CXO industry includes CRO/CMO/CDMO, i.e., Contract Research and Development Service Organization, Contract Manufacturing Business Organization, Contract Research and Development and Manufacturing Business Organization, which, through the form of contract outsourcing, accepts the entrustment from the pharmaceutical enterprises or biotechnology companies to provide specialized research and development services in the process of drug research and development, and provide the development of the processes required for product production, It also provides process development, production of APIs and intermediates, and production of formulations.
CRO can be divided into two categories: preclinical CRO and clinical CRO. Preclinical CRO business is mainly for the drug preclinical research stage, including target identification, discovery and optimization of lead compounds, identification of drug candidates, animal testing and so on. Domestic A-share companies engaged in preclinical CRO business include WuXi AppTec, Kanglong Huacheng, Quantum Biologics, Medicilon, and Zhaoyan New Drug. Clinical CRO mainly focuses on the clinical trial stage of drugs, and A-share companies engaged in clinical CRO business in China include Tiger Pharmaceuticals, Boji Pharmaceuticals and so on. Domestic A-share companies engaged in CDMO/CMO business include WuXi AppTec, Kaleidin, Boten, etc. and some API companies.The core capacity of CRO business is the number of employees, and the core capacity of CDMO/CMO business is the number of fixed assets.
CXO industry boom continues to improve, mainly benefited from the global new drug R & D investment continues to grow at a high rate, affected by cost and other factors, overseas R & D outsourcing demand continues to shift to the Asia-Pacific region, the domestic drug policy to force drug companies to increase investment in innovative R & D. First of all, CXO industry revenue comes from Kaleidoscience, CDMO, CMO, and some API companies. First, CXO industry revenue comes from R&D expenditures of drug companies and biotech companies. In the past few years, the R&D investment of the world's top 30 drug companies has continued to maintain a growth rate of about 5%. And the willingness of biotech companies to invest in R&D mainly depends on their financing. 17-19 years, the U.S. healthcare industry investment and financing reached $17.7, $22.4 and $19.8 billion, a more significant growth than the average of $10-12 billion in the previous years. Secondly, the value of the existence of the CXO industry is, first of all, to help drug companies reduce costs in the process of drug development and production, so the CXO industry chain is bound to gradually shift to low-cost regions. According to Frost & Sullivan data, it is expected that the global share of North American CRO will drop from 50% in 2015 to 44.8% in 2021, while the share of Asia-Pacific will grow from 12.9% in 2015 to 19.1% in 2021. With the high growth in the number of domestic graduates with bachelor's degree and above, and the high growth in the number of highly educated talents, the CXO industry is expected to benefit from the domestic engineer dividend and keep shifting to the country. Finally, since 15 years, domestic pharmaceutical industry policies have been reformed to encourage innovation. Driven by the policy, the domestic pharmaceutical enterprises R & D expenditure continued to grow, gradually shifting from generic drugs to hard-to-mimic drugs, and then to innovative drugs, from me-too to me-better, and even FIC. CXO industry boom is expected to continue to benefit from innovative drug development.
Expand the remaining 53%
WuXi PharmaTech basic introduction:
We were founded in 2000, started in the chemical synthesis business, and since then has continued to expand the scope of business through mergers and acquisitions. The company was listed on the U.S. stock market in 2007, acquired AppTec Laboratory Services in the U.S. in 2008, listed on the New Third Board of Hopuen Pharmaceuticals, its chemical CDMO business, in 2015, and delisted from the U.S. stock privatization in the same year, and listed on the Hong Kong stock market of WuXi Biologics, its biopharmaceutical CDMO business in 2017, listed on the A+H stock market of WuXi PharmaTech in 2018, and listed on the New Third Board of Hopuen Pharmaceuticals in 2019. Three Board terminated its listing. WuXi AppTec's business is divided into four main segments: laboratory services in China, CDMO/CMO services, laboratory services in the United States, and other CRO services. In terms of business region, the U.S. revenue accounts for about 55%, Europe about 15%, and domestic business revenue accounts for about 25%.
China zone laboratory services are mainly preclinical CRO business, accounting for more than 50% of the revenue. This business includes small molecule compound discovery services and drug analysis and testing services. 20 years after the release of Suzhou PharmaTech's production capacity, the analytical testing business is likely to see faster growth.
Hopeful Pharma's CDMO/CMO business accounts for nearly 30% of revenue. According to Frost & Sullivan data, the global small molecule CDMO/CMO market was about $64.9 billion in 2018. The global small molecule CDMO/CMO market size is expected to reach USD 102.1 billion in 2022, with a CAGR of around 12%. And China's small molecule CDMO/CMO market is expected to maintain a rapid growth rate of nearly 20% in the future. According to the statistics and forecast of Southern Institute, the market size of China's CDMO/CMO industry increased from 13.8 billion yuan to 27 billion yuan from 2012 to 2016, and is expected to increase to approximately 62.6 billion yuan in 2021. Hequan Pharmaceuticals is a domestic leader in research and development capability and has the highest revenue scale in China's small molecule CDMO/CMO market, and according to the market scale projected by the Southern Institute, Hequan Pharmaceuticals had a market share of approximately 7% of the domestic small molecule CDMO/CMO market in 2018. The company's CAGR of CDMO/CMO business revenue is expected to exceed the industry growth rate from 2019-2021.
Laboratory service revenue in the U.S. zone accounts for about 12% or so. The U.S. zone laboratory business is mainly placed in AppTec, a wholly-owned subsidiary, and mainly includes cell, gene therapy CDMO business and medical device testing services. The global market size of cell, gene therapy CDMO is expected to reach US$3.6 billion in 2022, with a CAGR of around 25% from 18-22. The Chinese market is expected to reach $500 million by 2022.
Clinical CRO service revenue accounted for about 8% or so. WuXi AppTec's clinical CRO services include clinical trial services (CDS) and site management services (SMO).The CDS business is mainly conducted through KinderHoney and the SMO business is mainly conducted through Jinshi Pharmaceutical. According to Frost & Sullivan, China's clinical CRO market was approximately US$3.2 billion in 2018, and China's clinical CRO is expected to reach US$13.3 billion by 2023, with a CAGR of approximately 35% from 2019-2021. Currently, the Company's market share in China is less than 2%. Revenue from this business is expected to grow rapidly.