The concept of synthetic biology catches fire; numerous listed companies respond.

2024-05-14 10:39:21

Synthetic biology, as an increasingly hot field that attracts attention, is under the dual spotlight of national policies and the capital market. It has been reported that a national action plan for biotechnology and biomanufacturing is expected to be launched in the near term. Meanwhile, the concept stocks of synthetic biology have caused severe fluctuations

Synthetic biology, as an increasingly hot field that attracts attention, is under the dual spotlight of national policies and the capital market. It has been reported that a national action plan for biotechnology and biomanufacturing is expected to be launched in the near term. Meanwhile, the concept stocks of synthetic biology have caused severe fluctuations in the capital market, becoming a hot topic of discussion.

Zhang Xinyuan, the head of research at Science and Technology Think Tank, outlined the potential and challenges of the synthetic biology industry. According to him, this field can drive the transformation and upgrading of traditional industries by providing innovative biological materials and technologies. However, the current challenge lies in how to safely and effectively transfer laboratory technologies into practical applications.

Two major pieces of news that have attracted industry attention are as follows: Firstly, Tan Tianwei, the president of Beijing University of Chemical Technology and an academician of the Chinese Academy of Engineering, revealed at the 2024 Zhongguancun Forum annual conference that the national action plan for biotechnology and biomanufacturing, a collaborative effort among various national ministries, is about to be unveiled with “Biomanufacturing+” as one of its core contents. Tan Tianwei expects that the bioeconomy is poised to become the fourth industrial revolution following agriculture, industry, and the digital revolution. Secondly, a team from Jiangnan University has successfully reduced the production cost of hyaluronic acid using synthetic biology techniques based on microbial fermentation, making mass production more economical and adding vigor to the popularity of synthetic biology.

In the field of agriculture, synthetic biology techniques can develop pest control methods that are more environmentally friendly and efficient. In manufacturing, more sustainable and efficient production processes and equipment can be introduced. Moreover, this technology also demonstrates enormous potential for application in medical and environmental protection fields, offering new solutions to problems.

Zhang Xinyuan further detailed the industrial chain structure of the synthetic biology industry, from upstream biometric material research (microorganisms, cells, genomes, etc.), through midstream biological material synthesis, editing, and analysis (relying on laboratory technology and equipment), to downstream production applications (covering manufacturing, medical, environmental protection, agriculture, and many other fields). In this process, upstream companies provide basic materials, midstream companies engage in technology development and result transformation, while downstream companies are responsible for marketing the products. The synthetic biology industry is spread globally and is growing rapidly, with major growth points including genome editing, gene therapy, biofuels, bioplastics, synthetic compounds, industrial microbial manufacturing, biopesticides, and biological control, among others.

Faced with the challenge of how to translate laboratory technology into practical applications while ensuring safety and achieving economic benefits, Zhang Xinyuan pointed out that this is the main challenge currently facing the synthetic biology industry. Industry growth rate shows that the performance of synthetic biology concept stocks is steadily improving, with an average revenue growth rate of 24 listed companies of 6.52% in the first quarter, and the profit growth rate reaching 27.47%. Amongst many companies, the revenue growth performance of companies like Yifan Pharmaceutical, Jiabio, and Teruis Biology is particularly prominent.

Many companies in the synthetic biology sector have achieved significant growth in performance, with Berry Genomics, Lotus Health, Yifan Pharmaceuticals, Novozymes, Fuxiang Pharmaceutical, Chuanning Biotech, and other enterprises successfully doubling their parent net profit growth. In the secondary market, the synthetic biology sector has shown obvious differentiation. Bluepha achieved a “six consecutive limit-ups,” while Boen Group, Garden Bio, Shengda Bio, and others have experienced substantial pullbacks. According to statistics, since the beginning of May, nearly 40 listed companies have responded to questions about synthetic biology on investor interaction platforms, and many other companies have also mentioned the dynamics of the sector in their annual reports.

For example, Dongfulong mentioned in its report that the company is continuously carrying out the construction of a series of complex equipment, covering various specific application scenarios of synthetic biology, from single machines, systems to engineering, etc. Fuxiang Pharmaceutical shared the latest progress of their microbial protein project in synthetic biology cooperation with customers. In 2023, the company’s microbial protein business achieved a leap from zero to industrial tonnage products and successfully received an order for 1,200 tons of microbial protein products. These orders are currently being produced and delivered according to plan.

However, among the companies leading in growth, there are cases where the synthetic biology sector does not account for a high proportion of the business. For example, Bluepha, which has experienced consecutive limit-ups, only established an innovation lab in the synthetic biology field to develop functional proteins for feed and sweeteners for food. This lab has few R&D projects and smaller investments, and it is still in the early stage of strain laboratory R&D. It has some distance to go before reaching industrial-scale production. On the other hand, Yifan Pharmaceuticals needs to wait for the production line to be completed before starting commercial trial production of its synthetic biology project, with the first line expected to be completed by the end of this year at the earliest.

In view of the future prospects of the synthetic biology industry, many brokerage firms have expressed optimistic views. Western Securities believes that synthetic biology is still in the early stages of industrialization, and Chinese companies are expected to become globally competitive enterprises with product and cost advantages. Guotai Junan emphasized that against the backdrop of the “dual carbon” policy, the market space for the synthetic biology industry is expanding rapidly. Although the traditional chemical industry overseas started earlier, the technological gap in synthetic biology and biobased materials is not significant, and the development of the domestic industry will lead the future of these two areas.

China CITIC Construction Investment pointed out that the synthetic biology industry is an emerging industry that emerged at the beginning of this century, with the capability to transform life systems. The current level of basic research, technological progress, and policy support are all promoting rapid development of the industry. Technological innovations often appear in a spiral upward trend, and there is confidence in the future development of the synthetic biology industry. It is expected that in the coming years, the market size of the synthetic biology industry will achieve significant growth, with areas such as gene therapy, biopesticides, and biological control leading the industry growth.