Caitong Securities: The demand for phosphonamide monomers will flourish, and multinational pharmaceutical companies' supply chain enterprises are expected to benefit

According to the Zhitong Finance APP, Caitong Securities released a research report stating that small nucleic acid drugs are considered potential candidates for treating various diseases due to their unique molecular structure and therapeutic mechanisms. Since most of the nucleic acid drugs are oligonucleotides, oligonucleotides have become an important raw material for nucleic acid drugs and are the main source of costs in the production process of small nucleic acid drugs. According to predictions by sphericalinsights, the global nucleotide market (including oligonucleotides and monomers) is expected to reach a sales volume of USD 730 million in 2023. China is the largest production market for nucleotides globally, with most of it being exported. In the future, with the vigorous development of downstream small nucleic acid drugs, the demand for important raw materials such as phosphoramidite monomers will also flourish, and companies within the supply chains of multinational pharmaceutical companies are expected to benefit.

The main points of Caitong Securities are as follows:

Phosphoramidite monomers have a significant impact on the R&D process of small nucleic acid drugs

Small nucleic acid drugs are considered potential candidates for treating various diseases due to their unique molecular structure and therapeutic mechanisms. Nucleic acid drugs can target disease-related genes or RNA for precise treatment. However, the R&D process for small nucleic acid drugs is complex and full of challenges, among which phosphoramidite monomers, as key raw materials for synthesizing small nucleic acid drugs, have a significant impact on the R&D process. Their roles include: 1) basic raw materials for synthesizing small nucleic acid drugs; 2) improving the stability and bioactivity of small nucleic acid drugs; 3) promoting innovation in the R&D of small nucleic acid drugs.

Oligonucleotides are the main raw materials and cost sources for nucleic acid drug production

From the perspective of the production process of oligonucleotide raw materials, the mainstream method for synthesizing oligonucleotides in the upstream process is the solid-phase phosphoramidite triester method, where phosphoramidite monomers undergo deprotection, coupling, oxidation, capping, and other steps with solid-phase carriers in nucleic acid synthesizers to obtain the target base sequence, i.e., crude oligonucleotides. After removing the protecting groups and cutting them from the solid-phase carrier, preliminary purity detection of the crude product is conducted through liquid chromatography, followed by purification, ultrafiltration, and freeze-drying to obtain oligonucleotide raw material intermediates. Since most of the nucleic acid drugs are oligonucleotides, oligonucleotides have become an important raw material for nucleic acid drugs and are the main source of costs in the production process of small nucleic acid drugs.

The demand for phosphoramidite monomers will flourish, and companies within the supply chains of multinational pharmaceutical companies are expected to benefit

According to predictions by sphericalinsights, the global nucleotide market (including oligonucleotides and monomers) is expected to reach a sales volume of USD 730 million in 2023. China is the largest production market for nucleotides globally, with most of it being exported. Overall, 90% of the global nucleotides are used for the production of nucleic acid drugs, with only about 10% used in health foods and agriculture. In the future, with the vigorous development of downstream small nucleic acid drugs, the demand for important raw materials such as phosphoramidite monomers will also flourish. Meanwhile, since the terminal drug market for small nucleic acids primarily relies on well-known multinational pharmaceutical companies such as Novartis, Roche, Sanofi, and Alnylam in the short term, companies within the supply chains of multinational pharmaceutical companies are expected to benefit Investment Recommendations to Focus On

Innovative Pharmaceuticals and Medical Devices: Such as Furui Co., Ltd (300049.SZ), Angli Kang (002940.SZ), Shutaishen (300204.SZ), Microchip Biotech (688321.SH), Frontier Biotech (688221.SH), China Antibody-B (03681), Baicheng Pharmaceutical (301096.SZ), Changchun High-tech (000661.SZ), Mabwell (688062.SH), Jibeier Pharmaceutical (688566.SH), Kangfang Biotech (09926), Deyuan Pharmaceutical (301255.SZ), Baili Tianheng (688506.SH), Kelun Botai Biotech-B (06990), Kelun Pharmaceutical (002422.SZ), Zexing Pharmaceutical-U (688266.SH), Rongchang Biotech (09995), Innovent Biologics (01801), Hansoh Pharmaceutical (03692), Lepu Biotech-B (02157), Genscript Biotech (01952), Jiankai Technology (688356.SH), SDKX (688136.SH), Cornerstone Pharmaceuticals-B (02616), Shouyao Holdings-U (688197.SH), Baiao Tai (688177.SH), and Kexin Pharmaceuticals-B (02171), etc.

From the Perspective of CXO and API: It is recommended to pay attention to WuXi AppTec (603259.SH), Jiuzhou Pharmaceutical (603456.SH), Chengda Pharmaceutical (301201.SZ), LIANHE TECHNOLOGY (002250.SZ), Huahai Pharmaceutical (600521.SH), ST Nuotai (688076.SH), etc.

Risk Warning

Risks of industry anti-corruption impacts exceeding expectations; uncertainties in new drug development progress; risks of sales not meeting expectations; risks of centralized procurement price reductions exceeding expectations, etc