WuXi AppTec 603259 2021 Annual Report Notes

Original link: https://ljf.com/2022/06/12/1107/

In 2021, the company achieved operating income of RMB 22,902,385,100, a year-on-year increase of 38.50%.

During the reporting period, the net profit attributable to shareholders of the listed company increased by 72.19% year-on-year. Net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses increased by 70.38% year-on-year

Basic earnings per share and diluted earnings per share increased by 65.09% and 64.76% respectively over the same period of the previous year

Business situation discussion and analysis

During the reporting period, the company achieved operating income of RMB 22,902,385,100, a year-on-year increase of 38.50%. Among them, the chemical business realized revenue of RMB 14,087,220,200, a year-on-year increase of 46.93%; the testing business realized revenue of RMB 4,525,111,300, a year-on-year increase of 38.03%; the biology business realized revenue of RMB 1,985,092,500, a year-on-year increase of 30.05%; cell and gene therapy CTDMO The business realized revenue of RMB 1,026,401,200, a year-on-year decrease of 2.79%, and the domestic new drug research and development service department realized revenue of RMB 1,251,039,900, a year-on-year increase of 17.47%.

During the reporting period, the company’s revenue from US customers was RMB 12.146 billion, a year-on-year increase of 37.1%; revenue from European customers was RMB 3.719 billion, a year-on-year increase of 40.3%; revenue from Chinese customers was RMB 5.802 billion, a year-on-year increase of 40.0%; revenue from other regions Customer revenue was RMB 1,234 million, a year-on-year increase of 40.7%.

The company’s revenue from existing customers was RMB 21.295 billion, a year-on-year increase of 28.8%; revenue from new customers in 2021 was RMB 1.608 billion. Benefiting from the company’s continuous efforts in the global “long-tail customer” strategy and the continuous increase in the penetration rate of other customers, the revenue from the world’s top 20 pharmaceutical companies was RMB 6.733 billion, a year-on-year increase of 24.1%; the revenue from other global customers was RMB 16.170 billion Yuan, a year-on-year increase of 45.6%. The company’s unique positioning across the drug development value chain allows the company to “follow the molecule” and achieve greater synergies. Customers using the services of the company’s various business units contributed revenue of RMB 19.639 billion, a year-on-year increase of 36.8%.

Industry situation of the company during the reporting period

The company provides new drug R&D and production services for global pharmaceutical, biotechnology and medical device companies. It belongs to the pharmaceutical R&D service industry. Through its own R&D and production platform, the company empowers customers and helps customers to develop new drugs faster and better. The company’s main business covers CRO, chemical drug CDMO, cell and gene therapy CTDMO (contract testing, research and development and production) and other fields. At present, most pharmaceutical R&D service companies in the world focus on a certain stage of new drug R&D, such as preclinical CRO, clinical trial CRO, CDMO, etc. In addition, there are few “integrated, end-to-end” R&D service platforms including the company, which can provide customers with one-stop new drug R&D and production services. The “integrated, end-to-end” new drug R&D service platform can adapt to the drug R&D value chain, provide services to customers from the early stage of drug discovery, empower customers in terms of capacity and scale, and provide high-quality service quality and efficiency through high-quality service quality and efficiency. , to win the trust of customers, and in the process of continuous advancement of customer projects, from “following the development of projects” to “following the development of drug molecules”, constantly expanding services and achieving sustained growth.

According to the latest Frost & Sullivan report in June 2021, the global pharmaceutical industry R&D investment will increase from US$224.1 billion in 2021 to US$312.9 billion in 2026, with a compound annual growth rate of about 6.9%.

According to the Frost & Sullivan report, the R&D investment in China’s pharmaceutical industry will increase from US$29.8 billion in 2021 to US$55.1 billion in 2026, with a compound annual growth rate of about 13.1%.

According to the Frost & Sullivan report, the outsourcing ratio of China’s pharmaceutical R&D investment will increase from 39.4% in 2021 to 49.9% in 2026, and the global pharmaceutical R&D investment outsourcing ratio will increase from 43.0% in 2021 to 52.7% in 2026.

The business of the company during the reporting period

During the reporting period, the company provided services to more than 5,700 active customers from more than 30 countries around the world through 31 operating bases and branches around the world.

As at the end of the reporting period, the company had a total of 34,912 employees, of which 11,001 had a master’s degree or above, and 1,302 had a doctorate or equivalent.

Analysis of core competitiveness during the reporting period

The company has a large, diverse and loyal customer base. In 2021, the company added more than 1,660 new customers, serving more than 5,700 active customers from more than 30 countries around the world, covering all of the world’s top 20 pharmaceutical companies. During the reporting period, the world’s top 20 pharmaceutical companies accounted for about 29.4% of the company’s overall revenue.

Main operating conditions during the reporting period

In 2021, the company will realize operating income of RMB 22,902,385,100, a year-on-year increase of 38.50%. in:

(1) The chemical business (WuXi Chemistry) achieved revenue of RMB 14,087,220,200, a year-on-year increase of RMB 9,587,666,100 compared with the same period in 2020, a year-on-year increase of 46.93%, of which the service revenue of small molecule drug discovery (R) was RMB 6,167,477,200, a year-on-year increase 43.24%, the service income of process research and development and production (D&M) was RMB 7,919,743,000, a year-on-year increase of 49.94%.

(2) The testing business (WuXi Testing) realized revenue of RMB 4,525,111,300, a revenue of RMB 3,278,438,600 over the same period in 2020, a year-on-year increase of 38.03%, of which laboratory analysis and testing services revenue was RMB 3,045,155,600, a year-on-year increase of 38.93%. The revenue of clinical CRO and SMO was RMB 1,479,955,600, a year-on-year increase of 36.20%. Drug analysis and testing services excluding device testing saw a strong year-on-year growth of 52.12%.

(3) The biology business (WuXi Biology) realized revenue of RMB 1,985,092,500, a revenue of RMB 1,526,410,300 over the same period in 2020, a year-on-year increase of 30.05%.

(4) The cell and gene therapy CTDMO business (WuXi ATU) achieved revenue of RMB1,026,401,200, representing a year-on-year decrease of 2.79% to RMB1,055,821,100 in the same period in 2020.

(5) The domestic new drug research and development service department (WuXi DDSU) realized a revenue of RMB 1,251,039,900, a revenue of RMB 1,064,990,500 over the same period in 2020, a year-on-year increase of 17.47%.

During the reporting period, the company achieved a gross profit of RMB 8,310,129,500, an increase of 32.28% over the same period in 2020; of which the gross profit of main business was RMB 8,297,033,900, and the gross profit of other businesses was RMB 13,095,600. The gross profit margin of the main business was 36.27%, down 1.70 percentage points from the same period last year.

Revenue and Cost Analysis

During the reporting period, the company achieved a gross profit of RMB 8,310,129,500, an increase of 32.28% over the same period in 2020; the gross profit margin of the main business was 36.27%, a decrease of 1.7 percentage points over the same period last year. The negative impact of the sharp depreciation of the RMB compared with the same period last year on the company’s revenue and gross profit; (2) the increase in raw material prices caused by the increase in the price of bulk materials; (3) the impact of the exemption of social security fees during the domestic epidemic period last year.

R&D investment

Reasons for changes in research and development expenses: During the reporting period, the company’s research and development expenses were RMB 942,241,900, an increase of 35.91% over 2020. The company is committed to improving R&D capabilities, continuously increasing R&D investment, focusing on platform empowerment construction, including enzyme catalysis, flow chemistry, etc. And focus on investing in a series of new capacity building R&D activities such as TESSATM, PROTAC, oligonucleotide drugs, polypeptide drugs, conjugated drugs, cell and gene therapy, and resource sorting algorithm development.

Explanation on significant changes in profit caused by non-main business

Reasons for changes in investment income: During the reporting period, the company’s investment income was RMB 1,356,268,600, compared with RMB 606,231,200 in the same period last year. The increase was mainly due to the year-on-year increase in the company’s income from disposal of other non-current financial assets during the reporting period. Among them, the investment income obtained from the disposal of other non-current financial assets in the current period was RMB 1,341,948,200, and the accumulated unrealized gain from changes in fair value was RMB 1,081,344,300. The net effect of the total realized income on the current profit was RMB 260,603,900.

Industry Landscape and Trends

First of all, with the economic development of various countries around the world, the growth of the total global population, the increase in the degree of aging of the population, the advancement of science and technology, the increase in medical expenses and the continuous enhancement of public health awareness, the global pharmaceutical market is expected to continue to grow.

Secondly, the outsourcing ratio of large pharmaceutical companies has increased, and the demand of small and medium-sized pharmaceutical companies has continued to grow. The global pharmaceutical R&D, production and service industry is expected to maintain rapid growth. On the one hand, innovative drug R&D has the characteristics of high investment, long cycle and high risk. Under the double squeeze of low R&D rate of return and patent cliff, large pharmaceutical companies are expected to promote R&D projects more through external R&D service agencies, improve R&D efficiency and reduce R&D costs. On the other hand, small pharmaceutical companies, including small and medium-sized biotech companies, virtual companies and individual entrepreneurs, have become important drivers of pharmaceutical innovation. These small and medium-sized pharmaceutical companies do not have the time or sufficient capital to build their own laboratories and production facilities for their R&D projects, but need to obtain many different services to meet the needs of their R&D projects in a short period of time, so they will seek outsourcing of R&D and production Services, especially “integrated, end-to-end” R&D services, meet their R&D service needs from proof of concept to product launch. According to the latest Frost & Sullivan report in June 2021, the global pharmaceutical industry R&D investment will increase from US$224.1 billion in 2021 to US$312.9 billion in 2026, with a compound annual growth rate of about 6.9%.

Furthermore, China’s pharmaceutical industry has shifted from a strategy of focusing on imitation to focusing on innovation, and it is expected that R&D investment will maintain rapid growth. The continuous advancement of a series of policies such as the reform of my country’s drug and medical device review and approval system, the marketing licensee system (MAH), the consistency evaluation of generic drugs and volume purchases, and the negotiation of innovative drugs and medical insurance will drive the domestic market demand for innovative drug R&D and production to continue to grow. . According to the Frost & Sullivan report, the R&D investment in China’s pharmaceutical industry will increase from US$29.8 billion in 2021 to US$55.1 billion in 2026, with a compound annual growth rate of about 13.1%.

China’s pharmaceutical R&D service industry, especially platform-based companies with global new drug R&D and production service capabilities, is expected to benefit from the rapid growth of new drug R&D investment and outsourcing rates in China and around the world. According to the Frost & Sullivan report, the outsourcing ratio of China’s pharmaceutical R&D investment will increase from 39.4% in 2021 to 49.9% in 2026, and the global pharmaceutical R&D investment outsourcing ratio will increase from 43.0% in 2021 to 52.7% in 2026. At the same time, the report predicts that the market size of global outsourcing services provided by Chinese pharmaceutical R&D service companies (excluding macromolecule CDMOs) will grow from RMB 98.5 billion in 2021 to RMB 300.6 billion in 2026, with an average annual growth rate of about 25%. According to Frost & Sullivan’s latest market research report in June 2021, the Company’s market share ranking in the three market segments of China’s drug discovery outsourcing market, China’s preclinical and clinical outsourcing market, and China’s small molecule CDMO market is the No. 1 in China First, the market share of the global cell and gene therapy CDMO market segment ranks fourth in the world.

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