Chuanning Biology： Rich in categories, with high degree of industrialization and outstanding technical advantages.

Yili Chuanning Biotechnology Co., Ltd. (hereinafter referred to as "Chuanning Biotechnology") will be launched in the near future. According to public information, Chuanning Bio is a pharmaceutical intermediate manufacturing enterprise, mainly engaged in the research and development and industrialization of bio-fermentation technology. It is one of the enterprises with large-scale industrial application of bio-fermentation technology in China, and it is also one of the enterprises with leading scale, complete product types and advanced production technology in the field of antibiotic intermediates.

The research and development of hard core, the advantages of cost and the favorable policies have broad prospects in the future.

Rich categories and high degree of industrialization

Chuanning Bio-technology has many advantages in the domestic bio-fermentation industrialization field, such as scale, production technology and environmental protection technology, etc. It has been rated as the national enterprise technology center and the Xinjiang Uygur Autonomous Region enterprise technology center. Up to now, as the upstream of the industrial chain, the main product of Chuanning Bio-antibiotic intermediate is a link with high technical and capital threshold in the whole industrial chain. It has established a large-scale industrial production system in the field of antibiotic intermediate, with a complete range of antibiotic intermediate products, and the output of erythromycin thiocyanate, cephalosporin intermediates and penicillin intermediates has reached the forefront of the domestic industry, which has formed a solid scale advantage.

Chuanning Bio is a core enterprise in the field of antibiotic intermediates, and also one of the main production bases of antibiotic intermediates in China. There are a wide range of antibiotic intermediates, covering the main intermediates of macrolides and broad-spectrum antibiotics, including erythromycin thiocyanate, 7- aminocephalosporanic acid (7-ACA), deacetyl -7- aminocephalosporanic acid (D-7AA) and 7- aminodeacetyloxy cephalosporanic acid (7-aminocephalosporanic acid).

In addition, relying on the mature bio-fermentation technology and enzyme technology platform, Chuanning Bio-technology focuses on R&D and innovation, and based on the research of synthetic biology and enzyme engineering, it develops in all directions to high value-added natural products (bisabolol and glabridin), biological pesticides, animal health products, biodegradable bio-based new materials and other pharmaceutical intermediates in health care and cosmetics raw materials, expecting to open more new profit growth points.

Geographical advantages help reduce costs

Chuanning Biology is located in Yili, Xinjiang, with obvious resource advantages, mainly reflected in the fermentation raw materials of agricultural and sideline products, coal, electricity, fermentation level and so on.

According to public information, Chuanning Bio-technology was established in Yining Park, the national Horgos Economic Development Zone, in 2011, with a total investment of over 10 billion yuan, using the most advanced and mature international bio-fermentation, chemical extraction, enzymolysis, control, energy conservation and environmental protection technologies.

Because it is close to the corn producing area, the sunshine time is long, and the protein content of corn is high as a whole, which makes the production cost of Chuanning Bio-organisms relatively lower than that of similar production enterprises in the mainland, which is an advantage in raw material cost. In terms of labor cost, the average labor cost in Xinjiang is lower than the national average. At the same time, Chuanning Bio has its own thermal power plant, which is close to the coal producing area, and the whole coal energy cost in Xinjiang is relatively low, which makes its power cost also have considerable advantages. As far as the production technology is concerned, because it is located in the Ili River Valley, the local climate conditions such as temperature and humidity are suitable for biological fermentation, and the suitable climate conditions can improve the fermentation level, which indirectly helps Chuanning Bio to reduce the production cost.

In addition to the advantages of natural geography, the 500 cubic meters fermentation tank used by Chuanning Biological Institute is the first in the industry, and the product yield is high. At the same time, the company will improve the fermentation level and yield through further technical transformation, and carry out more refined management measures for material consumption and equipment maintenance to increase production capacity and reduce costs.

Geographical and resource advantages are relatively rich, and multi-dimensional cost reduction can give Sichuan-Ningxia biology a certain advantage in market competition.

More macroscopically, Chuanning Bio-project is in line with the State Council’s industrial orientation that Horgos Economic Development Zone focuses on developing deep processing of agricultural products, biopharmaceuticals and trade logistics. As the bridgehead of the westward strategy, enterprises, including Yili Chuanning Project and the state-level Khorgos Special Zone Jinhe Bio, have further integrated into the national "Belt and Road" strategy, extended the industrial chain to Central Asia, adhered to the "bright road" and actively built an open pattern.

After years of development and practice, the company has trained a large number of professional and technical personnel, and the level of biological fermentation, environmental protection technology and extraction technology has been significantly improved. The growth of the issuer has promoted the development of the domestic bio-fermentation industry, especially the antibiotic intermediate industry, and also promoted its strong market influence, laying a competitive position for the issuer in the field of antibiotic intermediates. At the same time, by setting up a research institute in Shanghai and taking advantage of Shanghai’s talent highland, the issuer introduced a group of high-level talents at home and abroad, and reserved a talent team for R&D and innovation of enterprises.

Professionals build hard-core research and development

Over the years since its establishment, Chuanning Bio has owned a talent team with sufficient independent research and development capabilities, and at the same time, it has transformed its accumulated technical achievements into business achievements, and has continuously invested in technology research and development and technology industrialization research, which in turn has laid a solid foundation for the scale expansion and profitability improvement of Chuanning Bio.

According to the data in the prospectus, as of January 7, 2022, Chuanning Bio has 52 patents and more than 30 key technologies of bio-fermentation with independent intellectual property rights, especially the overall production and preparation technology of bio-fermentation antibiotic intermediates has a strong competitive advantage in the domestic bio-fermentation sub-industry.

Always insisting on independent research and development is a major feature of Chuanning Bio-technology. It may take a long time to do this, and the speed may not be as fast as that of "taking it", but the core technology is its own, which is an important basis for the survival and long-term development of enterprises. After years of technical accumulation, Chuanning Bio-technology has formed a number of independent intellectual property technologies with leading technical levels, such as antibiotic fermentation technology, enzymatic reaction technology and "three wastes" disposal technology. Moreover, through the comprehensive construction of antibiotic environmental protection technology system, Chuanning Bio has established a high market competition barrier, laying a solid foundation for its expansion of influence in the global antibiotic industry chain.

The core technology system of Chuanning Bio-technology is built around the basic application research of fermentation industry, such as production technology, mushroom residue research, environmental protection treatment, quality research and stability research. Antibiotic fermentation in high-capacity fermentor with high technical barriers is selected as the research and development direction, and a complete technical level is built by combining the synthetic preparation principle, process amplification optimization, safety and effectiveness research, zero waste discharge and other dimensions, thus forming an antibiotic fermentation technology platform with source management, controllable process, stable quality and efficient results.

The policy is good for environmental protection and worry-free

Last year, the National Development and Reform Commission and the Ministry of Industry and Information Technology issued the Notice on the Implementation Plan for Promoting the High-quality Development of the API Industry (hereinafter referred to as the "Plan"). As an API manufacturer, this is undoubtedly a great benefit for Chuanning Bio. However, for pharmaceutical companies, environmental protection is the most important issue. With the improvement of national environmental protection policy requirements, green development, especially the green development of pharmaceutical companies, is even more important.

The above plan requires that in the development of green and low-carbon technologies, we will focus on developing technologies such as enzyme catalysis, electrochemical reaction and photochemical synthesis. In the upgrading project of energy-saving and environmental protection equipment, high-efficiency and energy-saving equipment will be developed and applied for high energy-consuming links such as air pressure, refrigeration, water production, distillation, fermentation and waste treatment, so as to improve the level of thermal recycling and reduce energy consumption. Around the application of environmental protection treatment technology, we will develop new "three wastes" treatment equipment such as continuous solvent recovery, catalytic oxidation, sludge reduction, waste liquid desalination, bacterial residue treatment and regenerative incineration.

In terms of environmental protection, Chuanning Bio is very forward-looking. It has formulated the strategic goal of green development very early, taking "environmental protection first and sustainable development" as the basic policy, and adopted the most advanced and mature international bio-fermentation, chemical extraction, enzymolysis, control and energy-saving and environmental protection technologies in the project.

Over the years, Chuanning Bio has always attached great importance to environmental protection. Through research and development, upgrading and optimization, innovation and cooperation, and the introduction of advanced technology and equipment at home and abroad, the environmental protection problems in the process of antibiotic fermentation have been effectively solved. It also undertook the construction work of the National Environmental Protection Engineering Technology Center for Harmless Treatment and Resource Utilization of Antibiotic Residues by the Ministry of Ecology and Environment, and passed the acceptance of the Ministry of Ecology and Environment in 2021.

In addition, Chuanning Bio’s technology of "integration and application of tail gas treatment technology in bio-fermentation antibiotic production" won the first prize of scientific and technological progress in Xinjiang Uygur Autonomous Region in 2016. The treatment capacity of waste water, waste gas and waste residue has reached advanced level. Among them, high-end integrated technologies such as "imported molecular sieve runner, hydrophobic activated carbon bed, high-temperature thermal oxidation" are used to treat fermentation tail gas, especially in odor treatment.

Strong technical foundation, rich production line and deep moat all make the future development of Chuanning Biological more emboldened.