Laviana Pharma Files IPO Prospectus as a Specialized CDMO Focused on Small Molecule Innovative Drugs

In early 2004, Chen Wenting and his partner Yang Guang returned to China to launch a startup. Prior to this, Chen had spent many years engaged in new drug research and development at pharmaceutical companies such as SmithKline Beecham, DuPont, and Bristol-Myers Squibb in the United States. Upon returning to China, Chen’s initial plan was to continue working on innovative drugs. At that time, the research and development of innovative drugs was primarily funded by large pharmaceutical companies.

Innovative drug development is a time-consuming process, with the average new drug taking more than 10 years from research and development to market launch. Chen Wenting told VCBeat that he had previously participated in the development of a drug in the United States; although this drug entered Phase I clinical trials in 1999, it has only recently become poised for market approval in the U.S. Meanwhile, large pharmaceutical companies are often bogged down by complex organizational structures, making substantive innovation difficult and slow to achieve. Consequently, many large pharmaceutical firms have attempted to outsource their innovative drug R&D processes, thereby generating demand for pharmaceutical outsourcing service platforms.

After observation, Chen Wenting found that many platforms providing early-stage R&D for innovative drugs had already reached a significant scale, becoming stable outsourcing service providers for large pharmaceutical companies. However, service platforms capable of further translating early-stage R&D achievements into drug products and gradually bringing them to market were extremely scarce.

“After compounds are screened, they must pass through three phases of clinical trials before entering the market. However, at that time, there was no mature model for services spanning from preclinical research to clinical trials for innovative drugs,” pointed out Chen Wenting. He noted that the ultimate goal of compound development is to bring innovative drugs to market, and he believed that the missing link in the pharmaceutical outsourcing market represented a segment with tremendous potential. Consequently, Chen Wenting and others founded Laviana (Stock Code: 838853) to provide contract development and manufacturing organization (CDMO) services, including custom R&D and custom manufacturing, to pharmaceutical companies.

In 2005, the Jiangsu Jiangyan Economic and Technological Development Zone was established, with a focus on attracting pharmaceutical and chemical enterprises. Laviana settled in Jiangyan, Jiangsu. Since its inception, Laviana has leveraged its advantage in rapid achievement transformation, aligning with the pharmaceutical industry’s demand for high efficiency. Chen Wenting pointed out that the greatest risk for pharmaceutical companies developing innovative drugs is not failure, but uncertainty. Laviana excels at advancing the R&D progress of innovative drugs in a rhythmic manner, gradually solidifying its market position.

To date, Laviana has established collaborative partnerships with numerous domestic and international pharmaceutical and biopharmaceutical enterprises. Recently, VCBeat conducted an exclusive interview with Chen Wenting, Chairman of Laviana, in which he shared his insights on the evolution of the pharmaceutical market over his more than 20-year career, as well as his strategic vision for Laviana’s future development.

Chen Wenting told VCBeat that over the nearly 14-year development history of Laviana, there have been two major transformations—one in 2008 and the other at present.

In recent years, biotechnology startups comprising 5 to 10 employees have emerged as a significant force in innovative drug development, driving transformation in the pharmaceutical market. Previously, large pharmaceutical companies monopolized the research, development, and production of innovative drugs by leveraging their financial advantages. Today, the model wherein biotech companies identify targets and commission CDMOs to develop small-molecule innovative drugs based on these targets is becoming increasingly prevalent in Europe and the United States, the primary markets for Laviana’s clients.

The research and development (R&D) of innovative drugs is a field with exceptionally high technical barriers, with each stage—from compound discovery to market launch—posing distinct demands on core technologies. Biotechnology companies often lack personnel with genuine expertise in pharmaceutical manufacturing techniques; therefore, specific technical challenges and processes are typically addressed by Contract Development and Manufacturing Organizations (CDMOs). In standard practice, biotech firms focus on the discovery of novel compounds, while CDMOs are responsible for developing and optimizing manufacturing processes, advancing innovative drugs through clinical trials, and providing customized scale-up production.

Chen Wenting stated that the involvement of CDMOs would significantly accelerate the market launch of innovative drugs. “It previously took more than 10 years to develop and bring a new drug to market, but now this process can be completed in 7–8 years. In some cases, it may take only 5–6 years to bring an innovative drug to market.”

In contrast, the core competency of production outsourcing service platforms under the traditional model lies in process optimization and cost reduction; their R&D capabilities are often weak, making them ill-equipped to meet the demands of innovative drug development.

In 2008, Laviana underwent a strategic transformation, largely exiting its early-stage business of supplying pharmaceutical compounds. At that time, the company faced a choice between horizontal expansion into a large-scale platform, akin to WuXi AppTec or ChemPartner, or vertical integration into a specialized niche platform. After analysis, Chen Wenting concluded that establishing a horizontal mega-platform would require substantial upfront investment and that the market capacity had a ceiling. “Platforms that launched earlier have already achieved significant scale. For Laviana to gain a competitive edge in this track, the risks would undoubtedly be substantial.”

In Chen Wenting’s view, although the current mainstream small-molecule drugs in China are predominantly high-volume generics, advances in diagnostic and therapeutic technologies will lead to greater precision in drug suitability and indications. In the future, blockbuster statins such as Lipitor may become increasingly scarce, while “niche” drugs will see a corresponding rise.

Furthermore, Laviana possesses strong technical capabilities in drug and manufacturing process development, enabling it to adapt to product technology transfer and the development of new products. Its technical team has a profound understanding of the key technical aspects across all stages of chemistry and chemical engineering. Laviana focuses on developing personalized new drugs, providing a specialized platform for smaller-scale pharmaceutical companies.

By the end of 2017, after completing a new round of financing, Laviana began constructing standard cGMP-compliant facilities. This marked Chen Wenting’s second major transformation in shaping Laviana into a vertically integrated pharmaceutical outsourcing service platform. In determining the scale of the new facility, Laviana once again charted a unique course: rather than installing large-scale reactors designed for high-volume production in single reactions, it opted to build multi-purpose reactors.

Chen Wenting told VCBeat that for CDMOs, the phase with the highest costs and greatest risk is the early stage of project involvement. Therefore, Laviana has consistently concentrated its technical resources on the pre-Phase I clinical trial stage.

As the project progresses, the CDMO’s understanding of the project deepens. With accumulated experience, the demand for technical resource input continuously decreases, leading to a downward trend in costs. Furthermore, the peak profitability in innovative drug development actually occurs during the Phase II and Phase III clinical trials, when production volume ramps up.

However, due to the lack of cGMP-compliant facilities, Laviana could only participate in the later stages of project development, watching clients transfer out their matured technologies and thus receiving economic returns that were disproportionate to the project risks it bore. Therefore, Laviana is currently focusing on building standard cGMP-compliant facilities to enhance its production capabilities for the later stages of projects. “Once the cGMP workshop is completed, Laviana will be able to provide clients with outsourcing services all the way through to drug commercialization,” said Chen Wenting, who is highly optimistic about the expansion prospects of Laviana’s business lines. “We can even handle post-approval commercial manufacturing.”

However, Chen Wenting emphasized that Laviana will remain focused on CDMO services and will not engage in competitive businesses with its clients. Chen Wenting believes that, on one hand, professionals should be entrusted with professional tasks; on the other hand, once a CDMO becomes a competitor to pharmaceutical companies, both parties will become defensive in their collaboration, which will inevitably hinder the rapid development and market launch of innovative drugs.

Regarding the team, after more than a decade of development, Laviana has established a robust R&D system for its technical team. Currently, nearly 100 employees at Laviana are engaged in R&D activities, including frontline research, analytical research, and engineering. The R&D system is designed to continuously stimulate the professional growth and innovative drive of each researcher, thereby fostering an efficient innovation mechanism.

In the future, Laviana does not plan to venture into large-molecule drugs. However, Chen Wenting stated that Laviana would not rule out perfecting business lines such as formulations through mergers and acquisitions. In Chen Wenting’s view, CDMO is actually a vertical sector where the market will become increasingly concentrated; only CDMO enterprises that prioritize both R&D and manufacturing capabilities will sustain their competitiveness.