Hongbo Pharmaceutical: Pre-clinical service technology is distinctive. It specializes in commercial chemical products. Hongbo Pharmaceutical is based on drug discovery and gradually extends the industrial chain: at the beginning of its establishment in 2007, the company's main business was drug discovery, providing services to Biotech with the technical advantages of the founder team in pharmaceutical chemistry; expanding process research and development in 2010 to form strong business collaboration with drug discovery; in 2014, Hongbo was merged to expand commercial production downstream. Currently, it mainly produces independent products.
Drug discovery and process research and development: Distinctive technical characteristics, excellent synergy, front-end business is small but sophisticated, and growing rapidly. Compared with other CRO listed in China, Hongbo Pharmaceutical is currently relatively small in size, but its business is unique and focuses more on pharmaceutical discovery and process development based on drug design. As customer projects progress and the number of FTEs has increased, the scale of the company's drug discovery and process development business has grown rapidly in recent years. In the future, as the company actively expands its customer base, there will be more room for growth.
The customer is mainly American Biotech, and the project is mainly FIC. Since its establishment, the company has been committed to small molecule medicinal chemistry research services with high technical barriers and high added value, and can provide differentiated drug design services for overseas biotechs. Foreign customers developing new front-end drugs are currently mainly concentrated in US biotech companies, such as Agios, Alexion, Nuvalent, etc.; FIC is the main participating project, accounting for 81.8% of FIC projects as of 2022.
It features drug design, and AI assists in enhancing capabilities. As of the first half of 2023, the company's CAD/AIDD technology platform has provided technical support for 52 new drug projects. Of these, 2 have entered clinical phase I, 3 are in the clinical declaration stage, and the number of customers serving the procurement company's CAD/AIDD has reached 15. In 2023, the company further increased investment in R&D, and plans to build a PR-GPT platform and deploy large-scale language models (LLM) locally.
Customer drainage, drug discovery and process development collaborative development. When providing new drug research services to innovative pharmaceutical companies, by participating in early drug discovery research services, especially drug design, companies can access lead compounds earlier and enter process development processes earlier to improve efficiency. As can be seen from the analysis of key customers in the front-end business, there is a high degree of customer overlap between drug discovery and process development businesses, and the drainage effect is remarkable.
Commercial production: high domestic share, waiting to be done overseas
Commercial production is currently dominated by the production of independent products, which contribute the main revenue to Grello intermediates. The company supplies Grello intermediates to the main customers that won the bid for domestic procurement, so the domestic market share is high and the pattern is stable. However, in the past, the company's overseas sales of Grello intermediates were mainly in the Indian market, and there are also layouts in Europe and the US. During the COVID-19 pandemic in the past two years, supply in the Indian market was damaged and is currently recovering; as the European and American market extends the protection period for European and American patents in December 2024, generic drug release is expected to bring further demand for tigrello APIs and intermediates. Kaiyuan Hongbo, as the world's main supplier of teglerol intermediates, is expected to receive more overseas orders.
Risk warning
1. The risk of falling terminal prices for tigrello preparations;
2. Risk of exchange rate fluctuations;
3. The risk that new customer expansion falls short of expectations;
4. Risk that profit forecasting assumptions are untrue or fall short of expectations.