21st Century Business Herald reporter Zhao Yunfan reports

A- share black technology concepts emerge in endlessly, and this time it's synthetic biology.

Wind data show that since April 22, the Wind synthetic biological index has risen by more than 25%. Among them, Zhengdan shares (300641.SZ), the focus of the plate, closed two 20% trading limits in the past three days, with a total increase of more than 450 since April. Blue Technology (603739.SH) has closed seven trading limits in a row, doubling its share price. Including industry leader Kaisai Biology (688065.SH), its share price has also rebounded from its low point, with its market value returning to nearly 10 billion yuan.

The heat of synthetic biology seems to stem from three pieces of news.

First, a leaked email from global chemical giant Ineos claimed that the company would permanently shut down its subsidiary INEOS JOLIET's (INEOS JOLIET) production line for synthetic biological production of trimellitic anhydride (also known as partial anhydride, TMA). And the same production of TMA Zhengdan shares "passive" to become the industry oligarch.

Second, the Jiangnan University team used synthetic biology to produce hyaluronic acid with ordinary molecular weight by microbial fermentation, reducing the cost to several hundred yuan per kilogram, and realizing the popularization and application of hyaluronic acid with large output.

Third, there is news that the National Development and Reform Commission and other relevant ministries and commissions will introduce support policies for synthetic biology in the near future.

Synthetic biology replaces everything

In terms of policy, at the Zhongguancun Forum in April this year, Tan Tianwei, president of Beijing University of Chemical Technology and academician of the Chinese Academy of Engineering, revealed that currently led by the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Science and Technology and other national ministries and commissions are jointly developing the national biotechnology and bio-manufacturing action plan, and is expected to be released in the near future, "bio-manufacturing +".

In his view, bioeconomy is expected to become the fourth industrial revolution in the future after the agricultural revolution, industrial revolution and digital revolution.

A relevant person from a leading synthetic biology company confirmed to the 21st Century Business Herald that the introduction of the above policies is true, but it is not news in the industry.

"the policy has been brewing for some time, including the relevant ministries and commissions have also invited a number of industry head companies to have a discussion, or come to our company to investigate. therefore, the industry is basically aware of this matter." The aforementioned industry sources told reporters that according to the current progress, the progress of the relevant policies will be very fast.

At the same time, the enthusiastic response from the market has also allowed the company's investor relations department to break through the threshold.

"Recently, there have been many institutions that did not understand our business at all." The aforementioned relevant person revealed to reporters that some institutions are mainly concerned about whether they will introduce subsidy policies to support the development of the industry in the future.

Synthetic biotechnology, in short, is the use of organisms (mostly bacteria) to produce the materials or intermediates we need. Generally speaking, biosynthesis has no threshold in principle, and its difficulty lies in controlling organisms for large-scale mass production to reach the level of industrial use.

The materials produced by biological method can be further synthesized by chemical industry. Modified materials can not only be used in flexible scenes such as textiles and pipelines, but also can produce high rigidity, high heat and corrosion resistance materials to replace some steel and aluminum materials in some basic fields.

A vivid case is that Kaiser Bio (688065.SH) plans to raise capital by issuing shares to China Merchants Group, and the two sides have also signed a Business Cooperation Agreement. China Merchants Group and its subsidiaries will purchase bio-based polyamide resins and bio-based polyamide fiber composites from Kaiser Bio in batches on an annual basis for use in containers, pipeline transportation logistics and industrial manufacturing.

Perhaps in the near future, we will be able to witness the large-scale application of "steel" spit out by "bacteria.

McKinsey has a bold prediction that by 2025, the economic value of synthetic biology and biological manufacturing will reach 100 billion US dollars, and 60% of the world's material production can be realized through biological manufacturing in the future. In the distant future, 70% of the produced materials will be produced by biosynthesis.

Long road to industrialization

Although the future of synthetic biology looks bright, the size of each segment is still small when it falls to the size of the market segment.

For example, the TMA industry, which was discontinued by Ions, is mainly used for plasticizers, in addition to applications in the fields of power capacitor impregnated oils, adhesives, dyes, inks, pharmaceuticals and agrochemicals. However, according to 168Report, the global trimellitic anhydride market is 0.42 billion US dollars, but the compound growth rate of the industry is only 0.9 per cent, and it will be only 0.44 billion US dollars by 2029.

On the other hand, the 21st Century Business Herald reporter learned from industry insiders that the development of synthetic biology is still in its early stage, and there are at least several problems in promotion.

The first is the problem of the application verification cycle of new materials brought about by synthetic biology. Compared with resin, steel, aluminum and other materials familiar with its characteristics, synthetic biological new materials, if used in key parts of mechanical manufacturing, or used in food and other fields, its safety and reliability need to be verified for a long time to be applied on a large scale. Therefore, the application of new materials, the need for large enterprises or state-owned enterprises to actively participate in the first try.

Secondly, the main technical threshold of synthetic organisms lies in their mass production capacity. If the capacity supply cannot meet the application growth potential of downstream customers, then downstream customers will also be skeptical about the use of new synthetic biological materials when adapting products.

for example, before * ST ningke (formerly ningke biology) announced last year that its biological cultivation of lauric acid had achieved mass production, but soon the company announced that the technological transformation would stop production. Immediately afterwards, the company announced a resumption of production and a shutdown, the last round of which continues to this day.

in response, the company explained that lauric acid could not be resumed due to capital chain problems. However, some people in the industry speculate that the company's suspension of production is mainly due to the high cost of products due to the technical level of the production line, which is too high to produce products with economic value.

Finally, and crucially, synthetic biological mass production technologies are often patented, making it easy to become oligarchs in market segments (e. g., Ineos Inos and Zhengdan are global oligarchs in the TMA industry).

But on the other hand, downstream application companies are often afraid to purchase too many products from a single company on a large scale, resulting in insufficient cost control capabilities, thus causing some companies to not be successful in the process of promoting product applications.

However, the equity financing plan of Kaiser Biology and China Merchants Group provides a solution to the problem of trust between the two parties in the field of synthetic biology. Through downstream equity participation, customers can effectively influence the pricing behavior of suppliers, and in turn, suppliers can also influence customer procurement. Both parties can eliminate information asymmetry and form sustainable cooperation through a community of interests.