Fierce competition in pandemic-related business led to a fall in revenue for one of the world’s largest genomics companies
China’s gene firm BGI Group (300676) (Chinese: 华大基因) reported a revenue of CNY 6.701 billion (USD 1.062 billion) in 2021, down 20.2% year on year. It also recorded a net profit attributable to shareholders of the listed company of CNY 1.431 billion, down 31.55% compared to the previous year.
Specifically, the company announced a net profit of CNY 525 million in the first quarter of 2021, up 274.94% year on year. The figure fell to CNY 561 million, CNY 328 million, and CNY 17 million in the following three quarters.
Established in 2010 and listed on China’s A-share market in 2017, the Shenzhen-based company integrates genetic testing, mass spectrometry, and bioinformation to provide targeted testing and research services to enterprises and institutions.
According to the healthcare provider, the unsatisfactory performance was a result of increasingly cutthroat competition in the Covid-19-related market, which led to a price drop in test kits and services.
The pioneer in genomics also blamed the dwindling revenue on changes in epidemic prevention strategies in a few countries and regions. As of June 2021, BGI’s test kits were shipped to over 180 countries and regions worldwide.
When the epidemic first started in 2020, the revenue of the gene firm multiplied due to surging demand for Covid-19 test kits. The company recorded a revenue of CNY 8.397 billion and a net profit of CNY 2.102 billion in 2020, spiking 199.86% and 656.43%, respectively, over the previous year.
As the market placed high hopes on epidemic-related businesses, BGI shares leaped from CNY 68.25 in early 2020 to CNY 199.05 apiece on July 13 that year, the second highest since the company went public. Shares grew about 87% in 2020 compared to the previous year.
Other biotechnology firms also entered the race to supply test kits , and some still seemed to do well. Vazyme Biotech (688105) (Chinese: 诺唯赞生物科技) posted a revenue of CNY 1.864 billion in 2021, up 19.13% year on year, among which sales of epidemic-related products reached CNY 1.146 billion, or 61.48% of the total.
Wondfo Biotech (300482) (Chinese: 万孚生物) booked an epidemic-related revenue of CNY 800 million in the first three quarters of 2021, most of which came from oversea sales. As of March 19, 2020, at least nine listed companies received CE marking for their test kits, a designation allowing their products to be sold in the EU.
Other competitors included Hiteck (300683) (Chinese: 海特生物), Wuhan Mingde Biotechnology (002932) (Chinese: 明德生物), and DaAn Gene (002030) (Chinese: 达安基因).
As of today’s trading, BGI shares fell 57.07% from their second highest price to CNY 85.45 apiece, with a market cap of CNY 35.3.69 billion. The company will have 149 million more shares freed from trading lockups on July 14, 2022, representing 35.94% of the total stock capital.