Accela Chem: 15 Years of Specialization in Molecular Building Blocks for Innovative Drug Development Files IPO Prospectus

“How many years and how much money does new drug development take?”

Dr. Tang Ming, Chairman of Shaoyuan TechnologyHaving successfully led new drug development initiatives and forged a collaboration with Beta Pharma, Dr. Tang provided the following answer: It takes at least ten years, at least one billion US dollars, and a team of over a thousand R&D personnel to sift through tens of thousands of compounds in search of viable candidates. Moreover, failure can occur at any stage of development, including Phase III clinical trials. As time progresses, the difficulty of developing new drugs continues to increase, accompanied by escalating costs.

“How can the new drug development industry and enterprises improve their return on investment?”

The three answers provided by Shaoyuan: fully leveraging China's engineer dividend, specialized division of labor, and the spirit of craftsmanship.

The nature of the new drug development industry dictates that it is talent-intensive, requiring a large number of professionals in chemistry, biology, medicine, engineering, and other fields throughout the entire R&D process. The rapid year-on-year growth in pharmaceutical R&D investment both domestically and internationally has led to a continuous expansion in the demand for R&D talent in the pharmaceutical industry in recent years. Although Europe and the United States still dominate new drug development, their reserves of R&D and technical personnel can no longer meet the industry’s growing demands.

“China produces approximately 4.7 million STEM (science, technology, engineering, and mathematics) graduates annually (2016 data), at least three times the number in the United States.”Sun Yun, Director of ShaoyuanAs one of McKinsey’s earliest consultants, I have witnessed China’s development over the past three decades. With the robust growth of domestic industries such as pharmaceutical intermediates, active pharmaceutical ingredients (APIs), CXO, and new drug development, China has cultivated a large pool of specialized professionals in fields including pharmacy, chemistry, process engineering, and manufacturing.Laid the Foundation for the “Engineer Dividend” in China’s Pharmaceutical R&D Services Industry Over the Next Decade. China’s talent pool offers advantages not only in size but also in learning agility, working hours, client responsiveness, and service flexibility. During the pandemic years, a significant portion of overseas new drug R&D services has been accelerating its shift to China.

In the coming years, Shaoyuan remains firmly optimistic about the growth of China’s pharmaceutical R&D services market. In fact, from last year to this year, Shaoyuan’s R&D technical staff has doubled, reaching 200 employees, and is expected to double again next year.

Industrial specialization is an inevitable trend as an industry reaches a certain scale.

In Sun Yun’s view, much like the automotive manufacturing industry, which is divided into original equipment manufacturers (OEMs), Tier 1 component suppliers, Tier 2 component or parts suppliers, and so on,Specialized Division of Labor Enhances Industry-Wide Efficiency, enabling consumers to purchase automobiles that offer superior performance, high quality, diverse variety, and affordable prices. Component suppliers each specialize in their respective fields; for instance, in the new energy vehicle sector, the manufacturing of battery cells or battery modules is a highly specialized domain, giving rise to industry leaders such as CATL.

Molecular building blocks are to new drugs what battery cells are to new energy vehicles.Outsourcing molecular building blocks to specialized companies can help pharmaceutical firms and CROs improve the efficiency of new drug development. Shaoyuan is dedicated to providing molecular building blocks for new drug development, which can also be described as “creating the core” for new drug development.

Driven by the increasingly specialized division of labor spurred by innovative drugs’ pursuit of R&D efficiency, and the accelerating shift of the pharmaceutical industry chain to China, the domestic market for molecular building blocks has exceeded RMB 40 billion (Source: Frost & Sullivan) and continues to demonstrate sustained growth.

While the industry is replete with competitors, Shaoyuan’s focused positioning remains unique. To continue with the automotive analogy, some peers manufacture both battery cells and complete vehicles. This model lacks focus and creates competition with downstream OEM customers. Other peers operate comprehensive platforms offering a wide range of components, including battery cells, motors, electrical systems, and even structural components.While it is possible to rapidly scale up the business, there is a lack of technical focus. In contrast, Shaoyuan positions itself exclusively in molecular building blocks, serving as the “chip-making” expert for new energy vehicles, and offers one-stop services from R&D to mass production.

“In the new drug R&D industry chain, there are many companies providing pharmaceutical R&D services, numerous CDMOs, and no shortage of chemical reagent suppliers. However, Shaoyuan has its own strengths and distinctive features. ‘Shaoyuan is highly focused, leveraging its excellent R&D capabilities to specialize in and excel in the field of molecular building blocks. The company has always been dedicated to providing a one-stop service for all molecular building blocks required throughout the entire new drug R&D process,’ said Sun Yun.”

Shaoyuan’s team boasts a strong background in organic synthesis technology. Since its establishment in 2007, the team has seized this development opportunity, deeply cultivating the field of molecular building blocks for many years and fostering a unique “craftsman” culture.

To seize industry opportunities and focus on long-term development, Shaoyuan has been committed to building a high-caliber R&D technical team. Since its establishment in 2007, Shaoyuan’s R&D personnel have grown from just a handful of individuals to nearly 200 today.Ph.D. and Master’s degree holders with extensive experience and prestigious backgrounds in the pharmaceutical and chemical industries from leading institutions both in China and abroad—including the University of Chicago, Zhejiang University, the Shanghai Institute of Organic Chemistry (Chinese Academy of Sciences), the Shanghai Institute of Materia Medica (Chinese Academy of Sciences), China Pharmaceutical University, Wuhan University, and Lanzhou University—have converged at Shaoyuan Technology, united by shared values and goals., established two major molecular building block R&D centers in Shanghai and Jinan, set up a CDMO process R&D center, and initiated the preparation for establishing an R&D center in the United States.

Molecular building block CDMO is not only one of Shaoyuan’s core businesses but also its primary market. Global pharmaceutical giants and the top ten CDMO companies are all clients of Shaoyuan. From initial molecular screening to process improvement or optimization, we enable high-quality scaled-up production and reduce manufacturing costs. With 15 years of deep expertise in the field of molecular building blocks, Shaoyuan Technology has accumulated a robust portfolio of mainstream pharmaceutical and CXO clients, such as:Abbott、Johnson & Johnson、Roche、Hengrui Medicine、BeiGene、WuXi STA、Pharmaronetc., and maintain a stable partnership for many years.

Shaoyuan also prioritizes investment in the research and development of its core technologies, thereby more efficiently supporting customers’ innovative drug development and industrialization processes, while simultaneously raising competitive barriers.

Over the years, one key intermediate has been tracked by Shaoyuan for a decade, following the client’s project from preclinical stages through to the current Phase III clinical trials. This is a priority new drug program within the client’s pipeline, with market launch expected in 2025.Indicated for methemoglobinemia. This intermediate, characterized by its small molecular size and poor stability, is a key fragment in the client’s candidate molecule. The client initially approached several suppliers, none of whom were able to provide kilogram-scale commercial production. Shaoyuan boldly took on this challenge and, through substantial internal R&D investment, successfully overcame the technical hurdles, achieved commercial-scale manufacturing, and enabled the advancement of the client’s clinical trial program.

Shaoyuan’s most satisfying project is a key intermediate for an oral GLP-1 drug.This novel small-molecule drug for the treatment of type 2 diabetes, initially developed by the global pharmaceutical giant Pfizer, exhibits glucose-lowering and weight-reducing effects. As an oral formulation, it offers convenient administration and is projected to surpass other injectable GLP-1 agents to become a blockbuster medication. Numerous pharmaceutical companies both domestically and internationally, such as Eli Lilly and Hengrui Medicine, are developing follow-on products. A four-membered ring active fragment within this new drug constitutes the core of its molecular structure; incorporation of this moiety can enhance the potency of candidate molecules by a hundredfold. However, the original manufacturing process involves highly toxic substances, precious metals, and hazardous chemicals and procedures such as hydrogenation, resulting in high costs and significant challenges in scale-up.Following R&D and optimization by Shaoyuan Pharma, a novel synthetic route has been adopted that avoids highly toxic substances, precious metal reagents, and hazardous processes. This approach significantly reduces costs, enables green manufacturing, and supports production scales ranging from hundreds of kilograms to multiple tons, thereby greatly accelerating drug discovery and clinical development for pharmaceutical companies in this field. Shaoyuan Tech has already filed international patent applications.

Key Intermediates for Innovative Drugs in Glucose-Lowering and Weight Loss

Shaoyuan has also achieved new breakthroughs in the research and development of key intermediates for innovative anticancer drugs.In recent years, antibody-drug conjugates (ADCs) have emerged as a key direction in the development of novel anticancer therapeutics, boasting substantial market potential and driving significant demand for molecular building blocks. One of the most successful ADCs to date is Enhertu, developed by Japan’s Daiichi Sankyo. The active pharmaceutical ingredient (API) in this molecule is a camptothecin derivative, which requires more than 13 chemical reaction steps for synthesis. The original manufacturing process yielded only approximately 1%. Through research, development, and optimization by Shaoyuan, the company overcame critical technical barriers in the synthetic route for key camptothecin fragments. This breakthrough increased the overall yield by 20–30 fold, resolved the scalability limitations of the previous process that hindered mass production, and successfully scaled up production to the tens-of-kilograms level, thereby substantially reducing costs. Currently, this molecular building block has received orders and inquiries from dozens of clients.

Key Intermediates for Innovative Anti-Cancer Drugs

Earlier this year, Shaoyuan secured hundreds of millions of yuan in strategic investment from institutions including Principle Investment.Chen Lihuang, General Manager of Shaoyuan Technologystated: “We are delighted to have introduced strategic investors of significant value to Shaoyuan. Shanghai Principle Equity Investment Management Co., Ltd. and other partners bring extensive experience in investment, management, and mergers and acquisitions within the pharmaceutical sector, along with outstanding industry resources and networks, while sharing our team’s common goals. With the support of these strategic investors, Shaoyuan Technology will continue to deepen its focus on existing products while increasing capital and resource allocation to expand laboratory and manufacturing capacity, actively develop markets, and introduce new products. The Shaoyuan team will maintain its technological leadership and consistently deliver high-quality products and first-class services to customers. We believe that with this capital boost, Shaoyuan will be further empowered, unlocking broader development opportunities and positioning itself for growth into a globally renowned custom chemicals and CDMO service provider.”

The company has achieved high revenue growth for several consecutive years and is expected to maintain this momentum.Chen Lihuangstated,Going forward, Shaoyuan will increase its investment and continue to “double down” on the pharmaceutical R&D services sector.. In the short term, Shaoyuan Technology will continue toExpand Production Capacity、Enhancing Research Capabilitiesas the goal,Gradually Expanding into the International Market. In its medium- to long-term future development, Shaoyuan willTracking the Development of New Drugs, developedHigher Efficiency、More Targeted Molecular Building Block ProductsShaoYuan Technology’s Shanghai office has recently relocated to a new address. The expansion projects for its Jinan and Shanghai R&D centers are in full swing, with the company’s R&D capacity expected to double within the next one to two years. Preparations for the new factory are also proceeding in an orderly manner, with ShaoYuan planning to build a high-standard GMP intermediate manufacturing facility within the next one to two years. Meanwhile, ShaoYuan’s overseas colleagues are busy establishing new international subsidiaries. Across ShaoYuan Technology, there is a vibrant atmosphere of growth and prosperity.

After 15 years of dedicated refinement, Shaoyuan has established itself as a renowned brand in the molecular building block industry, underpinned by robust R&D capabilities, superior product quality, and first-class service.Unveiling Our Edge: Shaoyuan Technology Remains Bullish on the Next Decade of China’s Pharmaceutical R&D Services Market, Will Continue to Increase Capital and Resource Investment, Aiming to Become a One-Stop Service Expert for Innovative Drug Molecular Building Blocks, Focusing on the R&D and Production of Key Intermediates for New Drugs, and “Building the Core” for New Drug Development in China and Around the World.

ShaoYuan Technology is a professional supplier of catalog molecular building blocks and CDMO services in the R&D fields of innovative drugs. Its core business includes chemical reagents and catalog molecular building blocks, as well as custom synthesis, process development and optimization, and scale-up manufacturing services (CDMO) for drug molecular building blocks. ShaoYuan Technology boasts industry-leading capabilities in custom synthesis and process technology R&D. Its R&D team has over 15 years of proven success, and the company has established a strong customer base and brand recognition. Headquartered in China, ShaoYuan Technology serves the global pharmaceutical R&D industry chain.

Founded in 2002, Principle Capital focuses on equity and M&A investments in China’s advanced manufacturing, modern services, healthcare, and consumer sectors. It currently manages both USD and RMB funds. Leveraging its extensive professional resources, Principle Capital supports corporate growth, enhances enterprise value, facilitates international expansion, and drives industry consolidation and mergers and acquisitions, enabling deeper cooperation and development in the global market. Its successful investment cases include Crystal-Optech, Lier Chemical, Shanghai SteelUnion, Yashili, LONGi Green Energy Technology, Jinhe Industrial, Zhejiang Yongqiang, LB Group, Befar Group, Shida Shenghua, Injet Electric, Leaderdrive, and Camtek Intelligent.