Steroid API Leader Completes Acquisition of 60% Stake in Yingu Pharmaceutical for RMB 458 Million

Saituo Biological announced on October 16 that Yingu Holding Group Co., Ltd., the Company, and Yingu Pharmaceutical Co., Ltd. (hereinafter referred to as “Yingu Pharmaceutical”) signed the “Letter of Intent on Equity Transfer” on October 15, 2023.

Saituo Bio Plans to Acquire 60% Stake in Yingu Pharmaceutical via Cash Payment, upon completion of the transaction, the company will become the controlling shareholder of Yingu Pharmaceutical.The aggregate valuation of 100% equity interest in Yingu Pharmaceutical was RMB 763.5 million, with the transaction price for a 60% equity stake amounting to RMB 458.1 million.The final transaction price for the 60% equity interest in Yingu Pharmaceutical will be determined through subsequent negotiations among the parties involved, based on the appraised value stated in the appraisal report issued by an appraisal institution qualified to engage in securities-related business.

If this transaction is successfully implemented, it will achieve complementary advantages and industrial synergy between Saituo Bio and Yingu Pharmaceutical, thereby enhancing Saituo Bio’s full-industry-chain production capabilities.

Yingu Pharmaceutical, the acquired company, was established in August 2007 in the Haidian Park of Zhongguancun, Beijing. It is an innovative pharmaceutical enterprise integrating R&D of innovative drugs, synthesis of active pharmaceutical ingredients (APIs), formulation manufacturing, and product sales.

Yingu Pharmaceutical currently operates a modern patented active pharmaceutical ingredient (API) manufacturing plant, which includes peptide API synthesis capabilities, and a brand-new finished dosage form manufacturing facility. The latter comprises multiple GMP-certified workshops for various injectables and nasal sprays, featuring four production lines: two lines for small-volume parenterals (non-terminally sterilized) and two lines for spray formulations.

Leveraging its breakthroughs in innovative technologies, Yingu Pharmaceutical holds multiple Chinese patents and PCT patent applications, having obtained eight Chinese invention patent certificates as well as numerous invention patent certificates in the United States, Japan, Europe, and other countries.

Its core product is a nasal spray containing benzene ring quinine bromide, which is a Class 1.1 new drug in China for the treatment of post-cold rhinitis symptoms and persistent allergic rhinitis. The drug was approved by the NMPA for market launch on March 31, 2020, to alleviate symptoms such as runny nose, nasal congestion, nasal itching, and sneezing caused by allergic rhinitis.

With 16 years of establishment, Yingu Pharmaceutical has accumulated extensive experience and resources in drug R&D and commercialization, which will significantly enhance Heze Saituo Biological Technology Co., Ltd.'s full industrial chain layout in the active pharmaceutical ingredient (API) sector.

This Acquisition,In terms of product R&D, leveraging Yingu Pharmaceutical’s flagship products and supporting R&D capabilities, will help Heze Saituo Biological Technology Co., Ltd. accelerate the development of formulation products and continuously expand its product portfolio;In terms of large-scale industrialization, Yingu Pharmaceutical's mature formulation manufacturing capacity can provide pilot-scale and commercial-scale production platforms for Saituo Biological's products under development, while Saituo Biological's leading capabilities in intermediate and active pharmaceutical ingredient (API) production help stabilize the API supply for Yingu Pharmaceutical, expand production capacity, and capture market share;In terms of commercial promotion, Yingu Pharmaceutical's nationwide sales team and distribution channels also facilitate the promotion and sales of Saituo Biologics' products.

If the transaction is successfully implemented, Yingu Pharmaceutical will be included in the consolidation scope of Saituo Bio, which will effectively enhance Saituo Bio’s profitability, risk resistance, and sustainable development capabilities.

In fact, prior to this acquisition, Heze Saituo Biological Technology Co., Ltd., as the first domestic manufacturer to adopt synthetic biology methods for the large-scale production of steroid drug raw materials, had already completed its full industrial chain layout encompassing pharmaceutical “intermediates–active pharmaceutical ingredients (APIs)–finished dosage forms.”

Saituo Bio was established in 2010, specializing in the R&D and production of steroid drug intermediates, and successfully listed on the Shenzhen Stock Exchange in 2017.It is the leading supplier in the field of domestic steroid drug raw materials.Building on its leading position in the niche industry, Saituo Biological has completed its strategic layout across four major sectors: basic intermediates, high-end intermediates, high-end respiratory active pharmaceutical ingredients (APIs), and finished formulations.

In the field of basic intermediates, Saituo Biological has covered five major parent nucleus series products of steroid raw materials, possessing a comprehensive product line in the field of domestic steroid drug raw materials.

In the Field of High-End Intermediates, Saituo Bio has established production capabilities for more than ten high-end intermediates, including medroxyprogesterone epoxide (8DM), betamethasone epoxide hydrolysate (DB11), tetraene compound (3TR), anecortave acetate (H6), nonaene compound, and ring-opened derivative.

In the area of high-end respiratory active pharmaceutical ingredients (APIs), Saituo Bio has completed new regulatory filings for five active pharmaceutical ingredient (API) products both domestically and internationally. In China, Saituo Bio currently holds manufacturing licenses for nine APIs; fluticasone propionate is undergoing linked review, while three other APIs, including desonide and budesonide, are under independent review. For overseas filings, multiple APIs, including fluticasone propionate and abiraterone acetate, have been submitted for US Drug Master Files (DMFs); fluticasone propionate and triamcinolone acetonide APIs have been submitted for European CEP applications. Additionally, several other APIs are preparing for process validation, manufacturing license applications, and domestic and international regulatory submissions.

In terms of formulation, Saituo Biological also possesses extensive industrialization expertise.Saituo Biological successfully entered the finished pharmaceutical formulation sector through its Italian subsidiary, Lisapharma. Since 2019, over a four-year period, the company achieved a breakthrough upgrade from a single-product steroid API manufacturer to a full-industry-chain biotechnology enterprise.

Lisapharma boasts a portfolio of more than 20 pharmaceutical formulations, including salmon calcitonin injection, atracurium besylate injection, and sucralfate ointment. The company has completed the import re-registration for salmon calcitonin and triamcinolone acetonide. Notably, its domestic import registration application for sucralfate oral gel has been formally accepted by the Center for Drug Evaluation (CDE). In April 2023, Saituo Biotech successfully completed a refinancing through a private placement of shares to specific investors under the simplified procedure for its “high-end formulation industrialization” project, with the construction of cream production lines subsequently commencing in phases.

In the future, with the completion of domestic formulation plant construction, Saituo Biotechnology will establish dual platforms for formulation R&D and production in China and overseas.

Leveraging Saituo Biopharma’s full-industry-chain layout in the pharmaceutical sector spanning “intermediates–active pharmaceutical ingredients (APIs)–finished dosage forms,” the company’s 2023 semi-annual report, released on the evening of July 30, showed that it achieved operating revenue of RMB 664 million in the first half of the year, a year-on-year increase of 4.31%; net profit attributable to shareholders of the listed company amounted to RMB 59.9676 million, representing a year-on-year surge of 85.43%.

Achieving such a high net profit growth depends on the special field targeted by Saituo Biological, whose layout in steroid drugs is a huge market on par with antibiotic drugs.

Steroidal drugs refer to hormonal medications that contain a steroid structure in their molecular framework. They constitute an important class of clinically used drugs, primarily comprising two major categories: adrenocortical hormones and sex hormones. Corticosteroids used in clinical practice include cortisone acetate, hydrocortisone, dexamethasone acetate, and fluocinolone acetonide, among others. Sex hormones are classified into androgens and anabolic steroids, estrogens, and progestogens; examples include methyltestosterone, nandrolone phenylpropionate, ethinylestradiol, and progesterone. The Chinese Pharmacopoeia includes a total of 97 monographs for this class of drugs and their various formulations.

Steroid drugs occupy an important position in the chemical drug system., according to data from Yaorong Cloud,Currently, more than 400 types of steroidal drugs are produced worldwide, and they are widely used in the treatment of rheumatism, cardiovascular diseases, connective tissue disorders, lymphocytic leukemia, human organ transplantation, tumors, bacterial meningitis, skin diseases, endocrine disorders, and other conditions.

The vast downstream market for steroid drugs has driven the development of upstream raw materials. According to data from Huajing Industry Research Institute, global consumption of corticosteroid active pharmaceutical ingredients (APIs) showed a continuous growth trend from 2016 to 2021, reaching 387.58 tons in 2021, with a compound annual growth rate (CAGR) of 12.25%. Among these, the consumption of sex hormone APIs grew faster than that of corticosteroids; global consumption of sex hormone APIs reached 489.4 tons in 2021, with a CAGR of 45.05%.

Currently, the industrial chain has attracted numerous international players, including Pfizer, Bayer, BASF, Merck & Co., Sanofi, Cargill, ADM, Teva Pharmaceutical Industries, Mylan Pharmaceuticals, and Lupin Pharmaceuticals, as well as domestic Chinese companies such as Saituo Biotech, Dahongying Pharmaceutical, Gongtong Pharmaceutical, Xinhexin Pharmaceutical, Humanwell Healthcare, Zizhu Pharmaceutical, Xianju Pharmaceutical, and Jinyao Pharmaceutical.

According to data from Yaozhi.com, China still lags behind advanced countries in the research, production, and clinical development of steroidal drugs. This gap is attributable, on one hand, to the multi-step synthesis, complex reactions, low yields, and challenges in separation and purification associated with steroidal drug manufacturing; on the other hand, the shift from plant-based extraction to microbial transformation for upstream raw materials represents a revolutionary advancement in the field.

In recent years, leveraging China’s fertile pharmaceutical landscape, the country has demonstrated significant advantages in raw materials and continuously improved production processes. Consequently, a trend of industrial relocation has emerged in the global manufacturing of steroidal drugs, with China gradually becoming the world’s production hub for these medications.

According to data from Health.cn, China's annual output of steroid active pharmaceutical ingredients (APIs) currently accounts for approximately one-third of the global total. Among these, both the production capacity and actual output of corticosteroid APIs rank first worldwide. It is anticipated that more bulk APIs and globally integrated enterprises supporting them will emerge in China.