Genscript Biotech Corporation (1548) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to GenScript Biotech 2024 Annual Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Shiniu Wei, CFO. Please go ahead.

Thank you, Maggie. Good morning, and hello to everyone. This is Shiniu Wei, Chief Financial Officer of GenScript. Welcome to our company's 2024 annual results conference call. Joining me on the call today are Mr. Robin Meng, Chairman of the Board; Ms. Sherry Shao, Rotating CEO of GenScript; Dr. Ray Chen, President of GenScript Life Science Group; Dr. Aixi Bai, General Manager of Bestzyme; and Mr. Allen Guo, CEO of ProBio. During today's call, we will be making statements about future expectations, plans and prospects as well as any other statements regarding matters that are not historical facts, which may constitute forward-looking statements. Actual results may vary materially from those indicated by such forward-looking statements because of various important risk factors and changing market conditions. We do not undertake any obligation to publicly update any forward-looking statements. During today's call, Sherry will present our annual business highlights, and I will guide you through the company's financials and future outlook. Following that, we will open the floor for Q&A session. As a reminder, today's presentation can be accessed on our Investor Relations section of the company's website. Now I will turn it over to Sherry.

Thank you, Shiniu, and thanks to everyone for joining today's call. In 2024, despite industry headwinds and geopolitical tensions, GenScript remained resilient and achieved exciting breakthroughs. Before delving into each segment, let me provide a high-level overview. In the Life Sciences sector, despite geopolitical tensions affecting the first half, we experienced a strong recovery in the second half, driven by the solid customer trust we have established over the past 2 decades. Our Protein segment, representing about 25% of Life Sciences revenue, achieved remarkable growth. By capitalizing on the integrated strength of our gene and protein platform and our continuous improvement on platform capabilities, we were able to deliver and exceed customers' expectations. This success underscores the exciting growth potential of our Protein segment, unlocking a broad market for GenScript. In the CDMO business, following industry headwinds in the past 2 years, ProBio has seen a strong recovery across North America, China and Europe. Furthermore, through collaboration with LaNova, ProBio is poised to generate substantial cash flow in the coming years. We anticipate receiving a onetime upfront payment from LaNova in the first half of 2025, along with potential milestone payments over time. The cash flow from the LaNova deal will support our continued global expansion. Bestzyme's business continued to thrive, delivering top-tier revenue growth in the enzyme industry and injecting new vitality into the sector with solid innovation. In product innovation, cost optimization and key account development, Bestzyme has achieved notable breakthroughs. In 2024, GenScript accomplished a turnaround in profit. We expect group level profit to remain positive in 2025 and 2026. Beyond 2026, with improved profitability from our associate Legend Biotech, the group's profitability is poised for further improvement. As of the end of 2024, GenScript has a global workforce of over 5,500 members, driven by our innovation-led growth strategy. 10% of our workforce is dedicated to R&D leading the industry. With ongoing investment in research and development, GenScript has amassed over 250 patents and has more than 480 patents in the application process. We serve customers from over 100 countries and regions, positioning us as a global leader in the industry. Next page. Before diving into our business update, I'm excited to highlight the strides we have made in ESG. After joining the United Nations Global Compact, UNGC, we further solidified our sustainability commitment in 2024. Both GenScript and our subsidiary, ProBio, became supplier partners of the Pharmaceutical Supply Chain Initiative, PSCI, supporting the industry's sustainable supply chain. We were awarded the Bronze Medal by EcoVadis, placing us in the top 35% globally among all assessed companies. Our MSCI ESG rating was also upgraded from BBB to A, reflecting capital market recognition of our ESG efforts. We are collaborating with global partners to tackle climate change challenges. In early 2025, our carbon reduction targets were validated by the science-based targets initiative, SBTi, and we are committed to achieving net zero emissions across our value chain by 2050. On the social responsibility front, we are actively fostering a diverse and inclusive platform across multiple countries and regions. We advanced local recruitment to boost employment and better integrate our operations into local communities. In 2024, we launched a global volunteer platform to support health, education and environmental protection initiatives in local communities. Regarding corporate governance, we have established functional committees to enhance the roles of directors from diverse backgrounds. In 2024, we have the privilege of welcome Ross Grossman, Alphonse Galdes, and John Quelch to our Board. Their expertise in corporate governance, sustainability and global strategy will be instrumental in helping GenScript navigate complex global environment. Let's dive into our business highlights, starting with the Life Science Group. In 2024, our customer base grew to 60,000 active customers. By the end of 2024, GenScript's services and products were cited over 100,000 times in scientific journals, demonstrating strong recognition and trust in our work. In 2024, GenScript launched the Life Science Research Grant program globally. This initiative is dedicated to empowering researchers by providing grant funding earmarked for utilizing GenScript reagents and services. Through this program, we offer support to 117 pioneering research labs, fostering collaborations, advancement and excellence in life science research. Also, the GenScript Biotech Global Forum has emerged as a prominent industry event, serving as an open and inclusive platform that promotes collaboration between academia and industry. The success of our Life Science business in 2024 is attributed to 3 key factors: number one, industry-leading speed to help our customers accelerate scientific breakthroughs. We are dedicated to pushing our limits and establishing new industry benchmarks for reagent services turnaround time. We proudly introduced the FLASH gene, offering a turnaround time of just 4 business days, 50% faster than the industry. This covers gene synthesis, cloning and plasmid preparation, which are all added time from over -- from other vendors. Importantly, all at flat rate for easy budgeting and ordering. These services are available from our global facilities in the U.S. and China. We also introduced the TurboCHO protein expression as quoted by many of our customers from global pharma and biotech. This is a game changer. From sequences to purified antibodies, we deliver reliable and high-titer antibody expression services at high throughput in as little as 5 business days. Also designed to expedite discovery and target screening endeavors, streamline mRNA library construction and more. We introduced another industry-defining 10 business days turnaround time Rush RNA synthesis services. We are continuously enhancing our enabling platforms with cutting-edge technologies and unprecedented scale. Our intelligent production and automation have enabled us to provide high-quality reagent services at significant cost savings. In 2024, our flat rates for FLASH gene not only addressed customers' concerns about fluctuating and complex pricing based on base pairs, but also delivered 3x more cost savings. Additionally, our upgraded TurboCHO antibody expression platform offers reliable premium quality services at nearly half the market price. More importantly, we were able to maintain a stable profit margin through internal cost optimization. Furthermore, in 2024, we successfully formed our Scientific Advisory Board. We are truly thankful to have pioneering scientists, Dr. Carl June, Dr. George Church and Dr. Liu to guide our R&D directions in a way that is deeply driven by research applications. From doubling titers in our TurboCHO platform to being the first few pioneers in offering saRNA from making ultra-long guides possible for next generations of gene editing to supporting the first IND clearance for NK cell therapy from the FDA. From developing instruments made plasmid purification easy to automating cell isolation. We kept innovating to better serve science and make discovery easy. Next page. Here, I would like to highlight our protein business here. The addressable market of protein reagents is over USD 4.5 billion. This market demand will keep growing with more discovery efforts in antibody drugs, as well as the promise of AI-driven protein engineering. For a long time, we have strategically pinpointed the protein business, as the upcoming key growth driver for Genscript's Life Science Group. And our strategic efforts have started generating solid returns. As I presented in overview, our protein business grew significantly in 2024, achieving nearly 50% revenue growth. The success in the protein business can be attributed to our operational excellence and proactive marketing strategies. Importantly, we also have a unique advantage to make this growth happen, that is we have the world's #1 gene synthesis platform. The integration of dedicated gene platform and protein platform made the industry defining speed of protein services possible. Compared to the first quarter of 2024, the proportion of genes delivered to our protein work increased by 12 percentage points in the fourth quarter. The growth of our protein business certainly has driven growth for gene synthesis. As you can see from the figure, the volume of our gene synthesized increased with rapid and steady growth rates across all 4 quarters in 2024. More importantly, our continuous innovations in production automation at scale, intelligent production and proprietary expression systems further enhance our delivery reliability, premium quality and most importantly, platform profitability, even when we charge over 50% less of the market price. In 2025, we will further strengthen and utilize the synergy between our gene and protein platforms to deliver and exceed our customers' expectations. We are also upgrading other protein expression platforms, and we will soon launch our upgraded E. coli platform featuring a 5 business day turnaround time. By the second quarter of 2025, we expect to shorten our insect expression platform turnaround time to 2 weeks. Next page, building and expanding our capable capacity globally and being closer to our customers has been our key glocalization strategy for the past 4 years to further strengthen supply chain resilience, enhance customer accessibility and optimize production costs. It has been our commitment to our customers that we will be able to deliver the same premium quality reagent services at scale from any of our global facilities that are closer to you. In both of our newly expanded New Jersey gene and plasmid facility and Singapore gene and protein facility, we are able to deliver significantly more and more profitable and with significantly shortened turnaround time. In 2025 and beyond, we will expand more protein and gene to plasmid capacity in the U.S., China and Singapore. Also, we are expanding our mRNA labs from Seattle to Netherlands. Turning to our CDMO, ProBio. Despite industry headwinds, ProBio continued to serve our customers with the highest industry standards. Starting with our new orders booked in 2024, we observed an upward trend in the first half of the year, and this trend continued to accelerate in the second half. Including antibody CDMO business, we secured 28 new CMC projects, 50% from ex-China region. We helped clients obtain 12 new R&D clearances and successfully delivered the first PPQ project, which anticipates submitting the BLA in 2025. In the first half of the year, we signed the first 2,000-liter CMO order, marking a significant milestone for our CDMO business. This project will enable us to further accumulate experience in late-stage commercial production and quality system, paving the way for us to become a more competitive global CDMO. In the CGT CDMO segment, we secured 2 new PC/PV projects and 23 R&D clearances and supported 33 new CMC projects. We delivered the first PPQ project, integrating plasmid and viral vectors and supported the clients in submitting the BLA. In AAV manufacturing, we delivered 200-liter GMP batch and helped the client to successfully obtain R&D approval. Notably, our partners, Chimagen and LaNova have entered into strategic collaborations with GSK and Merck, respectively. In this project, ProBio has entered the development of these clinical assets consistent with global pharma quality standards. We are seeing more biotech companies seek out ProBio's services, thanks to our high-quality standards. In terms of capacity, we launched a commercial biologics manufacturing facility in April 2024. Also, we launched our fill/finish line in Zhenjiang. It can support commercial production of liquid and lyophilized formulations with a maximum batch capacity of 192,000 units. In the CGT field, our Zhenjiang-based CGT team focused on enhancing GMP level suspension and adherent viral vector production capabilities. At U.S. CGT site at Hopewell, our GMP plasmid production line is operational and is currently working on its very first CGT order. I'd like to extend my gratitude to our team for this endeavor. Our GMP AAV production line is expected to start operations in Hopewell in the third quarter of 2025, followed by the GMP LVV production line by the first quarter of 2026. By expanding capacity in both China and the U.S., we believe we can mitigate supply chain risks for our customers and significantly shorten delivery time. Next page. In 2024, our partner, LaNova entered into a USD 3.3 billion collaboration agreement with Merck with an upfront payment of USD 588 million. Since the anti-PD-1 single domain antibody in this project was exclusively licensed by ProBio to LaNova. ProBio is entitled to 40% of the upfront payment and 25% of potential milestone payments that LaNova will receive from Merck. We noticed that the transaction has been approved by the regulatory. Therefore, we expect to receive the upfront payment from LaNova in the first half of this year and future milestone payments over the course of the collaboration project. I'd like to introduce ProBio's NME out-licensing business model. The out-licensing of molecules is based on ProBio's years of continuous development and accumulation in new molecule development, as well as our industry insights. Currently, we have over 30 predeveloped projects with high-value targets. Notably, our proprietary CD3 VHH and CD3 TCE pipelines feature innovative contracts, better developability and improved the efficacy and safety, primarily targeting cancers with potential applications in autoimmune disease as well. To date, we have accumulated 16 licensing projects, 2 of which have entered clinical stage. Depending on partners' research funding and R&D efficiency, we offer flexible collaboration options, including fee-for-service, co-development, asset buy out and licensing out. Turning to our Industrial Synthetic Biology Products segment, Bestzyme. Bestzyme continued to maintain rapid growth in 2024 with its growth rate ranking among the top tier in the industry. Currently, its products primarily serve the grain processing, food and nutrition, animal nutrition and health and household care and textile industries. Growth in 2024 was driven by rapid expansion of market share and improved product competitiveness. In terms of market expansion, the percentage of revenue from key accounts continue to grow, and these accounts have increased their spending with Bestzyme. We have strengthened our IP portfolio, ranking top tier in enzyme industry. In 2024, 2 of our core products, high-temperature resistant phytase and detergent protease were granted patents. We also intensified IP protection. This lays a solid foundation for us to build trust with clients, especially leading players in downstream applications. We accelerated global expansion in 2024. Revenue from ex-China accounted for about 19% of Bestzyme's revenue. Bestzyme expanding into a larger market with more potential on profitability, driving Bestzyme's further rapid growth. In terms of product competitiveness, we continue to increase market share through product performance enhancement and cost optimization. In 2024, our top 5 products by revenue continued their rapid growth. We also launched higher-value products to build barriers to enter and reinforce our core competitiveness. For example, revenue from our detergent enzyme, PuriWise nearly doubled compared to 2023. We anticipate explosive growth for PuriWise in 2025, as more industry-leading companies start to increase their purchases from us. In the synthetic biology pipeline, we are advancing regulatory approvals and pilot production for natural sweet protein. We have completed industrial scale trial production for natural sweet protein, attained self-affirmed GRAS status and submitted a GRAS notice to the U.S. FDA. Our natural sweet protein has been successfully launched in the U.S. market. Additionally, we are advancing a robust synthetic biology pipeline. Next page. We anticipate that Bestzyme will continue its strong momentum. To address capacity needs, Bestzyme commenced construction of a new facility in the second half of 2024. This facility represents a total investment of RMB 800 million and is slated for completion by 2027. It will enhance capacity for the enzyme business and support the commercial production of synthetic biology products. Additionally, we have increased our investment in R&D capabilities and team to support future growth. This concludes the business update. Next, I'd like to invite Shiniu to share the company's financial performance for 2024.

Thank you, Sherry. For our listeners online, we're on Page 16 of the slide deck. Since Legend Biotech has been deconsolidated from the group, the revenue figures I mentioned below will exclude Legend's revenue for 2024. The group's revenue increased by 6.1% year-over-year to approximately $590 million. The group recorded a net profit of around $2.9 billion. This significant growth in net profit is primarily due to a onetime investment gain from the deconsolidation of Legend. The adjusted net profit from continuing operations remained stable at approximately $59.8 million. The Life Science Group's revenue was approximately $455 million, representing a 10.2% year-over-year growth. The adjusted operating profit for Life Science Group was about $90.4 million, reflecting a 15.5% increase year-over-year. ProBio's revenue was $95 million, experiencing a decline of about 13.2% year-over-year. ProBio's adjusted operating loss was approximately $43.4 million. Bestzyme's revenue grew by about 24.6% to $53.7 million. Bestzyme achieved an adjusted operating profit of approximately $2.1 million, increasing 2.9% year-over-year. These results are consistent with the guidance we provided during the semiannual result conference call last August. Now for Life Sciences Group, revenue was nearly $455 million. We observed a recovery in the second half of 2024. The revenue growth accelerated. In particular, we saw strong growth in our gene to protein business, supported by a robust demand from AI-related applications and continued strength in antibody drug research. Revenue from industrial customers further increased largely due to the development of more MNC companies. The adjusted gross profit for the Life Science Group rose by approximately 5.9% year-over-year to around $240 million. Our price investment in molecular biology and protein business lines resulted in significant market share gains, while temporarily impacting margins. On the expense front, there were no significant fluctuations. The rise in selling expenses were primarily due to a more aggressive sales strategy and increased investment in the global market. R&D expenses remained roughly 8% of revenue. Overall, adjusted operating profit increased by 15.5%, reflecting sustained growth and better margin profile. Our Life Science business has maintained strong cash flow with operating free cash flow reaching approximately $82.4 million in the second half of 2024. Turning into ProBio, revenue fell by 13.2% to approximately $95 million, primarily due to the challenging biotech funding environment. However, a healthy order recovery was observed across U.S., China and European markets through 2024, with revenue also demonstrating a strong rebound over the past half year period. The adjusted gross profit was about $14.4 million, impacted by lower capacity utilization. The adjusted EBITDA stood at negative $14.6 million. In terms of expenses, I would highlight there was a significant rise in administrative expenses, largely due to our new facility in Hopewell, U.S. as the facility was not yet fully operational in 2024, all associated start-up costs have been booked under administrative expenses. We anticipate these costs will transition to cost of goods sold this year once the facility is operational. With a cash position of $194 million, ProBio is well positioned to execute its business plan. Additionally, we are in the process of receiving upfront payments from LaNova in the first half of this year. It will further strengthen ProBio's balance sheet and provide continued cash flow in the future years. Turning into Bestzyme, revenue reached approximately $53.7 million, up 25% year-over-year. On a constant currency basis, revenue grew 27%. The adjusted gross profit rose by 36.1% to $22.6 million, while the adjusted operating profit stood at $2.1 million. Revenue from industrial enzyme increased further and the higher-margin industrial enzyme business contributed to an overall improvement in gross margin. On the expense side, we are aggressively investing in sales and marketing efforts to quickly grow our business, especially outside of China. We are also investing aggressively in R&D to upgrade existing products and add more innovative and highly competitive products into our portfolio. As we see that the addressable market for Bestzyme's synthetic biology solutions are big, and we are enjoying a head start, we will accelerate investment through CapEx and P&L to maximize future value instead of focusing on short-term measures. We believe the shareholder value we can create through Bestzyme will be substantial over time. Now on Page 20, to help you better understand the financial implications of Legend's deconsolidation, I will provide a brief explanation. Let's first examine the impact on group's 2024 financials, which included 2 components. The first was an approximately $3.2 billion onetime investment gain, as we adjust the carrying amount of Legend assets on GenScript's balance sheet now to include the fair value of the intangible assets and goodwill and others in addition to intangible assets from -- in addition to tangible assets from Legend's books. This gain was recorded in the P&L as an investment gain with no cash flow or tax implications. Additionally, the loss generated by Legend from January to September 2024 was fully booked as a loss under discontinued operations in our profit and loss statement. Legend's loss during the last quarter of the year following the deconsolidation was recorded as a loss of an associate under the equity method proportional to our ownership percentage. Starting in Q4 2024, we recognize gains or losses from Legend under the equity method, meaning that GenScript will record our share of Legend's net profit or loss. In addition, the aforementioned intangible assets will amortize according to the estimated useful life. Such changes in asset value will impact both GenScript's P&L and balance sheet, but not Legend's own reporting. Considering the anticipated sales growth of CARVYKTI, driven by Legend's capacity expansion and potential earlier line approvals, we expect that loss from Legend will continue to narrow and ultimately, Legend will bring substantial long-term value to the group. Last but not least, let's turn to our 2025 guidance on Page 21. Looking ahead, we are targeting the full year revenue growth for our Life Science business to be around 10% to 15%. Due to our aggressive market pricing strategy for 2025, we are targeting -- we are targeting a flat gross margin, but the gross profit is expected to continue to rise and stay above 50% gross margin rate. Based on the growth trend of new orders, excluding the impact of licensing to LaNova, we anticipate revenue growth of 15% to 20% for ProBio in 2025. We expect to receive upfront payment share from LaNova in 2025, which will be fully recognized as revenue. We will recognize revenue when further milestone payments from the collaboration between Merck and LaNova are achieved as well. As for Bestzyme, we're targeting constant currency revenue growth of 20% to 25%. With high capacity utilization and increased presence of high-margin products and its revenue mix, we anticipate Bestzyme's gross margin to be around 45%. Now this wraps up our prepared remarks. Operator, please open for Q&A. Operator?

[Operator Instructions] Our first question comes from Daisy Cheng from MS.

I have mainly 2 questions for the results. The first one is what's the order trend in recent months and the outlook in 2025 by domestic side and by overseas market? And also, do we see any ongoing pricing pressure in both markets, the pricing is kind of stabilized in recent months. And my second question is for the -- our major business segments. For Life Science segment, could management give us some color on the net margin outlook in the next 1 to 2 years, maybe the 3-year outlook for the net margin. And for the ProBio, what's the gross margin for 2025 with LaNova's contribution and without LaNova's contribution? And for the BSG business segment, we saw very robust growth in recent years. What are some major drivers behind and some 2- to 3-year CAGRs for this segment?

Thank you, Daisy, for your question, and thank you for attending the call early in the morning. For your first question in terms of order trends for our business across different geo locations, overall, we are expecting faster growth in Europe and U.S. Well, I think for the China region and Asia Pacific, we think the growth will be more moderate. And in terms of your question on 2025 outlook, we have provided guidance just now. So I would like to reiterate. For Life Science business, we're targeting growth of 10% to 15% with a flat gross margin. For ProBio business, fee-for-service, excluding LaNova deal will be 15% to 20% growth. And as you can understand, we are still investing in the business and to expand our capabilities ex China, and we're not providing margin guidance for ProBio at this moment. And for Bestzyme, constant currency growth, we are targeting 20% to 25% and gross margin will be better year-over-year. We are targeting 45%.

And for the BSG business, what are the -- maybe the mid- to long-term outlook because we saw a very strong growth for last year. So maybe for this year and the year after, do we see this kind of over 20% year-on-year growth be sustainable in the next 3 years?

Yes. Thanks for the follow-up question. We are confident to keep the growing trend in the following years and mainly driven by our continuous R&D investment to launch new products and upgrade our products and existing products. And also, I have mentioned in my introduction part for the business -- we also have seen the great returns from the continuous -- gain more trust from our key accounts and also the ex-China overseas market expansion. So we are confident to maintain this trend.

Just a moment for our next question, please. Our next question comes from Linhai Zhao from Goldman Sachs.

I have 2 particular questions. The first one is about the global tariffs. Since we are continuing expanding our global presence in both Europe, Singapore, U.S. and just want to get some colors on the general impact of this global tariff on our businesses, perhaps some impact on our margins and on our order outlook. And that's the first question. And the second question, I just want to get more color from management on our gross profit margin for Life Science Group. It seems that Life Science Group has been our fundamental growth business, and the gross margins looks pretty stable in the past few interims. And I just want to get more color on what has been the driver for us, to adopt this aggressive marketing pricing strategy? And is that because of some global competition and also or the observed order dynamics shifting towards the protein business? How should we understand the profit margins between the protein business and the gene synthesis business?

Thank you, Linhai. I will take the first question on tariff and Sherry will comment on Life Science business margin performance, and Ray will also add some additional color. So for global tariff, I think at a high level, all of our products and services are competing on the quality, delivery speed and the value we're creating for our customers with or without tariff. So that tariff discussion does not change the fundamental industry competitive dynamics. With that said, there are many levers we can pull without going into too much details. There are many levers we can pull as a company to adjust and manage the impact of tariffs without having to sort of impact our customers, the affordability of our products and services to our customers. And overall, I think based on what we have observed so far and our analysis internally, we don't think the tariff implemented will have a significant impact on our business results. Sherry?

Yes. And thanks for the question regarding the profit margin of Life Science business. Yes, well, we see in short term, the profit margin is decreasing due to the -- we are expanding the ex-China production delivery to meet our local customers' expectations. So we can see the larger mix of ex-China production delivery. And we are confident to this part with our continuous efforts, the profitability is in the improving trend. So this will be the -- and also, we are -- invest for the affordable price to our customers to gain more market share. So also, we are confident to have the capability to further optimize our cost and to improve our profitability. So as I mentioned in the business introduction, we are confident to improving the profitability in the coming years. And Ray will give further comments here.

Thank you, Shiniu, and thank you, Sherry, and thank you for the question. And this is actually a long-term decision in a strategic way in a world that is becoming more dynamic and budget-wise, research funding-wise, geopolitical-wise, logistics-wise, that we are here and committed to provide stability and reliability and accessibility for the global researchers. So we are in the process, and we are redefining the industry turnaround speed and redefining the affordability for many of our offerings. We deliver and exceed customer expectations across all of our major offerings. So by doing this, we're aiming for long term to gain more and more market share in a sustainable way. And I just wanted to add this color into both Shiniu and Sherry's answers. And we are confident through our innovations in platform capability upgrades, the innovations in our intelligent workstations as well as our marketing transformation to drive the future growth and efficiency in a steady, profitable way across the globe.

And just one little last piece that I mentioned, do we see -- how should we understand the differences between gross profit margin between the protein business and the gene synthesis business?

The protein business actually is a higher margin offering portfolio through our platforms because that we're capturing the downstream work more and more and added more values and in a more differentiating way because no one else in the world can get the work from the sequence to purified proteins, as well as related assays down in a speedy way that we can and also remain the premium quality. The value added there is tremendous, so that we will be able to capture the profit there as well. So it's higher.

Our next question comes from Wilfred Yuen from Daiwa.

Hello. Can you hear me?

Yes, Wilfred. We can hear you clearly.

Just one question. Can you give us some guidance on the CapEx spend for 2025 and the breakdown into different business segments? And if possible, for longer term, how should we be thinking of the CapEx spend in the next few years?

Okay. Thank you for the question. Overall, we believe 2025 CapEx spending will be roughly flat compared to 2024 levels. However, the individual components from each segment will be different. The ProBio's CapEx will significantly come down from 2024 levels. While Life Science, we will be increasing some CapEx outside of China to expand our manufacturing bases in New Jersey, as well as Singapore. But overall, Life Science's CapEx would not increase too much compared to 2024 levels. But on the Bestzyme side, as we have mentioned, enjoying very strong growth momentum, and we have a lot of very innovative and highly in-demand products coming on to the market. So we are investing in capacity at Bestzyme to accommodate that growth. So that CapEx there will increase meaningfully. So that's why overall for the group, CapEx will be roughly flat compared to 2024.

Got it. And any color in the next 3 years for the capital spend?

I think for the next 3 years, with the current capital plan we have, I think we can sustain the growth trajectory we're currently enjoying, and we may even be able to accelerate growth. Short answer is, I think the next 3 years CapEx will gradually come down and utilization will be up.

Just a moment for our next question, please. Next, we have Derek Choi from JNP -- JPM. Derek Choi, your line is now open. David -- Derek has dropped from his line. [Operator Instructions] I see no further questions on my side. I will now pass back to management.

Thank you, Maggie, and thank you all for attending today's conference call, and thank you for your questions and your ongoing interest in GenScript. If you have additional inquiries, please don't hesitate to reach out to our Investor Relations team. Also, today's presentation, management prepared remarks and a replay of the conference call will be available on our Investor Relations website. We look forward to connecting with you on our next call. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.