its business development speed exceeds 20%. After acquiring Asuragen in 2021, it has market-leading genetic vector screening and oncology diagnostic kit development technology, which is mostly used for clinical and research applications and molecular level control.
7. Diagnostic reagents: The total market size is US$1 billion to US$2 billion. Bio-Techne expects the market growth rate to be medium single-digit growth. Bio-Techne's market share can reach 10%, and its business growth rate is about 4% to 6%. With more than 40 years of experience in developing and manufacturing diagnostic reagents, the company has become a leading market supplier of clinical control, calibrators and kits. Its brands include R&D Systems, Biospecific, and Asuragen.
Before 2014, Bio-Techne was divided into two departments: biotechnology department and diagnostic department. After acquiring Protein Simple in 2014, it added a new protein platform department, increasing the company's main departments to three.
1. Biotechnology Department (Biotechnology). The revenue of the biotechnology department accounts for more than 60%. Its main business is to provide laboratory consumables to industrial research and academic researchers in the fields of biotechnology and biomedical life sciences. Its products include proteins, antibodies, immunoassays, flow cytometry products, intracellular signaling products and biologically active compounds.
2. Diagnostics Department (Diagnostics). The diagnostics department provides customers with a range of controllers and calibrators for diagnostic equipment and as verification tools, and also produces and sells other reagents included in the diagnostic kit. Bio-Techne acquired Bionostics in 2014 and Cliniqa Corporation in July 2015, further complementing and expanding its clinical diagnostic control solutions.
3. Protein Platforms. Bio-Techne has established this department since 2015 after acquiring Protein Simple. Its main business is to develop and sell patented products and consumables for protein analysis to simplify, quantify, and repeat the protein analysis process, strengthening the company's market position in the immunoassay market.
Since 2018, Bio-Techne has reorganized its business, recombining the previous three departments into two business departments: protein science and diagnostic genomics. It includes dozens of sub-brands such as R&D Systems, Novus Biologicals, Tocris, ProteinSimple, etc., covering many research content in the fields of protein and diagnostics. 1. Protein Sciences (Protein Sciences, revenue in fiscal year 2022 was 75.18%): Integrate high-quality purified protein reagents and protein analysis business to provide customers with more protein-based solutions. 2. Diagnostics & Genomics (Diagnostics & Genomics, revenue in fiscal year 2022 was 24.82%): Combining diagnostic reagents, instruments and detection methods, it covers the diagnostic product market in multiple aspects.
Protein Science Department
Protein Science Department is Bio-Techne's main revenue department, and its revenue share has reached more than 70% in the past four years.The operating income of the sector was US$832 million in fiscal 2022, an increase of 18.13% year-on-year. The department provides high-quality purified protein and reagent solutions, including cytokines and growth factors, antibodies, immunoassays, bioactive small molecule compounds, tissue culture reagents and T cell activation technologies. In addition, the department provides protein analysis solutions to provide researchers with efficient and simplified automated western blotting and multiple enzyme-linked immunosorbent assays (ELISA).
Diagnostics and Genomics Department
Bio-Techne's Diagnostics and Genomics Department's profit margin fluctuated significantly in recent years. In fiscal 2022, the department's revenue was US$275 million, a year-on-year increase of 20.68%. Its main business is the development and manufacturing of diagnostic products, including FDA-regulated quality control products, calibration products and clinical chemical quality control products, as well as providing other reagents to OEMs and clinical customers, and also developing and producing a range of clinical molecular diagnostic oncology testing products, as well as the production and sale of tissue-based in situ hybridization analysis for research and clinical use.
Review Bio-Techne's development history in the past 30 years, its main development strategy is to improve the competitiveness of core products, and to advance in acquisition business and global expansion, while paying attention to timely reorganization of resources. It is the correct choice of development strategy that has created Bio-Techne's success in the field of life science research. We believe that domestic bioreagent companies are expected to learn from and learn from Bio-Techne's successful experience in the future, and gradually develop from domestic bioreagent leading companies to global bioreagent leaders.
Development Strategy 1—Continuous Innovation of Core Products
In 2022, Bio-Techne's R&D expenditure was US$87.14 million, and the R&D investment ratio was 7.88%. The company will convert the continuous large-scale investment in R&D into high-quality products that will be the first to go public, improving the quality and measurement accuracy of existing products. In 2020, due to COVID-19, a large number of scientific research laboratories and research centers were closed, and Bio-Techne's revenue growth rate has decreased, but the company has also provided high-quality new solutions for COVID-19. The fully quantitative serum test it has developed can not only determine whether a patient has been exposed to the virus, but also determine the patient's immunity level. It is the most specific and accurate serum test at present. In the future, Bio-Techne also plans to vigorously develop an exosome detection platform for cancer diagnosis risk assessment to provide patients with a simpler home testing kit.
Development Strategy 2-Global layout and new business expansion
Bio-Techne expands its sales business and distribution channels globally to enhance its global influence and customer stickiness. Since its establishment of the China branch in Shanghai in 2007, it has actively expanded the Chinese market and signed strategic cooperation agreements with several Chinese companies after 2018. In fiscal year 2022, Bio-Techne's revenue in China reached US$112.44 million, achieving endogenous growth of 23%, accounting for 10.17% of the company's total business revenue.
At the same time, the company accurately controls market trends, uses its existing product portfolio to expand its products to new research fields, innovate and carry out cell and gene diagnosis business, and regards it as one of the company's main development directions in the future. Before 2018, Bio-Techne's product services mainly focused on protein. After 2018, with the emergence of revolutionary drug use of living cells as therapeutic agents, research on cell therapies targeting cancer and stem cell-based therapies has continued to increase. The company has seen the possibility of the development of its business in the bioprocessing and cell therapy market, and expanded its research content to the production of related reagents and analytical instruments. Since 2019, Bio-Techne has introduced new cell and gene therapy business departments and has enhanced its research capabilities through a series of mergers and acquisitions and R&D (Bio-Techne acquired Quad and B-Mogen in 2019 respectively. Thanks to Quad's unique immune cell activation system and B-Mogen's transposon-based non-viral gene editing technology, the company currently has a relatively complete cell and gene therapy process, which can provide powerful tools for cancer research, diagnosis and treatment.In the same year, the company established a joint venture with Fresenius Kabi and Wilson Wolf, which can provide the world's top bioreactors and the most advanced leukocyte separation equipment; in 2019, Bio-Techne invested about $50 million to build the most advanced GMP protein factory in Minnesota, which was officially opened in the first quarter of 2021. Currently, there are 61,000 square meters of facilities. After the factory is put into use, it can produce commercial GMP-grade proteins on a large scale, and can provide different types of products to meet the different needs of customers, and can also be used for clinical diagnosis and treatment, produce high-quality reagents and high-precision automated analytical instruments to promote the further development of the business. The company expects that the department's revenue will exceed $3 billion in the next five years.
Development Strategy 3—Timely reorganization based on company resources and strengthening the synergy between businesses
In the past decade, Bio-Techne has carried out two business reorganizations. After acquiring Protein Simple in 2015, based on the original biotechnology department and diagnostic department, the protein platform department was added to expand the business scope of the protein field and provide more customers with better protein research solutions. After the acquisition of Exosome Diagnostics in 2018, the company reorganized its original three departments into two departments: Protein Science and Diagnostics & Genomics, leveraging the advantages of each department more scientifically, bringing its diverse expertise and product portfolio advantages to the research and diagnostic fields, and providing the resources needed to promote life science research and support clinical breakthroughs. In summary, looking back at Bio-Techne's development history in the past 30 years, its main development strategy is to innovate R&D to improve the competitiveness of core products, continue to acquire and global expansion, and pay attention to timely reorganization of resources. As a leading "one-stop" biological reagent and technology platform in China, Yiqiao Shenzhou has a rich product library and is constantly deploying in the global market driven by R&D. It has strong medium- and long-term growth certainty. We believe that Yiqiao Shenzhou is expected to learn from and learn from Bio-Techne's successful experience in the future, and gradually develop from a domestic leading biological reagent company to a global leader in biological reagents.
Profit Forecast
is a leading one-stop supplier of biological reagents and technical services in China. Its main business includes recombinant proteins, antibodies, genes and culture media and other products. In 2020, the company's COVID-19 revenue has ushered in explosive growth. Considering that the revenue contribution of COVID-19 products will gradually weaken in the future, while the company's non-COVID business is expected to maintain rapid growth, we expect
① Recombinant protein: The company currently develops and produces more than 6,500 recombinant protein products, including more than 4,500 human cell-expressing recombinant protein products, which can fully meet customers' demand for recombinant proteins that are closest to the structure and properties of the human natural protein. In the future, the company will develop new drug target protein products based on market feedback and research hotspots, use the existing recombinant expression technology platform to carry out recombinant antigen products for diagnostic fields, etc. It is expected that the growth rate of the new crown business revenue in 2022-2024 will be -65.00%/-45.00%/-25.00% respectively, and the growth rate of the non-new crown business revenue will be 20.00%/42.00%/40.00% respectively;
② Antibody: The company currently develops and produces more than 14,000 antibody products, of which the number of monoclonal antibodies exceeds 4,900, which can cover multiple fields of life science research, and provide a "one-stop" channel for basic scientific research directions such as molecular biology, cell biology, immunology, developmental biology, stem cell research, and innovative drug research.Due to the large number of antibodies in the scientific research field and relatively dispersed number, the company will increase the number of antibody product development in the future to target scientific research needs; at the same time, the company plans to focus on developing specific antibodies that only recognize a certain virus in the next 1-2 years, as well as broad-spectrum antibodies that widely recognize mutations. It is expected that the growth rate of the new crown business revenue in 2022-2024 will be -75.00%/-45.00%/-25.00% respectively, and the growth rate of the non-new crown business revenue will be 35.00%/45.00%/42.00% respectively;
③ Culture medium: We expect that after the Taizhou factory is put into production in the future, the culture medium will enter large-scale production to continuously meet the market demand for high-end culture medium. It is expected that the growth rate will be -75.00%/ respectively, and the growth rate of the non-new crown business will be 35.00%/ respectively. 40.00%/32.00%;
④ CRO: The company continues to expand its technical service business field. We expect the revenue growth rate to be 30.00%/45.00%/42.00% respectively from 2022 to 2024.
In summary, the company's revenue in 2022-2024 is expected to be RMB 605/721/949 million, and its net profit is RMB 397/438/549 million, respectively.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
selected report source: [Future Think Tank].
