132 new integrated projects were added in '23:132 new projects were added in '23. Of these, Q1 was affected by the slowdown in biotechnology financing, Q2 showed a recovery with 46 new projects, Q3 added 15 new projects, Q4 showed a strong recovery with 71 new projects, and the number of new non-COVID-19 projects in the company reached a record high in '23. Among them, North America contributed about 55% of new projects, while China's share of new projects rebounded sharply to 25%, and Europe and the rest of the world accounted for 14% and 6%, respectively. Of the 23 new projects, 18 were molecules transferred to the clinical or CMO stage. Clinical Phase III & CMO won a total of 9 molecules, exceeding the previous 5 expectations. The company raised the target number of new projects from 80 to 110 in 24.
The total number of projects in 23 years was 698: The total number of projects in 23 years was 698, including 339 pre-clinical, 203 clinical phase I, 81 clinical phase II, 51 clinical phase III projects, and 24 commercialized projects.
It is worth noting that in 23 years, only 61 projects were converted from pre-clinical to clinical phase I, showing that the conversion rate is low in an environment where pharmaceutical financing is sluggish, and we need to continue to pay attention to the future transformation of the backlog of pre-clinical projects.
The company's microbiological platform has developed rapidly. It has had 25 projects and 43 molecules in 23 years (mainly in the form of enzymes, recombinant proteins, VLP-virus-like particles and others), and is expected to grow to 35 projects and 60 molecules in 24 years. In addition, the company's XDC business has become number one in the world (in terms of number of comprehensive projects), with a global market share of 9.8% (based on sales revenue) in '22. Currently, there are 110 XDC projects, 43 of which are biocoupling projects in progress. 50% of the profits of Pharmaceutical Syndication are included in the profits due to shareholders of Pharmaceutical Biotech.
Capacity progress: The company's production capacity was 276,000 liters in 23 years, and production capacity is expected to reach 580,000 liters in 26 years.
The Irish plant's 54,000 litre production capacity is expected to have significant commercial production demand and break-even starting 2024, with production capacity close to full production in 2025. The rapid increase in production capacity is based on the commercial production demand for pipeline pharmaceuticals. It is estimated that there are 7 projects in the pipeline that are expected to contribute 200 million+ US dollars in commercial production revenue every year, 10 projects that contribute 1-2 billion US dollars in commercial revenue every year, and 8 projects that contribute between 0.5 and 100 million US dollars in commercial revenue. The CMO revenue of the above projects is expected to exceed 2 billion US dollars.
Production-side companies gained a competitive advantage with WuxiUiTM's higher harvesting protein concentration and lower production costs with single-use bioreactors.
Target price HK$36.3, purchase rating: The company began repurchasing on December 7, and has so far repurchased 44.86 million shares, accounting for about 1.1% of the total share capital. Yao Ming Biotech uses CRDMO to drive the company's continued business growth. We expect the company's net profit after 23 years of adjustment to fall by about 5% due to the slowdown in biotechnology financing and CMO revenue delays. However, considering loss of investment income, declining exchange earnings, and listing expenses of Pharmacoming.com, etc., we drastically lowered our net profit to a 25% drop in 23. We have adjusted the company model and used DCF as the company's valuation. Due to increased company fluctuations, we raised the discount rate to 11% and the sustainable growth rate of 3%, maintaining the company's target price of HK$36.3, with room for an increase of 21.1% compared to yesterday's closing price.