Zhaoyan New Medicine (603127): Acquisition of BIOMERE Expands Foreign Safety Evaluation Market

Zhaoyan New Medicine (603127): Acquisition of BIOMERE Expands Foreign Safety Evaluation Market

Event: On May 17, the company announced its intention to acquire US BIOMEDICAL RESEARCHMODELS, INC for US $ 27.28 million.

(Biomere) 100% equity, the target’s main military pre-clinical CRO (mainly safety assessment) and vaccine business, of which the vaccine business will be divested before the transaction.

The core point of view is holding Biomere to advance the internationalization strategy of the security assessment business.

According to reports, Biomere employs about 100 people and has a facility area (animal houses and laboratories) of 8,268 square meters. It has occupied the safety assessment business in the Boston area of the East Bay for more than 20 years, has a mature business model and management structure, and has accumulatedLess deep customer base (including Shire, Novartis, etc.).

The main business of the target is preclinical CRO (including safety assessment, biological analysis and pharmacology, etc.).

In 2018, Biomere cancelled its vaccine business to achieve revenue1.

260,000 yuan, with a net profit of 11 million yuan.

We believe that the company’s holding of Biomere will accelerate the progress of the safety assessment business in the United States and further improve its international layout.

Domestic and foreign platforms have played a synergistic role and opened the ceiling of the safety assessment business.

The acquisition will expand Zhao Yan ‘s popularity in overseas markets, divert orders from the US market, and rapidly expand the local market. In the future, it can expand its capacity in the United States or complete overseas orders directly at domestic bases.

In addition, the non-GLP business outside Biomere can be directly taken over by the relevant departments within the company after the integration to improve the company’s profitability.

The U.S. market is a global high ground for pharmaceutical research and development. The local platform acquired by the company’s mergers and acquisitions is expected to break the constraints of the domestic market (currently, the domestic business accounts for more than 95%), and raise the upper limit of the security assessment business growth.

With the safety assessment business as the main body, build a pre-clinical comprehensive CRO.

The company’s strategy is to build a comprehensive CRO around early clinical and biopharmaceutical CRO / CMO based on the perfection of GLP business with biopharmaceutical as the core.

In terms of safety assessment, the domestic Chongqing base is about to start, and the international market has begun to try; early clinical business, the construction of clinical bases has been smooth, and it has been transformed into the improvement of the CRO team and laboratory.

杭州夜网论坛In our opinion, the company is expected to eventually become a preclinical comprehensive CRO in China.

Financial Forecast and Investment Recommendations We predict that the company will realize net profit attributable to mothers in 2019-2021.

55/2.

10/2.

850,000 yuan, the corresponding EPS is 0.

97/1.

31/1.

78 yuan.

With reference to the comparable company’s estimates, maintain a 56x 2019 P / E ratio and a corresponding target price of 54.

32 yuan, maintaining the “overweight” level.

Risk Warning If the new business development is less than expected, it will adversely affect the company’s growth prospects.