Good News on Listing | Frost & Sullivan Assists Zhengye Biotech Holdings Limited in Successful US Listing

Zhengye Biotech Holdings Co., Ltd. (hereinafter referred to as 'Zhengye Biotech') successfully listed on NASDAQ in the United States on January 7, 2025. The company plans to issue 1.5 million common shares at an issue price of $4.00 each, raising approximately $6 million in total funds.

During the process of listing in the US, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the writing of relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), helping the issuer communicate with the SEC and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback from regulatory authorities on various industry issues.

• As a world-leading manufacturer of veterinary vaccines, the company has been focusing on the research, development, manufacturing, and sales of veterinary vaccines for over 20 years, dedicated to improving animal health;

   

• The company possesses a diversified and comprehensive portfolio of veterinary vaccines, covering multiple animal species including pigs, cattle, sheep, poultry, and pets;

   

• The company possesses high-quality production capabilities and has established 3 veterinary vaccine production workshops, 13 vaccine production lines, 1 quality inspection center, and 1 animal facility for vaccine development. It is capable of efficiently and stably producing veterinary vaccines that meet standards.

   

• The company possesses strong R&D capabilities, not only owning its own research center but also maintaining long-term cooperative relationships with multiple domestic universities and institutions to continuously develop and manufacture new products.

   

• The company has established a strong sales and distribution network both domestically and internationally, covering 28 provincial regions in China, and has set up sales channels in multiple countries such as Vietnam, Pakistan, and Egypt.

According to the Frost & Sullivan report, the company:

• In 2022, the company is the veterinary vaccine company in China with the most comprehensive product portfolio;

   

• Based on the sales of veterinary vaccines in 2022, the company ranks tenth as a provider of veterinary vaccines in China; moreover, the company's annual growth rate in veterinary vaccine revenue ranked first in the market in 2022, reaching 21.4%.

   

• Ranked eighth nationwide in terms of pig vaccine sales in 2022;

   

• Ranked ninth nationwide in terms of poultry vaccine sales in 2022;

   

• Ranked fourth nationwide in terms of cattle and sheep vaccine sales in 2022,

According to the type of product, animal vaccines can be divided into live vaccines and inactivated vaccines.

live vaccineLive vaccines are active microbial preparations made from bacterial or viral pathogens. Under artificial culture conditions, their toxicity can be reduced or eliminated, while still retaining the immunogenicity and reproductive capacity of the pathogen, or some non-toxic microvirus pathogens can be screened out from external sources. Common live vaccines include classical porcine distemper rabbit-adapted attenuated vaccines, varicella live vaccines, sheep pox live vaccines, etc. Most live vaccines are freeze-dried through vacuum drying, which can extend the storage time of the vaccine and maintain its activity.

Inactivated vaccineInactivated vaccines are made from bacterial (viral) cultures or toxic tissue or cell cultures. They are inactivated by chemical agents or heat to preserve their immunogenicity, and then appropriate preservatives or immunopotentiators are added. Inactivated vaccines usually require adjuvants. Depending on different adjuvants, inactivated vaccines can be divided into oil adjuvant vaccines, aluminum adjuvant vaccines (with a longer duration of action), and propolis adjuvant vaccines (propolis enhances the immune effect). Common inactivated vaccines include porcine pseudorabies inactivated vaccine, avian influenza inactivated vaccine, etc.

The scale of the veterinary vaccine market in China increased from $1.9 billion in 2018 to $2.5 billion in 2022, with an annual compound growth rate (CAGR) of 6.6%. It is expected that by 2026, the market will further grow to $32 billion, with a CAGR of 6.5%.

Pork is the most important source of animal protein for the Chinese people and has long dominated meat consumption in China. Pork can be divided into two main categories: breeding pigs and commercial pigs. In 2021, from the supply side of the pork market, China's pork production was 53 million tons, accounting for 44.09% of global pork production, ranking first in the world. From the demand side of the pork market, China's pork consumption accounts for about 46% of global pork consumption, with per capita pork consumption being approximately twice that of the global average.

The scale of the Chinese swine vaccine market grew from $840 million in 2018 to $1.2 billion in 2022, with an average annual growth rate (CAGR) of 9.4%. It is expected that by 2026, the market will further grow to $1.45 billion, with an average annual growth rate of 4.9%.

Poultry can be divided into meat poultry, breeding poultry, and egg-laying poultry. In addition to providing meat and eggs for humans, the feathers of poultry also have significant economic value.

The scale of the Chinese poultry vaccine market grew from $660 million in 2018 to $930 million in 2022, with a compound annual growth rate (CAGR) of 9.0%. It is expected to further grow to $12 billion by 2026, with a CAGR of 6.6%.

Cattle are species with strong environmental adaptability. Materials such as cowhide, sheepskin, and wool can be processed into clothing, leather bags, and more. In China, sheep mainly refer to goats and sheepdogs. Mutton is rich in nutrients and very popular in China. Due to unique dietary habits, the consumption of mutton in China relies heavily on it, especially in minority communities in the northwest.

The scale of China's cattle and sheep vaccine market declined from $370 million in 2018 to $290 million in 2022, with a compound annual growth rate (CAGR) of -5.7%. It is expected to grow to $390 million by 2026, with a CAGR of 7.8%.

The pet industry provides goods and services related to all aspects of pet and pet owner life, including food, clothing, living conditions, transportation, entertainment, and education from birth to death. The pet industry can be divided into five major categories: pet food, pet supplies, pet services, pet healthcare, and live animal trading. The pet healthcare market in China is the fastest-growing segment of the pet industry. As an important part of pet healthcare, the pet vaccine market is also on the rise, accounting for 8.9% of the overall pet healthcare market in 2021. According to relevant research, the primary purpose of domestic pet owners visiting a pet hospital is for vaccination, accounting for 70.3%. More than 90% of pet owners know that they need to vaccinate their pets regularly, but only 67.2% of pet owners regularly vaccinate their pets against rabies, and 74.1% of pet owners vaccinate their pets against infectious diseases every year. Currently, the penetration rate of pet vaccines in China is less than 3%, far below the 40% level in developed countries.

The scale of the China pet and other vaccines market grew from $30 million in 2018 to $500 million in 2022, with an annual compound growth rate (CAGR) of 10.2%. It is expected to further grow to $1000 million by 2026, with a CAGR of 23.6%.

In 2022, among domestic veterinary vaccine companies, Jilin Zhengye Biological Products Co., Ltd. (ZYBIO) has the most comprehensive product portfolio.

In 2022, among China's veterinary vaccine companies, the operating entity Jilin Zhengye Biological Products Co., Ltd. ('ZYBIO') ranked tenth in the market.

In 2022, the annual growth rate of revenue from veterinary vaccines of Zhengye Biotech (ZYBIO) ranked first in the market, reaching 21.4%.

●The number of large-scale farms has increased

In recent years, the scale of livestock and poultry breeding has been continuously expanding. For example, in 2020, the proportion of large-scale farms with an annual output of over 500 pigs reached 70%. Due to the higher breeding density of large-scale breeding enterprises, the risk of losses caused by animal diseases is also higher, and their average cost of epidemic prevention is usually higher than that of retail investors. Therefore, large-scale farms are more sensitive to the quality and cost-effectiveness of vaccines.

●Immunization Awareness and E-commerce

Local governments have raised farmers' overall awareness of animal epidemic risks and the necessity of immunization by attracting their attention and promoting mandatory immunization. At the same time, veterinary drug transactions are gradually becoming e-commerce-oriented, with some farmers starting to purchase veterinary vaccines through e-commerce platforms and exchange information about veterinary vaccines.

●The prevalence of animal epidemics in some areas

In recent years, China has experienced multiple outbreaks of foot-and-mouth disease type O, type A, highly pathogenic avian influenza subtype H5 in poultry, avian influenza H7N9, and diseases affecting small ruminants. In 2021, China reported a total of 7 outbreaks of highly pathogenic avian influenza subtype H5, characterized by sporadic occurrences and a wide range of affected areas. The prevalence of animal diseases has led to a sharp increase in demand for veterinary vaccines.

●National Animal Epidemic Monitoring and Prevention and Control Policy

In recent years, China has introduced a series of policies conducive to animal epidemic monitoring and prevention and control. For example, in 2021, the Chinese government revised the Animal Epidemic Prevention Law of the People's Republic of China. Prevention is the foundation for preventing and controlling animal diseases and an important measure to effectively reduce production costs and improve the economic benefits of animal husbandry. The revised law has added three new animal epidemic prevention measures: improving the compulsory immunization system, perfecting the epidemic monitoring and early warning system, and establishing a zoned management system for animal diseases. The law stipulates that breeding companies and individuals should fulfill their obligations to compulsory immunize animals, must properly implement compulsory immunization, and compulsory immunization is closely related to the use of veterinary vaccines.

●Market access barriers

Given the demand for vaccine upgrades, first-mover advantage is a barrier to market entry. First-mover companies typically iterate their products faster than later entrants, allowing them to maintain competitive advantages and high profit margins by continuously upgrading new products. Vaccine production capacity is another barrier to market entry. Vaccine developers with large-scale production capabilities can adjust production steps and parameters to obtain vaccines suitable for different animals, as well as those covering different serotypes and antigen components, which is difficult for newcomers to achieve in a short period.

●Sales channel barriers

The supply of vaccines required for China's animal disease compulsory immunization system is gradually shifting from government procurement to market supply, with the goal of completely eliminating government procurement channels by 2025. Since domestic veterinary vaccines are mainly sold in agriculture and pastoral areas and have a dispersed terminal distribution, there is a significant demand for distribution channel capabilities. Enterprises with excellent sales capabilities have formed multi-channel layouts including direct sales and distribution, and possess a wide-ranging sales team, which helps to increase market share and achieve rapid expansion.

●R&D technology and talent barriers

Veterinary vaccines are products with a long R&D and production cycle that require substantial investment in research and development to enhance market competitiveness. Therefore, companies with insufficient funds find it difficult to enter this industry. In addition, companies that have been established for a long time possess relatively sufficient production technicians and after-sales technical service teams for veterinary vaccines. New entrants cannot obtain sufficient human resources in the market, and talent acquisition mainly relies on internal company training.

Frost & Sullivan, with 64 years of global consulting experience and a 27-year history of dedicated service to the booming Chinese market, uses a global perspective to help clients accelerate their business growth and achieve industry benchmarks in terms of growth, innovation, and leadership. The Greater Health Industry is one of Frost & Sullivan's core areas of focus. Over the past 20-plus years, the Frost & Sullivan team has provided financing and financial advisory services, IPO industry advice, strategic consulting, management consulting, and other services to hundreds of outstanding domestic and international biopharmaceutical, medical device, healthcare services, and internet healthcare companies. Successful listings include: BrainGate (6681.HK), Health Road (2587.HK), Huahao Zhongtian (2563.HK), Yinos (688710.SH), Jingtai Technology (2228.HK), Yimai Sunshine (2522.HK), Shenghe Biotech (2898.HK), Quanxin Biotech (2509.HK), Meizhong Jiahé (2453.HK), WuXi AppTec (2268.HK), Arnao Medicine (NASDAQ:ANL), Neusoft Xikang (9686.HK), Youzhiyou (2496.HK), Yiming Angke (1541.HK), Corning Biotech (6990.HK), LaiKai Medicine (2105.HK), Kedi Group (2487.HK), Lvgreen Biotech (2480.HK), Meis Health (2415.HK), PHECR, Zhongjin Medical (NASDAQ:ZJYL), Yisheng Biotech (NASDAQ:YS), Meiliyuan (2373.HK), Kangfeng Biotech (6922.HK), Bao'an Biotech (6955.HK), Sida Di (1244.HK), Meihao Medical (1947.HK), Gaoshi Medical (2407.HK), Lepu Xintai (2291.HK), Jianshi Technology (9877.HK), Health Yuan (JCARE.SW), Lepu Medical (LEPU.SW), Dingdang Health (9886.HK), BAIOSAT (2315.HK), Zhiyun Health (9955.HK), MeinGene (6667.HK), Prenetics (PRE.NASDAQ), Yunkang Group (2325.HK), Ruike Biotech (2179.HK), Lepu Biotech (2157.HK), Clear Medical (1406.HK), Baxin An (2185.HK), Yonghe Medical (2279.HK), Kailaiying (6821.HK), Beihai Kangcheng (1228.HK), Gusheng Tang (2273.HK), Yingpeng Technology (2251.HK), Clover Biotech (2197.HK), Minimally Invasive Robotics (2252.HK), Harmony Kamane (2256.HK), Kunbo Medical (2216.HK), Xianruida (6669.HK), Kangsheng Global (9960.HK), Yimai Tong (2192.HK), Tengsheng BOPY (2137.HK), Canora (2162.HK), Chaoyuju Eye Hospital (2219.HK), Guichuang Tongqiao (2190.HK), Hehuang Medicine (0013.HK), Koi Pharmaceutical (2171.HK), Zhaoke Eye Hospital (6622.HK), Nature Pharmaceuticals (UPC.NASDAQ), Saiseng Pharmaceutical (6600.HK), Zhaoyan New Drug (6127.HK), Novogene Health (6606.HK), ADAG.NASDAQ, Beikang Medical (2170.HK), Jianbimiao Miao (2161.HK), Minimally Invasive Heart Tong (2160.HK), Rui Li Medical Beauty (2135.HK), Jiake Pharmaceutical (1167.HK), Hebo Medicine (2142.HK), JD Health (6618.HK), Deqi Medicine (6996.HK), Rongchang Biotech (9995.HK), WuXi AppTec (2126.HK), Xiansheng Pharmaceutical (2096.HK), Yunding Newray (1952.HK), Jiahe Biotech (6998.HK), Zai Ding Medicine (9688.HK), Ocular Biotech (1477.HK), Yongtai Biotech (6978.HK), Hapu Pharmaceutical (9989.HK), Kepeng Pharmaceutical (9939.HK), Peijia Medical (9996.HK), Kangfang Biotech (9926.HK), Nuo Cheng Jianhua (9969.HK), Tianjing Biotech (IMAB.NASDAQ), Kanglong Chemical (3759.HK), China Antibody (3681.HK), Dongyao Pharmaceutical (1875.HK), Yasheng Pharmaceutical (6855.HK), Fuhong Hanlin (2696.HK), Hansoh Pharmaceutical (3692.HK), Mabotech (2181.HK), Fangda Holdings (1521.HK), Via Biotech (1873.HK), CStone Pharmaceuticals (2616.HK), Junshi Biotech (1877.HK), WuXi AppTec (2359.HK), Xinda Biotech (1801.HK), Hualing Medicine (2552.HK), BeiGene (6160.HK), Gilead Sciences (1672.HK), WuXi AppTec (2269.HK), China Resources Medicine (3320.HK), Jacobson Scientific & Pharmaceutical (2633.HK), HCM.NASDAQ, Biotech (1548.HK), BBI Life Sciences (1035.HK), Tongyuan Kang Medicine (2410.HK), etc. In terms of the number of filings, the Frost & Sullivan healthcare team maintains an absolute leading position in Hong Kong healthcare IPOs, consistently ranking first in market share from 2018 to 2023.

Since the listing of the first batch of companies on the Sci-tech Innovation Board in July 2019, Frost & Sullivan reports have been widely cited in the prospectuses of leading Sci-tech Innovation Board listed companies in the industry, including: Zhongyan Co., Ltd. (688716.SH), Zhejiang Rongtai (603119.SH), Optoelectronics Technology Group Co., Ltd. (688450.SH), Jinghe Integration (688249.SH), Wuxi Rilian (688531.SH), Maolai Optics (688502.SH), Kangwe Century (688426.SH), Jinkang Protein (688137.SH), Novogene Biologics (688428.SH), Aopu Mabio (688293.SH), MicroPort Neurosurgery (688351.SH), Mengke Pharmaceutical (688373.SH), Yifang Biologics (688382.SH), Jicui Pharmaceutical (688046.SH), Haichuang Pharmaceutical (688302.SH), Rongchang Biologics (688331.SH), Rendu Biologics (688193.SH), Shouyao Holdings (688197.SH), Heyuan Biologics (688238.SH), Yaxin Security (688225.SH), Xidi Micro (688173.SH), Mawei Biologics (688062.SH), Yahong Medicine (688176.SH), BeiGene (688235.SH), Jiameng Medical (688246.SH), Dizhe Medicine (688192.SH), Novozyme (688105.SH), Chengda Biologics (688739.SH), Geke Micro (688728.SH), Huaxi Biologics (688363.SH), Junshi Biologics (688180.SH), Zhejiang Oncology (688266.SH), BeiGene (688177.SH), and Shenzhou Cells (688520.SH). They are considered one of the most powerful, professional, and influential industry research institutions in the industry. We hope to work with enterprises to understand industry trends, seize development opportunities, jointly promote innovation and upgrading of China's big health industry, and build a healthy future.