We are a leading non-clinical CRO focused on drug safety assessment. We are also in the process of expanding our offerings to an integrated range of services covering discovery, pre-clinical and clinical trial stages in the drug R&D service chain. Our non-clinical studies refer to pharmaceutical R&D studies other than clinical trials conducted on human subjects. Such non-clinical studies encompass all major stages of the pharmaceutical R&D process, including discovery, pre-clinical and clinical trial stages. Setting out as a CRO specialized in pharmacology and toxicology studies for innovative drugs in China, we have now become the largest CRO in non-clinical drug safety assessment in China with a market share of 15.5% in terms of revenues in 2019, according to Frost & Sullivan. In 2019, the market size of China and global non-clinical drug safety CRO market was US$415.7 million and US$4.8 billion, respectively, accounting for approximately 6.1% and 7.7% of the US$6.8 billion and US$62.6 billion market size of China and global pharmaceutical CRO in 2019, respectively, according to Frost & Sullivan. The A Shares of our Company have been listed on the Shanghai Stock Exchange (stock code: 603127) since August 2017.
Building upon our core competency in drug safety assessment, we have been expanding our service offerings with a view to becoming an integrated pharmaceutical R&D service platform capable of providing a comprehensive portfolio of CRO services including non- clinical studies, clinical trial and related services, and research model business. With our project experience and scientific expertise, we aim to help our customers reduce R&D costs and risks and improve the overall productivity and efficiency of their global pharmaceutical R&D projects. With over 25 years of operating history, we have accumulated extensive experience in regulatory requirements for new drug applications and are capable of conducting complex research projects in accordance with applicable GLP standards and guidelines promulgated by major jurisdictions around the world. In addition, our deep scientific and practical expertise, coupled with our full suite of global qualifications and capabilities, enable our customers to make global filings with a single set of research data, with a goal to greatly improve efficiency and achieve significant cost savings.
Headquartered in Beijing, we currently own and operate two GLP-certified facilities in China strategically located in Beijing and Suzhou. We are a leading CRO in China in terms of the size of GLP-compliant facilities, according to Frost & Sullivan. Our facilities located in Beijing have a total GFA of approximately 11,600 sq.m. Our facilities in Suzhou have a total GFA of approximately 61,600 sq.m. and we plan to commence the construction of approximately 20,000 sq.m. of additional laboratories and research model facilities in 2021. With a view to further expanding our service capacity and geographic reach, we are also planning to build a drug safety assessment center for innovative drugs and a central laboratory with associated platforms for bioanalytical services in Guangzhou, as well as laboratories for GLP-compliant non-clinical studies, breeding facilities for research models and central laboratories for clinical studies in Chongqing. We expect the Phase I of both facilities to commence operation in 2023. In addition to our facilities in China, we have been broadening our global footprint through organic growth and strategic acquisition. In 2019, we acquired Biomere, a discovery-based, specialty CRO located in Worcester, Massachusetts with an international customer base and strong reputation in customer services. For the nine months ended September 30, 2020, Biomere generated RMB157.8 million in revenue, accounting for 25.0% of our total revenues and substantially all of our overseas revenues during the same period. Combined with the facilities in northern California that we plan to lease and upgrade in the near term, we aim to establish a strategic bi-coastal presence in the United States with each of our U.S. facilities located within close proximity to the two prominent life science centers in the United States.
We generated substantially all of our revenues from providing services in non-clinical studies during the Track Record Period. We have also been expanding our clinical trial and related services with a view to offering a more comprehensive range of CRO services to our customers.
‧ Non-clinical studies. We currently offer a comprehensive range of non-clinical studies, including (i) drug safety assessment, (ii) DMPK studies, and (iii) pharmacology and efficacy studies, to support a variety of innovative drugs sponsored by pharmaceutical and biotechnology companies, as well as academic and research institutions in China and overseas.
‧ Clinical trial and related services. Our clinical trial and related services are still at its early stage. They currently encompass three segments, namely (i) clinical CRO services, (ii) co-managed phase I clinical research units (CRUs), and (iii) bioanalytical services. Unlike traditional CROs, we have integrated all three segments and provide our customers with an integrated platform for clinical trial services.
‧ Research model business. We engage in the development, production, breeding and sales of high-quality research models to support a wide range of non-clinical studies. Our research models currently include rodents and non-human primates. We sell rodent research models mainly to local academic and research institutions. Going forward, we do not plan to further grow or expand our sales of rodent research models, and we are currently focused on carrying out scientific studies and breeding of non-human primate research models with a goal to producing high-quality non-human primate research models at scale in the long term. During the Track Record Period, we mainly generated revenue from sales of rodents and did not generate any revenue from sales of non-human primate research models.
We have a large, high-quality, loyal and expanding customer base. The total number of our customers increased from approximately 280 in 2017 to approximately 350 in 2018 and to approximately 450 in 2019. In the nine months ended September 30, 2020, we served approximately 520 customers. Among our expanding customer base, we have provided services to seven of the top 10 pharmaceutical companies in terms of revenue in the China pharmaceutical market in 2019, as well as a growing number of innovative biotechnology companies. As of the Latest Practicable Date, we had served our top five customers in 2019 for an average of over six years, with a 100% customer retention rate in 2019 for our top five customers in 2018. Our predominant leadership in drug safety assessment has also allowed us to attract our existing customers to our growing clinical trial services through cost-effective cross-selling efforts in a manner of seamless transition. In 2019, 100% of our top 10 customers procured more than one services from us. The contracted future revenue for our services was RMB1,776.5 million as of December 31, 2020.
Led by our Chairperson and founder Ms. Feng and our Vice Chairperson of the Board and Executive Director Mr. Zuo, our core management team has on average over 30 years of experience in toxicology and pharmacology and is dedicated to the development of novel therapies for unmet medical needs since our inception, contributing to our consistently high-quality services and industry leadership. We have also attracted a deep pool of talented and skilled research professionals, who are the most valuable assets to support our future growth. Their technical expertise, combined with extensive know-how accumulated through managing complex R&D projects, provide us with a competitive edge against our competitors.
We achieved robust growth and profitability at scale during the Track Record Period. Our total revenues increased from RMB301.3 million in 2017 to RMB408.8 million in 2018 and further to RMB639.4 million in 2019, representing a CAGR of 45.7%. Furthermore, our total revenues increased by 83.5% from RMB344.2 million in the nine months ended September 30, 2019 to RMB631.5 million in the nine months ended September 30, 2020, partly due to our acquisition of Biomere a discovery-based, specialty CRO in the United States. Our profit for the year increased from RMB79.9 million in 2017 to RMB105.3 million in 2018 and further to RMB187.7 million in 2019, representing a CAGR of 53.2%. Furthermore, our profit for the period increased by 65.1% from RMB85.9 million in the nine months ended September 30, 2019 to RMB141.9 million in the nine months ended September 30, 2020, partly due to our acquisition of Biomere, among other reasons.
Source: JOINN Lab (06127) Prospectus (IPO Date : 2021/02/16) |