Affected by this news, both A-shares and H-shares of WuXi AppTec rose on the same day, with A-shares hitting the daily limit up at one point. As of the close, WuXi AppTec's A-share market price was 69.68 yuan/share, up 8.82%, with a market value of 2021 billion yuan; The Hong Kong stock market quoted 71.95 yuan per share, up 9.93%, with a market value of 207.8 billion yuan.

Not only WuXi AppTec, but also companies such as Kanglong Huacheng, Chengdu Pioneer, and Hongbo Pharmaceutical actively embrace AI technology. These CXO giants have coincidentally ventured into the AI field, and what insights do they have for the industry?

Medication strategy: HI+AI
Thanks to its contract outsourcing model, CXO has significantly reduced research and production costs and improved research and development efficiency for the pharmaceutical industry, making it highly respected in the industry. However, the industry still inevitably faces many uncertain factors such as geopolitical risks, sluggish market financing, and intensified internal competition. From the perspective of industry development trends, CXOs still need to consider how to build their own protective moat.

At the 2024 performance exchange conference call, executives from WuXi AppTec discussed the application of AI in the pharmaceutical industry, stating that the industry is in the early stages of exploring the use of AI to accelerate innovative drug development. "We have seen many customers trying it out. We believe that AI, as an innovative tool, can help the entire industry improve efficiency and speed, and may open up more space for new drug development in the future that was previously impossible to develop into drugs.

The relevant person in charge of WuXi AppTec said, "The company's strategy has always been to make good use of the dual wheel drive of HI (human resources) and AI, enhance industry insights and business predictability, and better serve our customers and patients. We will also follow the trend and provide ultimate services to our customers.

WuXi AppTec has never independently developed new drugs or used AI to develop new drugs. The Chemistry42 mentioned online has nothing to do with the company. As an integrated CRDMO service platform, the company has always been committed to providing empowerment services, which can bring more customers and business opportunities.

Chen Zhu, Chief Analyst of the Medical and Health Industry at CITIC Securities, frankly stated, "For WuXi AppTec, the core business growth comes from project services provided by partners. The conflict between independently developing new drugs and its current business model will affect its business orders. However, WuXi AppTec maintains an open attitude towards AI technology and does not rule out the use of AI tools to accelerate CRDMO business, which is also the reason for its statement at this exchange meeting.

CXO industry enters the fast lane
For CXO enterprises, the importance of AI is self-evident. If AI tools can be maturely applied, it will greatly improve research and development efficiency, reduce costs, and accelerate the development of innovative drugs. In fact, CXOs that lay out AI are not just WuXi AppTec. On February 19th, Kanglong Huacheng announced that its subsidiary Kanglong Huacheng Clinical Research Services Co., Ltd. has completed a controlling transaction with Zhejiang Haixinhui Technology Co., Ltd. (hereinafter referred to as "Haixinhui").

It is reported that Haixinhui's core advantage lies in utilizing its digital and AI technology platform with independent intellectual property rights to build a patient management system that strictly complies with international data privacy regulations. Relying on strategic cooperation with the Chinese Society of Clinical Oncology (CSCO), it has formed a real-world data (RWD) network covering more than 30 provinces across the country.

Chengdu Pioneer is also laying out its AI track, jointly developing a molecular skeleton transition algorithm based on AI technology (GraphGMVAE) with Tencent AI Lab. This algorithm can generate molecules with similar activity but different skeletons while keeping the molecular side chains unchanged, thereby accelerating the efficiency of small molecule design in the field of drug development and reducing labor and time costs.

On January 15th, Hongbo Pharmaceutical released DiOrion, a drug development platform based on artificial intelligence technology, which integrates advanced AI algorithms and big data analysis technology.

Yang Zekang, co-founder of Gazelle Investment, pointed out that "CXO's positioning is different from Biotech, on the one hand, it does not engage in independent new drug development; On the other hand, through the accumulation of data from partners, it has obvious advantages in data and research and development. With the help of AI tools to train and strengthen databases, this will greatly enhance the efficiency of early drug development. This cost-effectiveness is why many pharmaceutical companies are willing to cooperate with it. Leading CXOs such as WuXi AppTec and Kailein, which already have large databases, have been involved in AI for a long time
As a golden trend leading future development, AI+medicine not only extends itself to pharmaceutical companies, but also attracts many cross-border players, such as technology giant Nvidia, which is constantly expanding its presence. At the same time, according to statistics from China Merchants Securities, the global AI pharmaceutical financing in the capital market will exceed 5.8 billion US dollars in 2024, and the valuations of leading companies such as Yingsi Intelligence and Jingtai Technology will soar more than 15 times... These are all forcing CXO companies to accelerate their technological upgrades.

The 14th Five Year Plan for the Development of the Pharmaceutical Industry clearly states that the new generation of information technology should be used to empower pharmaceutical research and development. Explore the application of technologies such as artificial intelligence, cloud computing, and big data in the field of research and development, and improve the efficiency of discovering new targets and drugs through mining and analyzing biological data and simulating calculations. Strengthen the application of information technology in the construction of experimental animal models, drug design, pharmacological efficacy research, clinical trials, data analysis and other aspects, shorten the research and development cycle, and reduce research and development costs.

Source: https://pharm.jgvogel.cn/c1497926.shtml