Smart Finance APP learned that China International Capital Corporation released a research report stating that, with the rapid increase in sales of the GLP-1 star products Semaglutide and Tirzepatide, there is an explosive potential demand for peptide active pharmaceutical ingredients. Peptide scale production is highly restricted, and currently, the solid-phase synthesis method of chemical synthesis is the mainstream, with high demand for high-quality production capacity. In terms of global pattern, Swiss companies are leading, and China is the main supplier of GLP-1 active pharmaceutical ingredients. Under the rapid release of GLP-1 drugs globally, the prosperous trend of peptide active pharmaceutical ingredients industry continues to rise. This team believes that companies with differentiated scale production and cost control capabilities will have greater business performance elasticity.

Demand: The explosive demand for GLP-1 star products drives high elasticity. Peptides have the advantages of small molecules and biological drugs, and have unique advantages in the production of finished drugs. China International Capital Corporation believes that with the rapid increase in sales of the GLP-1 star products Semaglutide and Tirzepatide, there is an explosive potential demand for peptide active pharmaceutical ingredients. China International Capital Corporation estimates that by 2030, the demand for raw materials for Semaglutide and Tirzepatide injection will reach the level of 50 tons, with a vast potential market space. Oral preparations have low bioavailability and high consumption of raw materials. China International Capital Corporation estimates that by 2030, corresponding demand will exceed 100 tons, and demand will further increase. Based on this, the potential of GLP-1 in indications such as NASH and Alzheimer's disease is worth looking forward to. Considering the demand for generic drug companies to stock up before the expiration of Semaglutide core patents, China International Capital Corporation believes that commercial orders have begun to increase. After the long-term supply increases, raw material prices will decrease. China International Capital Corporation estimates that the market size of Semaglutide raw materials ranges from 8.52-35.78 billion US dollars, and the profit space is still considerable when exchanging quantity for price.

Supply: The production of peptides is highly restricted, and high-quality production capacity is in short supply. Peptide production is divided into biological fermentation and chemical synthesis. Currently, the solid-phase synthesis method of chemical synthesis is the mainstream. In terms of global pattern, Swiss companies are leading, and China is the main supplier of GLP-1 active pharmaceutical ingredients. 1) In terms of technological barriers: The scarce production capacity of peptide drugs is mainly due to the high potential impurities, high purification requirements, high process control requirements, low purification yield, and difficulty in stable mass production during the synthesis process. 2) In terms of the pace of capacity expansion: The short-term large-scale production capacity has not yet been released, and the supply and demand pattern will not change. The production capacity of peptide active pharmaceutical ingredients at home and abroad has just entered the intensive expansion stage. China International Capital Corporation predicts that the peak production capacity of original research pharmaceutical companies Novo Nordisk and Eli Lilly will be put into operation in 2026-2027. Overseas leaders Bachem and PolyPeptide will begin to release their new production in 2024H2. Domestic production capacity is expected to start mass production after 2025, and the total expansion plan disclosed by domestic manufacturers will increase by approximately 15-20 tons of production capacity, among which companies with scale production capacity are still relatively few, and high-quality production capacity may be more scarce.

The advantage of first-mover in production capacity is obvious, China International Capital Corporation suggests focusing on companies with differentiated scale production and cost control capabilities. Considering the production rhythm, China International Capital Corporation believes that the supply and demand situation of peptide active pharmaceutical ingredients will be maintained until at least 2026. 1) Short-term view: The high technical barriers to increasing the batch production scale, the scarcity of companies with ton-level production capacity, and the strong demand under supply and demand imbalance all have potential for growth. 2) Long-term view: Companies with scale production capacity have lower production costs and better profitability during price declines. The profit total of exchange quantity for price is still attractive.

Risk

Core product price fluctuations, core technical personnel turnover, fluctuations in raw material sales and sales lower than expected, exchange rate fluctuations, pharmaceutical research and development risk, regulatory risk, macro-environmental risk.