From the assembly line to the black light lab, the automation revolution upstream of the life sciences

According to the actual business attributes of the future company, Yang Xiaolong, partner of Innovation Works, pointed out that several types of industries can be evaluated: first, if it can become a labor-based company, the valuation can be compared to CRO companies such as Wuxi Apptec; Second, it can produce biological results, such as specific drugs or compounds, which have corresponding asset value, and can be valued for standard drug enterprises, generally using discounted cash flow method; The third is automation equipment, which can be used to value overseas listed companies such as Beckman, PE and Agilent.

However, he also stressed that given that this is a highly interdisciplinary field, in fact, it can also be valued with a comprehensive reference to the above three industries, which can produce a certain advantage premium and match the development potential of the industry.

The look of a "good target"

In the investment market, what is a good target? Yang Xiaolong believes that it is either a system driven by super key components, or it is to train it into a "brain" - that is, a system of human judgment, which can be boiled down to three elements: a "card neck" point, with independent intellectual property rights, and a special structure.

From the perspective of the industry chain, like other industries, downstream customers generally pursue cost-effective and "user-centered" solutions, and multinational manufacturers are generally difficult to meet the needs, which leaves opportunities for local manufacturers. However, the disadvantage of this model is that it is difficult to modularize and standardize - this is the biggest gap between niche market and blue ocean market, and the market valuation is often lower than standard products. For automation developers, the key is to strike a balance: the protocol developed for a specific project is gradually optimized into a standard module, through the assembly of standardized modules to meet customized needs, and fundamentally reduce research and development costs.

As for the landing form, when asked whether to choose software or hardware, most entrepreneurs, investors and even customers will vote for hardware or software and hardware integration.

Drawing on the successful overseas experience, Dassault BIOVIA (small molecule medicine) and Benchling (large molecule medicine), as the representative companies, entered the laboratory data recording market through self-developed software, the latter has been valued at 6 billion US dollars, and it can also form a business barrier through the asset-light software system. However, people in the industry generally believe that infrastructure is the entrance of life application science, and equipment is the carrier of data formation; Software tools alone cannot expand the market, especially in the domestic market.

One investor told 36kr that benchling was valuable because it began as a differentiated digital tool and gradually expanded into a communication tool for hundreds of thousands of professionals in the scientific community and industry, which deposited more and more templates and databases, "This is very valuable." However, in China, doing such tools will "roll" badly, not only to fight price, fight service, fight customer sentiment, Party A is also used to customization, most manufacturers may not go to PLG (Product-Led Growth, product-driven growth) "hang up".

The apparent barrier

The barriers of this format are mainly reflected in technology and team, customer reputation and industry awareness and accumulation.

First of all, laboratory automation is also regarded as a life science support industry, involving biology, chemistry, materials, electronics and machinery and other professional fields, the products of various subdivisions of the industry often need to be applied in multiple disciplines, usually requires a composite team for years of technology accumulation to develop and manufacture mature products.

Secondly, there is customer choice inertia. In general, downstream customers are very cautious about the choice of products, tend to purchase high brand recognition, good market reputation tool products, once locked suppliers are difficult to replace.

Finally, in the long run, in addition to "technical barriers", the real stable moat also comes from industry cognition, cost advantage and product matrix, which requires enterprises to take root in the scene, constantly accumulate data and polish products, and quickly start volume, and then have the opportunity to achieve cost advantages; In addition, in order to resist the cyclical risks of downstream customers, the company should also choose a good track and constantly improve the product matrix.

As China joins ICH, we need to look at the industry from a global perspective, and "Why China" has become an important topic - in the global market with a higher degree of marketization, the fields that give full play to the advantages of China's intelligent infrastructure will rise at a faster pace, including laboratory automation. Under the cultivation of the global market, future laboratory intelligence will also become a reality sooner.