The Zhitong Finance App learned that Huaxi Securities released a research report saying that it comprehensively analyzed overseas investment and financing data and the global TOP15 R&D investment situation, as well as the growth in operating income, orders, number of employees, and capital expenditure of overseas CXO companies in 22, to maintain an early judgment on the sentiment of the overseas CXO industry.Based on domestic engineer dividends and industrial cost advantages, we continue to be optimistic about the domestic CXO boomWe continue to recommend Pharmaceutical Mingkangde (603259.SH), Jiuzhou Pharmaceutical (603456.SH), Sunshine Nuohe (), Baicheng Pharmaceutical (301096.SZ), Gloria Ying (002821.SZ), Boten Co., Ltd. (300363.SZ), etc. 688621.SH
▍ The main views of Huaxi Securities are as follows:
Follow up on the US investment and financing situation and the R&D investment of the world's top 15 pharmaceutical companies:
It can be seen that overall investment and financing in the US is still at an all-time high, and starting from a quarterly perspective, it is expected to gradually improve in the future; in addition, from the global top 15 R&D investment, it can still be seen that the overall growth continues to show steady upward growth.
Overseas CXO financial data performance - employees, orders, and capital expenses all showed upward growth, indicating continued industry sentiment:
The 12 CXO companies focused on achieved revenue of 51.8 billion US dollars in 22, an increase of 8.3% over the previous year. Among them, the clinical CRO business, CDMO business, and laboratory business achieved operating income of 33.903 billion US dollars, 15.069 billion US dollars, and 2,797 million US dollars respectively. The year-on-year increases were 6.4%, 11.1%, and 16.5% respectively. Among them, the biopharmaceutical CDMO segment grew at 20.0% year on year, showing relatively rapid growth.
Furthermore, the bank tracks key data such as employee growth of clinical CRO companies (the year-on-year growth rate is basically 5% to 10%) and order growth (overall new orders increased by about 6.3% year-on-year), and that CDMO's capital expenditure is trending upward, which can also effectively indicate that the industry is booming.
Judging from the 22Q4 investor exchange minutes, we can see that the industry is still booming as a whole:
IQVIA/Covance/iCLR inquiries continued to show high intensity and no abnormal cancellations were found. In addition, the MEDP inquiry situation weakened slightly and cancellations increased slightly, and iCLR's Biotech customer order amounts slowed slightly;
Furthermore, CRL discovered that the business began to have incremental demand again starting in 22Q4, and LONZA also expects investment and financing to slowly recover in 23Q1, which indicates a trend where industry sentiment is improving.
The 2023 performance guidelines for core overseas CXO companies are still growing steadily:
IQVIA, Covance, ICLR, and MEDP expect clinical CRO business revenue to increase 5% to 7% year-on-year in 23 (excluding COVID-19, the endogenous revenue growth rate is 10% to 12%), 5% to 7%, 2.6% to 7.7%, 15.8% to 19.9%; Lonza gave revenue guidelines for the full year of 23, which is “high single-digit CER sales growth.”
Risk warning:
The weakening influence of investment and financing, uncertainty in the business relationship brought about by Sino-US relations, and performance fell short of market expectations.