mid-year review | 8 cxo companies suffered losses in the first half of the year, when will the industry get out of the trough
2024-09-08
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the cxo (pharmaceutical r&d and production outsourcing) industry is regarded as one of the indicators of the prosperity of the biopharmaceutical market. over the past year or so, with the decrease in revenue from covid-19 projects and the slowdown in biopharmaceutical investment and financing, the industry's growth has slowed down. as the semi-annual reports of various companies have been disclosed, how are the industry's fundamentals performing?
taking the 29 cxo companies listed on the a-share market before june this year as the statistical objects, the net profit attributable to the parent company's shareholders declined in 20 companies, accounting for nearly 70%. among them, zhaoyan pharmaceutical (603127.sh), nanmo biopharma (688265.sh), ruizhi pharmaceutical (300149.sz), heyuan biopharma (688238.sh), medicilon (688202.sh), and boten pharmaceutical (300363.sz) declined by more than 100%.
in the first half of this year, eight companies suffered losses in net profit attributable to parent company shareholders, which is also the record with the largest number of companies reporting losses in the interim results of the a-share cxo industry.
among them, boten pharmaceuticals, zhaoyan pharmaceuticals, and heyuan biopharma were the top losers, with losses of 170 million yuan, 170 million yuan, and 113 million yuan respectively. in addition, medicilon also suffered a loss of 70.23 million yuan.
from 2020 to 2022, due to the emergence of the covid-19 pandemic, a large number of covid-19 vaccines, neutralizing antibodies, and therapeutic drugs were invested in research and development, which once gave rise to the rapid development of the industry. now, with the disappearance of the covid-19 pandemic, there is no longer any revenue from covid-19 project orders for cxo companies. the decline in performance of most companies is related to the reduction in revenue from covid-19 projects and the high base of revenue from previous covid-19 projects. at the same time, companies also need to digest the pressure of asset impairment of covid-19 projects.
boten shares said at a recent investor exchange meeting that as the company completes the delivery of previously received major orders in the third quarter of 2023, the company's revenue will be less affected by the base of major orders in the second half of 2024, and conventional business will develop steadily. due to the expansion of the company's business scale and the rapid pace of investment in new businesses in the past few years, the company's related operating expenses and fixed asset depreciation have increased, which has a negative impact on net profit. the company is implementing cost reduction and efficiency improvement measures according to the annual operating plan, and reasonably adjusting the pace of business development based on different business development cycles. losses have narrowed quarter by quarter in the past three quarters.
affected by the slowdown in external investment and financing, some pharmaceutical companies reduced their investment in biopharmaceutical r&d, which in turn dragged down the order revenue of cxo companies.
in its semiannual report, heyuan bio stated that due to the continued impact of the external investment and financing environment, financing for downstream customers in the domestic cell and gene therapy industry is still not smooth, and market order prices are at a low level. at the same time, due to the operation of the first phase of the lingang industrial base, the company's depreciation and amortization and daily operating costs have increased significantly in the short term, which has led to a decline in operating gross profit and net profit.
when will the cxo industry be able to emerge from its performance slump?
the quarterly net profit attributable to the parent company's shareholders can further reflect the current state of the industry. according to statistics from the first financial daily, there are 9 companies that have maintained quarterly growth for two consecutive quarters in the first and second quarters.
among these nine companies, wuxi apptec (603259.sh), tiger pharmaceuticals (300347.sz), and jiuzhou pharmaceutical (603456.sh) are among the top five a-share cxo companies in terms of operating revenue.
in the first half of this year, wuxi apptec's net profit attributable to shareholders of the parent company was 4.24 billion yuan, down 20.2% year-on-year. in the first and second quarters of this year, the net profit attributable to shareholders of the parent company increased by 26.25% and 18.54% respectively.
for tiger pharmaceuticals, in the first half of this year, the net profit attributable to the parent company's shareholders was 493 million yuan, a year-on-year decrease of 64.50%; in the first and second quarters of this year, the net profit attributable to the parent company's shareholders increased by 61.85% and 9.66% month-on-month respectively.
as for jiuzhou pharmaceutical, in the first half of this year, the net profit attributable to the parent company's shareholders was 475 million yuan, a year-on-year decrease of 23.62%; in the first and second quarters of this year, the net profit attributable to the parent company's shareholders increased by 256.11% and 0.62% month-on-month respectively.
jiuzhou pharmaceutical said at an investor exchange meeting that in recent years, affected by factors such as geopolitics and the investment and financing environment, the cdmo (pharmaceutical manufacturing outsourcing) industry has been under great overall pressure. however, with the end of the us interest rate hike cycle, the investment and financing environment has begun to improve, and it is believed that cdmo will gradually get out of the predicament.
(this article comes from china business network)
