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Disruptions to China’s strict covid measures this year have hurt not only consumer-facing businesses, but also the developing cash of the country’s contract study outsourcing (CRO) corporations that provide R&E services.
Showing his obvious immunity to Covid, Joinn last week reported successful effects for its first 3 quarters of 2022, posting a net profit of 607 million yuan ($83. 7 million) to 657 million yuan for the period, up about 150% year-on-year. year. This means that the company already exceeded its total profit of 557 million yuan last year.
Joinn attributed this functionality to his continued expansion investments in R.
Briefly, Joinn’s stock rose as much as 10% the day after the news broke. Kong’s shares fall to levels not noticed since the global currency crisis of 2008 and 2009.
Joinn’s core business includes non-clinical CRO facilities, such as drug evaluation, testing, studies, and screening of subject safety, efficacy, and quality prior to clinical trial phases. These facilities generated 755 million yuan in the first part of the year, accounting for 97. 2 percent of total revenue, according to the company’s interim report.
The company is an industry leader in non-clinical drug protection assessment (DSA) facilities in China, ranking first with a market share of 15. 7%, based on 2019 revenue. DSA, as an integral component of drug development, has been a major barrier to access due to the high expense and expertise required to build, qualify and staff facilities.
A study report through Pacific Securities indicated that CRO corporations involved in drug protection assessment facilities must be Good Laboratory Practice (GLP) certified, which requires not only having GLP laboratories with the best criteria that are difficult and time-consuming to build, but also assembling certification criteria and processes that vary from country to country. Some 28 CRO corporations in China received LPG certification from the China National Medical Products Administration (NMPA) from 2017 to 2020. But the U. S. Food and Drug Administration (FDA) is not allowed to do so. The strictest U. S. government had rated only 14 Chinese-founded labs, adding two owned through Joinn Laboratory.
Such ratings mean Joinn’s is confident in superior demand. Its intermediate effects show that the company’s notable orders totaled 4. 1 billion yuan and new orders signed exceeded 2 billion yuan in the first part of the year. According to a recent report via Frost
To cope with a full ordering e-book that is holding back its growth, Joinn Lab has embarked on an expansion of its services in recent years. The first phase of a new 8,000-square-meter facility in the eastern city of Suzhou began operations in January. This year. Construction is largely carried out in the current phase of the approximately 20,000 square metre project, with internal fittings underway. The company is also building a DSA site in the southern city of Guangzhou, the infrastructure of which is expected to be completed by the end of the year. Once completed, Joinn hopes to turn all new capacity into orders and new revenue, which deserve gross margins.
At the same time, the company is also expanding its laboratory animal business, a critical link in the upstream supply chain for preclinical CROs. Laboratory animals, such as mice and monkeys, are used in medical research, drug quality testing, and biologics manufacturing, and also vital to Joinn’s DSA business. Joinn began the construction of an animal base in the southern region of Guangxi as early as 2019. Most of this task is complete and designed to breed approximately 10,000 non-human primates after start-up, aiding corporate self-sufficiency. enough to unload laboratory animals.
The emergence of the pandemic and the accelerated advance of vaccines and similar drugs have created a huge demand for lab monkeys, raising prices to 150,000 yuan according to the monkey in China by the middle of this year, up from 15,000 yuan today. To protect its own materials and guard against such price fluctuations, Joinn announced the acquisition in April of Weimei Bio-Tech and Yinmore Bio-Tech, for 1. 8 billion yuan, to bolster its laboratory resources.
Joinn said the deal would be its strategic garage and cargo control for key animals, lessen source hazards and better meet its key needs for commercial-scale expansion. compared to the same time last year.
Although still in its infancy, Joinn has also actively evolved into the clinical CRO chart, which come with the submission of medication records, medical writing, assignment control and other similar operations services, moving from assignments in clinical trials at an initial level to then coming with Phase 3 Projects as well.
CRO industry leaders such as WuXi AppTec ((OTCPK:WUXIF, OTCPK:WUXAY); 2359. HK; 603259. SH) have effectively established themselves globally, now with foreign markets as their main source of income. Joinn tries to catch up with this group. In 2019, it acquired the U. S. preclinical CRO. U. S. Biomere, which won orders worth nearly two hundred million yuan in the first part of this year, up nearly 30% year-on-year. Meanwhile, Joinn’s national CRO division is also expanding in tandem. , receiving record orders of nearly 160 million yuan in the first part of the year, more than double last year’s period.
Joinn is trading lately at a price-to-earnings (P/E) ratio of 16 times, which represents a slight reduction from its peers. WuXi AppTec and PHARMARON BEIJING ((OTCPK:PHBBF, OTCPK:PHRBY); 3759. HK; 300759. SZ) in industry 22 times and 18 times, respectively. But with more installs next year and more functionality most likely next, investors will be more willing to bet more on the company eventually.
Disclosure: None
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