Chemical API market is building core competitive advantages

With high R&D investment, Chinese CRO/CDMO companies are able to efficiently undertake outsourced R&D and manufacturing business related to BigPharma and Biotech at home and abroad based on good engineer's bonus, mature production process preparation and large clinical volunteer base as an effective way to reduce costs and increase efficiency. 

According to the financial reports of major Chinese CXO companies, Chinese CDMO companies, led by Hechuan Pharmaceuticals, have shown strong upward growth in the past three years, with an average compound growth rate of 28% in the number of projects of Chinese core CDMO companies. Meanwhile, revenue and net income of major Chinese CXO companies grew 41.8% and 49.4% year-over-year, respectively, in the first three quarters of 2021, with strong performance growth also statically validating the high boom in drug development and outsourcing. Based on the orders on hand and new orders announced by major listed CXO companies, the rapid year-on-year growth of newly signed orders shows a better industry boom.

Through overseas M&A, Chinese CXO companies are expanding their business footprint and enhancing their service capabilities, helping to rapidly build core competencies and increase overseas customer recognition. Whether from the perspective of laying out emerging tracks in advance or to meet specific customer requirements (e.g. cGMP certified manufacturing sites), the successive overseas M&As in recent years indicate that Chinese CXO companies are on an upward trajectory of integration and growth, and as their service capabilities continue to strengthen, they are gradually gaining recognition from overseas innovative pharmaceutical companies, further contributing to sustained overseas revenue growth.