Why Jingyun Star Pharma Thrives as a Resilient Oral Solid Dosage CDMO Amid Industry Winter

In May 2021, in Suzhou, China, during the DIA (Drug Information Association) China Annual Meeting, Dr. Chen Minhua, Co-founder, Chairman, and CEO of Crystal Pharmatech, met with Dr. Ma Decheng, then Director of Pharmaceutical Sciences and Clinical Supply at Merck & Co., Inc. (MSD) China. Dr. Chen invited his long-time friend Dr. Ma to join him in launching a startup focused on building an oral dosage form CDMO.

At that time, the domestic innovative drug industry was still at a peak, with an entrepreneurial mindset of “not waiting even a single day.” For Crystal Pharma, founded in 2010, expanding from active pharmaceutical ingredient (API) polymorph research to formulation development was a natural extension of its business and capabilities. Although the industry offered significant opportunities, it was evolving rapidly, with short windows of opportunity, necessitating prompt action to secure facilities, build laboratories, and commence operations.

On July 1, 2021, Jingyun Xingkong was officially registered and established. In December of the same year, Ma Decheng left Merck China to join Jingyun Xingkong as CEO. Just as they were enthusiastically building their team, selecting a site, purchasing instruments, and designing GMP-compliant facilities in preparation for a major launch, the external environment had already undergone significant changes.

After a year of preparation, Jingyun Xingkong officially commenced operations in May 2022. By that time, China’s innovative drug industry had taken a sharp downturn: Since 2022, a capital winter has enveloped the entire ecosystem of the innovative drug sector, and contract development and manufacturing organizations (CDMOs) providing “contract manufacturing” services for innovative drugs have not been spared.

Externally, Crystal Cloud Starry Sky has failed to ride the wave of the times; instead, it faces an industry downturn and an intensifying price war. Internally, it must continually question where its core competitiveness lies. As a refreshing force in the industry, what are the sources of its resilience and strength for sustained growth?

Entrepreneurs certainly do not anticipate a winter, but when internal and external challenges arise, the true character of a company is revealed.

The story of Jingyun Xingkong began at the 2021 DIA conference. Two and a half years later, it has grown into an oral dosage form CDMO with a team of 77 employees, serving more than 40 projects.

China has never lacked entrepreneurial stories riding the crest of the latest trends,However, the story of Jingyun Xingkong is not one of a startup that merely rode the wave of the times; rather, it is a tale of a newcomer establishing a firm foothold in the market by leveraging its core competencies amidst a rapidly transforming industry landscape.; Of course, this is also a story of scientists, entrepreneurship, and dreams—a generation of Chinese formulation scientists who aspired to bring back the knowledge and experience accumulated over many years at multinational pharmaceutical companies to China, mentor and cultivate a new cohort of young talent in novel drug formulation R&D, and serve generations of innovative pharmaceutical enterprises.

Crystal Cloud Sky’s parent company, Crystal Cloud Pharma, was founded in 2010. Around 2020, Crystal Cloud Pharma, known for its motto “Born of crystal forms, renowned for crystal forms,” began considering further business expansion, and the establishment of a formulation CDMO was placed on the agenda.

Chen Minhua was well aware that establishing a world-class formulation CDMO required building a technology-driven enterprise. He reached out to his longtime friend Ma Decheng, who had extensive experience in the field of pharmaceutical formulations.

For Ma Decheng, CEO of Jingyun Xingkong, entrepreneurship represents a belated opportunity to realize his dream.

In fact, as early as around 2010, Ma Decheng and several formulation colleagues from Merck & Co. returned to China for a field visit with the aim of founding a CDMO company. They even prepared a business plan and reached out to investors. However, more than a decade ago, China’s innovative drug industry was still in its infancy, making it exceedingly difficult for startups to secure investment.

This time, despite having Crystal Cloud Pharma as a backer, Chen Minhua and Ma Decheng both understood that to enter a new niche market and establish a formulation CDMO that stands out in both technology and systems, the top priority wasIt is to assemble a core technology founding team that other domestic formulation CDMOs would find difficult to recruit.

First, experience is crucial in the pharmaceutical formulation industry. A simple example illustrates its importance: during the different life cycle stages of a new drug molecule—from pre-formulation and Phase I–III clinical trials to scale-up and commercialization—the focus of formulation development varies significantly. Only by spanning the entire journey from pre-formulation to commercialization can one fully understand the specific priorities at each stage. This process for a new drug molecule typically takes 5 to 10 years.

Formulation scientists must hone their keen insight—often described as “piercing vision”—through project-by-project experience and years of accumulation, enabling them to determine the right strategies at different stages of formulation development, identify potential risks, and pinpoint critical variables. Therefore, the founding team of Jingyun Xingkong must comprise seasoned experts with decades of extensive hands-on experience in innovative pharmaceutical companies.

Furthermore, formulation science is highly interdisciplinary, encompassing fields such as materials science and clinical pharmacy. Daily operations require extensive communication and coordination with non-clinical, clinical, and regulatory affairs departments. Therefore, the founding team must not only possess extensive individual experience but also demonstrate complementary skill sets.

Most importantly, entrepreneurship is arduous; the founding team must share common goals and mutual trust.

Ultimately, the core founding technical team—comprising CEO Ma Decheng, CSO Li Feng, and CTO Chen Xiaoxia—perfectly met the above requirements.

Ma Decheng, Li Feng, and Chen Xiaoxia have known each other for many years. All three are formulation experts from the Merck & Co. network, with 22, 21, and 18 years of formulation R&D experience at multinational pharmaceutical companies, respectively. Their combined knowledge and experience span over 60 years, enabling them to better address various challenges that arise in projects.

Moreover, Ma Decheng and Li Feng were long-time colleagues at Merck & Co. in the United States. From 2008 to 2011, both worked in Merck’s Pharmaceutical Development Department and served as closely collaborating teammates on multiple project teams.

Formulation and analytical chemistry are like twins: Ma Decheng has more experience in analytical chemistry, while Li Feng excels in formulation research and is an expert in compression simulation, dry granulation, tableting, and pediatric mini-tablet dosage forms. Privately, the two are also close friends. Moreover, Li Feng dreams of establishing a CDMO company in China; around 2010, he returned to China with Ma Decheng in an attempt to start a business.

Reuniting after more than a decade, the two resumed their unfinished work from years past.

Ma Decheng and Chen Xiaoxia were classmates in the Department of Chemical Engineering at Tsinghua University. At Merck & Co. in the United States, Chen Xiaoxia is primarily responsible for late-stage projects, such as scale-up, technology transfer, validation batches, registration batches, regulatory filings, and support for commercial manufacturing. Meanwhile, Chen Xiaoxia has also worked at innovative biopharmaceutical companies and other multinational pharmaceutical firms such as AbbVie and Roche, gaining experience with the cultures of different types of companies and understanding their diverse perspectives and demands.

To this day, the three individuals still cannot help but remark to VCBeat New Medicine on how rare it is for them to have been brought together.

As for why Jingyun Xingkong has emerged as a “breath of fresh air” among CDMO startup teams, Ma Decheng attributes this largely to the backgrounds and mindsets of its three technical co-founders. “Most CDMOs operate with a vendor mindset, whereas our team comes from the client side., having been engaged in the development of innovative drugs ourselves, we deeply understand the preciousness of each innovative drug molecule. We treat our clients’ molecules with the same care and dedication as if they were our own.We essentially serve as our clients' formulation development department.。”

In the journey of entrepreneurship, there are dreams as well as practical challenges. Lu Bo, who grew within the Jingyun system and served as the chief preparatory officer at the inception of Jingyun Xingkong before assuming his current role as COO, describes himself as “responsible for building the infrastructure and team capable of supporting entrepreneurial dreams.”

Crystal Cloud Sky stood on the shoulders of Crystal Cloud Pharma from its very inception. Leveraging Crystal Cloud Pharma’s mature systems, values, and culture, Crystal Cloud Sky quickly took shape and achieved rapid development based on this foundation. Lu Bo was responsible for recruitment at Crystal Cloud Sky. She believed that “delving deeply into niche segments to become number one in the industry” was key. As Crystal Cloud Sky’s vision, values, and culture are directly inherited from Crystal Cloud Pharma, the recruitment standards and framework were clearly defined from the outset. “In 2022, more than half of our time was devoted to recruitment. Crystal Cloud Pharma’s corporate culture was integrated throughout the entire hiring process, and its strong reputation in the industry helped us earn the trust of candidates more easily.” Ultimately, Crystal Cloud Sky rapidly assembled a high-quality team of nearly 80 employees.

Establishing a CDMO company is a capital-intensive entrepreneurial venture that requires not only sound judgment of market conditions but also a clear market positioning. Centered on the market positioning of Jingyun Xingkong, the founding team engaged in discussions and quickly reached a consensus:China is not short of CDMOs, but it lacks specialized, refined, and high-quality formulation CDMOs.

In China, there is virtually no company that specializes in providing formulation CDMO services to global innovative drug enterprises while demonstrating exceptional technological and systemic capabilities. Both biotech firms and big pharma companies share a common sentiment: although there are numerous CDMOs, it remains challenging for pharmaceutical companies to find a fully trustworthy partner capable of delivering a robust and rational solution tailored to the specific characteristics of their drug molecules, rather than offering a low-cost but generic approach.

The founding team has a clear understanding of what underpins Jingyun Xingkong’s market position. “High-quality formulation CDMOs are actually very scarce, even in the United States,” said Chen Xiaoxia. By offering tailor-made formulation solutions for individual molecules, Jingyun Xingkong has established this core competitiveness, thereby securing its foothold in the market.

However, shortly after Jingyun Xingkong commenced operations, it encountered a severe industry downturn. Despite this challenging cycle, the company’s business has remained on track. According to Ma Decheng, both contract signings and revenue have risen sharply since the third quarter of 2023. However, profit margins have declined due to the impact of price wars.

Currently, Jingyun Xingkong is pursuing a dual-market strategy in China and the United States: in China, it aims to secure contracts, acquire new customers, and build customer reputation; meanwhile, it is also intensifying its efforts to expand into the U.S. market. Currently,The U.S. market accounts for more than half of Jingyun Xingkong’s total business volume.

During the process of market expansion, the role of Crystal Pharma as a strong backing has been demonstrated. In particular, the customer resources and trust foundation established by Crystal Pharma in the United States and China have provided significant momentum to Crystal Sky.

“The U.S. market has provided us with significant support. Compared to the Chinese market, although the volume is smaller, its market size is substantial and profit margins are higher,” said Ma Decheng. Moreover,In the U.S. market, clients typically prioritize project delivery quality first, speed second, and price third; however, in China, price competition and awarding contracts to the lowest bidder remain prevalent practices.

In China, Jingyun Xingkong’s current strategy is to maintain reasonable and competitive pricing aligned with the market, while growing alongside Chinese innovative pharmaceutical companies. Additionally, the company engages in communication with clients to help them recognize Jingyun Xingkong’s unique value and build brand recognition.

From management to technical staff, Jingyun Xingkong is composed of pragmatic scientists. In the process of business development (BD), they face a major challenge: how to clearly articulate Jingyun Xingkong’s core value proposition? What differentiates the services provided by Jingyun Xingkong? How are its molecule-tailored formulations unique?

“We design the formulation for each client with two primary objectives: first, to ensure success in Phase I clinical trials; and second, to guarantee that the formulation remains unchanged, or requires only minor adjustments, throughout subsequent Phase I–III clinical trials and the commercialization stage,” introduced Li Feng. For early-stage projects, the three co-founders often hold preliminary discussions to share their key concerns from different perspectives. Leveraging their combined knowledge and experience, Crystal Cloud Sky has never missed any potential risks in its projects to date.

This gives Jingyun Xingkong the confidence to propose the “First-Time-Right” (i.e., “Correct on First Attempt”) development philosophy.. This professional, responsible, and customer-centric approach has also turned most of Jingyun Xingkong’s clients into repeat customers.

Crystal Cloud’s “client-centric mindset” is reflected in every aspect of its project services. For instance, under the typical vendor culture of “delivering what is paid for,” there is often a tendency to design as many prototype formulations as possible. However, more formulations do not necessarily yield better outcomes. With thorough pre-formulation studies, satisfactory results can be achieved without developing numerous formulation prototypes. Crystal Cloud advocates minimizing API usage wherever feasible, stating, “Through rigorous scientific data analysis, we typically keep the number of proposed prototype formulations in the single digits.”

Taking Crystal Cloud’s first project as an example, the client was a Guangzhou-based biotech company and also a long-standing customer of Crystal Pharmatech. “At that time, we developed only three model formulations, selected two of them for pharmacokinetic (PK) studies, and then chose one to proceed directly to clinical trial material (CTM) manufacturing,” said Chen Xiaoxia.

“Jingyun Xingkong” represents the dream of a generation of Chinese formulation scientists, and also carries Crystal Pharma’s vision to transform the industry by advancing from crystal forms to formulations.

Before co-founding Jingyun Starry Sky, Li Feng had already taken early retirement from Merck & Co. in the United States and enrolled at a college in the Boston area to pursue a master’s degree in humanities; Ma Decheng had also planned his future honorable retirement life. However, both of them altered their original life plans to some extent in pursuit of their dream in formulation CDMO.

With over two decades of experience in the pharmaceutical formulation R&D industry, Li Feng feels a particular obligation to disseminate the critical industry message regarding “the importance of formulations.”

In July 2023, at the open day event held to celebrate the second anniversary of Jingyun Xingkong, Li Feng was invited to deliver a keynote speech, during which he presented a set of data.

A 2019 questionnaire survey showed that,Among the surveyed practitioners, up to 60% experienced project failure or delays due to formulation issues; of these, 38% faced delays of up to 12 months, 52% encountered delays exceeding 12 months, and 10% resulted in project termination.。^[1]

The study summarizes three primary reasons: First, insufficient emphasis on formulation development has led to inadequate investment, with only 21% of companies investing more than $500,000 in this area; second, there is a lack of product roadmaps and unclear objectives; third, there is reliance on “off-the-shelf” generic formulations. The article concludes that “although formulation is a value-driven key factor in the new drug development process, the industry continues to underestimate its importance in early-stage R&D.”

“Although these figures are broadly consistent with my own observations and those of other formulation colleagues, they remain startling. In other words, at least half of all projects will encounter issues. Imagine having two projects in hand; one of them is likely to fail,” remarked Li Feng. “The core value of a drug molecule lies in its molecular structure. When formulated into a specific solid form as an active pharmaceutical ingredient (API), the API becomes the carrier of this value. The drug product, in turn, protects the API and ensures accurate and reliable delivery of the drug molecule to patients. Thus, formulation development serves as a bridge, enabling the drug molecule to transition from the laboratory to clinical trials and eventually to the market, where it ultimately demonstrates its value in patients. I clearly see that most formulation problems stem from deviations in formulation strategy and inadequate recognition and mitigation of potential risks. It is essential to ensure the success of your Phase I clinical formulation to support overall clinical success.”

The success or failure of formulation development has a far greater impact on biotech companies than on big pharma.Biotech companies lack the resources and room for trial-and-error that Big Pharma enjoys. Many biotechs approaching Crystal Cloud have encountered formulation issues or challenges; some are considering terminating their projects, while others are experiencing delays of 9–12 months, with severe cases leading to complete failure in Phase I clinical trials. Reformulating the drug and conducting subsequent clinical trials would require an investment of tens of millions of yuan. More critically, given the intense competition in new drug development, any delay in project progress could cause these companies to miss crucial financing and commercial opportunities.

For Chen Xiaoxia, Crystal Cloud Sky is a company founded by scientists that embraces a passion for science and relies on data-driven decision-making. Everyone strives for technical excellence, and she values this alignment with the team’s core values. Additionally, Chen thrives on challenges. In her early career, to delve deeper into formulation R&D, she returned to school after entering the workforce to earn a second master’s degree in quantitative pharmacology, emerging as a top-tier talent with a Ph.D. and two master’s degrees.

In Boston, Chen Xiaoxia also witnessed the rapid pace of technological advancement. The pharmaceutical industry as a whole has reached a crossroads, with emerging trends gradually becoming apparent in how to bridge small molecules and large molecules. Which is the right direction? How can one seize this business opportunity? At Crystal Cloud Sky, she can stay at the forefront of innovation and pursue more challenging cases.

However, beyond the realm of science, formulation CDMO is also a business that requires business development and serving a broader client base.

For Ma Decheng, the CEO, Jingyun Xingkong, as a latecomer in the CDMO industry, is built upon three core consensuses: first, drug formulation is critical; second, excelling in formulation is challenging and requires substantial expertise and experience; third, effective management by a high-quality CDMO partner is essential. With effective client communication and competitive pricing, Jingyun Xingkong naturally secures its market position.

Currently, Ma Decheng spends half of his time on work related to client projects. In terms of project management, Jingyun Xingkong has a clear objective: to deliver every project with high quality, meeting and exceeding customer expectations.

Currently, Crystal Sky supports solid dosage forms from small-scale and pilot studies to early commercialization. The global headquarters building of Crystal Pharmatech and the commercial formulation production facility have been completed. In line with client project timelines, Crystal Sky will promptly advance the construction of Phase II GMP formulation workshops, which will possess full commercial manufacturing capabilities. This ensures that once clients choose Crystal Sky, they can remain confidently within our ecosystem for the long term.

Furthermore, Crystal Cloud has entered new technological fields. Over the past year, Crystal Cloud has invested substantial resources in the research and development of oral delivery technologies for PROTACs and peptide molecules, achieving surprising bioavailability in animal studies. It is expected that human pharmacokinetic (PK) data will be obtained in the near future through clinical trials of its current pipeline projects.

For Chen Minhua, co-founder and helmsman of Crystal Pharma, the Chinese innovative drug industry is undergoing significant cyclical adjustments. Should he go all-in on Jingyun Starry Sky? This is a major strategic decision. Chen Minhua’s answer has always been clear: no matter how difficult the journey may be, his determination and vision to build Jingyun Starry Sky into China’s premier formulation CDMO will remain unchanged.

For Chen Minhua, CrystalPharm has dreamed since its founding in 2010“To be an industry leader and a force for global change”—this vision aligns perfectly with the dream of three Chinese pharmaceutical formulation professionals to transform the formulation CDMO industry.

Dreams Continue. Jingyun Xingkong started in the “winter” of 2021, but nothing could stop its resilient growth.

Reference Article:

【1】 Formulation Fail Delays arising from formulation issues are commonplace in the industry. It’s time to start thinking about the problem earlier.  

https://themedicinemaker.com/manufacture/formulation-fail