ClinPlus, a Chinese clinic site management company, has completed the initial public offering process and is now the first SMO company to be listed on the Chinese A-share market. After the IPO, Hillhouse is holding 1.5 percent of the company's stock.
ClinPlus, a Chinese clinic site management company, has completed the initial public offering process and is now the first SMO company to be listed on the Chinese A-share market. After the IPO, Hillhouse is holding 1.5 percent of the company's stock.
The funding will be used to expand clinical trial sites, build big data platforms, support headquarters construction, and supplement the liquidity.
The Chinese Site management organization (SMO) industry is experiencing rapid growth, from 2.33 billion CNY in 2018 to 3.39 billion CNY in 2019, representing a YOY growth of 44.2%. With rising drug development costs and increased demand for clinical trials, the industry is expected to expand even more.
Hillhouse Capital has shown a keen interest in the Chinese pharmaceutical R&D and production outsourcing services (CXO) industry, especially the contract research organization industry (CRO), which is critical in the drug research and development process. Prior to investing in ClinPlus, they also invested in Hangzhou Tigermed, a leading Chinese contract research provider and one of ClinPlus's main competitors. However, Hillhouse has reduced its holdings in pharmaceutical stocks since 2021, raising concerns about the shift in policy toward the contract research organization industry. In 2022, they come back and increase their stake in CRO companies, which drew a lot of attention to this rapidly growing market.
ClinPlus is a leading clinic Site Management organization in China, specializing in providing one-stop services for clinical trial implementation., ClinPlus’s gross profit margin of its main business has fallen to 32.88%, 29.12%, and 26.08%, From 2019 to 2021. According to the prospectus, ClinPlus' main business and source of revenue is its SMO service, which could pose a risk of having a single business model going forward. ClinPlus' SMO business also lacks synergies with other services when compared to its competitors who operate in both CRO and contract manufacturing company (CMO). We'll keep an eye on ClinPlus' secondary market performance.