After nearly ten years of development, my country's biopharmaceutical industry has begun to emerge in the global market. Some of the innovative biological drugs approved and marketed by the drug regulatory authorities in recent years are listed for the first time in the world, meeting the needs of global patients for biological drugs. The research of the "Economic Information Daily" shows that the bio-innovative drug industry is helping my country to transform and upgrade from a big country in medicine to a strong country in medicine.

In the first half of this year, 51 domestic bio-innovative pharmaceutical companies are in full swing to "go overseas". Some of them will apply for approval from the U.S. Food and Drug Administration (FDA) as the first step in entering the global market.

After nearly ten years of development, my country has become one of the few developing countries in the world that can independently develop innovative biological drugs. Moreover, many innovative drugs approved for marketing in my country in the past two years are the first in the world. Many Chinese bio-innovative pharmaceutical companies with globalization ambitions choose to enter overseas markets. Industry analysts pointed out that internationalization has become a relatively clear direction for the development of my country's biopharmaceutical industry.

During the “Thirteenth Five-Year Plan" period, the number of new drugs under development jumped to the second place in the world

In the first half of 2022, at least 51 Chinese innovative pharmaceutical companies are intensively promoting their "going overseas" business. On May 18, Hengrui Medicine, a top-ranking domestic company in new drug R&D investment, announced the establishment of a wholly-owned subsidiary to enter overseas markets aggressively. In the past, most of my country's "going overseas" drugs were mainly based on the export of raw materials, but now domestic bio-innovative pharmaceutical companies are gearing up to "go overseas".

This is due to the vigorous development of China's bio-innovative drug industry in the past decade. It is reported that during the "Thirteenth Five-Year Plan" period, the number of new drugs under research has jumped to the second place in the world, becoming one of the few developing countries in the world that can independently develop innovative biological drugs. At present, China has become the country with the largest number of biosimilar drugs under development, and more than 200 clinical applications for biosimilars have been approved.

The vigorous development has also brought about fierce competition in the domestic innovative drug industry. At the end of last year, the average price of 67 exclusive new drugs was reduced by 61.71%. Industry experts predict that more than 30 biosimilar drugs will be approved for marketing in China in the next three years. Therefore, many bio-innovative pharmaceutical companies choose to enter overseas markets.

Wan Jiang, senior vice president of Betta Pharmaceuticals, said that there are three ways for my country's bio-innovative drugs to "go overseas". The first is to go overseas independently, and local pharmaceutical companies conduct clinical trials overseas, apply for listing and later commercialize sales on their own. The second is to go overseas by "ship", which mainly includes license out, patent authorization, and local pharmaceutical companies selling overseas or global rights and interests of their products to overseas companies, and overseas companies are responsible for follow-up work. The third is to join hands to go overseas, that is, joint development between Chinese pharmaceutical companies and overseas pharmaceutical companies to share costs and benefits.

Relevant reports from Ekai Capital show that in 2021, the total transaction value of license out of domestic pharmaceutical companies will reach 13.3 billion US dollars. According to incomplete statistics, since 2017, 6-8 innovative drug products in my country have submitted drug marketing applications to the FDA every year.

Application for innovative pharmaceutical companies

US FDA admission ticket layout “going to sea”

The reporter noticed that many domestic innovative pharmaceutical companies will apply for the US FDA as the first step to enter the global market.

It is reported that in the global pharmaceutical product consumption market, the United States, China, the 5 EU countries, Japan, and other regions account for 38.7%, 18.3%, 12.6%, 7.5%, and 22.9% respectively.

“Drugs are developed based on global clinical needs, and will inevitably develop international markets. ” Yang Dajun, chairman of Ascentage Pharma, told reporters that China's original and innovative drugs take the road of internationalization. On the one hand, they can solve the clinical needs of global patients without drugs; on the other hand, if they are successful, they can obtain a broader space for commercial returns.

The reporter learned that after the multinational pharmaceutical company Merck's anti-cancer drug K drug was launched in 2014, the sales continued to increase every year, and the global sales in 2021 will reach 17.2 billion US dollars.

Approved listing in the United States enjoys a higher pricing advantage, which is more conducive to global promotion. According to Yang Dajun, in general, the price of an innovative drug in the country where it is first listed determines the price of its promotion in the global market. The United States has formed a relatively sound innovative drug pricing system, and the pricing is relatively scientific.

Legend Bio Sidaki Orenza is the second bio-innovative drug approved by the US FDA in my country in recent years. Cedarquiorenza is indicated for the treatment of adult patients with relapsed multiple myeloma. Multiple myeloma is considered an "incurable malignancy", and its incidence has surpassed that of acute leukemia. Huang Ying, CEO of Legend Bio, said that the efficacy of Cidaki Orenza is better than that of similar products already on the market in the United States, and the price is higher than that of similar drugs in the United States.

Emerging market countries are expected to be the breakthrough

However, most Chinese innovative pharmaceutical companies "break through" the FDA failed to get their wish. From the rejection of Wanchun Pharmaceutical at the end of last year, to the rejection of Innovent Bio, Junshi Bio, and Chi-Med Pharmaceutical this year……According to According to incomplete statistics, only two innovative biological drugs have been approved for marketing in the United States since 2017.

Are there any shortcuts for "going to sea"? Huang Ying believes that, without the path of overtaking on a curve, the key to the FDA's approval of Cidaki Orenza lies in the "competitiveness" of the drug, that is, the clinical value of the drug, which can solve the urgent clinical needs of patients around the world. Li Jin, a well-known expert in my country and director of the Oncology Department of Shanghai Dongfang Hospital, pointed out that the drug can truly meet some unmet treatment needs, or lead in efficacy or safety, and "the FDA has no reason not to approve it".

In addition to clinical value, talent and funding are also important. On May 24, the FDA approved the listing of Tapinarof, a drug for the treatment of psoriasis, which was the first to be approved for marketing in my country in May 2019. The team of the inventor, Dr. Chen Genghui, previously transferred the overseas development rights. Chen Genghui believes that internationalization requires a talented team including partners who understand global pharmaceutical commercialization. According to relevant sources of Hengrui Medicine, Hengrui spent 1.236 billion yuan on overseas research and development last year, and also built its own overseas team.

“Let's not only focus on the US, Europe and Japan markets. Emerging market countries such as the "Belt and Road" countries have vast pharmaceutical market potential and unmet clinical needs, and Chinese innovative drugs can gain a place in these countries. ” Yang Dajun said. Africa is the continent with the highest concentration of developing countries. Its industrialization has just started, and its demographic dividend is huge. Sidibe, the special envoy of the African Medicines Authority, said that the African pharmaceutical industry will grow from US$19 billion in 2012 to US$66 billion in 2022, making it the fastest growing market in the world.

In recent years, the state has successively introduced policies to encourage and support innovative pharmaceutical companies to "go overseas" in emerging market countries, to promote domestic pharmaceutical companies to enter the international market at a higher level, and to strengthen investment and cooperation with countries that jointly build the "Belt and Road". , and actively explore the emerging pharmaceutical market.

Wan Jiang believes that China's innovative drugs are of good quality, suitable prices, and good services from pharmaceutical companies, which are more suitable for the needs of patients in developing countries. According to reports, the price of the anticancer drug PD-1 independently developed by many domestic pharmaceutical companies is only one-tenth of that of the original drug developed by foreign companies, which is fully affordable by developing countries. Industry insiders suggested that we should accelerate the "going out" of my country's pharmaceutical innovative products and further release domestic pharmaceutical production capacity.

Which innovative pharmaceutical companies will be the first to make profits?

The innovative drug track is the most competitive, most dynamic and flexible. According to Frost & Sullivan, the period from 2020 to 2025 is the period with the highest prosperity of innovative drugs in China. The market size of anti-tumor drugs + autoimmune disease drugs will expand from 214.2 billion yuan to 474.4 billion yuan, with a compound annual growth rate of 17.2%. . As the proportion of chemotherapy drugs shrinks sharply, freeing up a lot of space, targeted therapy and immunotherapy will grow faster.

We are in a golden age, and without knowing it, the setbacks of the current local congestion are but a blip in the ascent. In fact, in the next three or four years, the launch of domestic innovative drugs will be in a state of blowout, and around 2025, the head Biotech will reach the break-even point.

What is the journey to breakeven?

Biotech initially presented an inverted pyramid shape, so its valuation was volatile. When the base (operating income + cash reserve) becomes wider and thicker, and the top (R&D expenses + administrative expenses + sales and marketing expenses) becomes more restrained and restrained, it can enter a stable state.

When the R&D expenditure of traditional big pharmaceutical companies is out of control, the new generation pharmaceutical companies are expanding their operations and reducing their expenditures, starting a spiral upward trend.

Hengrui Pharmaceutical's R&D investment accounted for 19% of its revenue in the first half of 2021 and 24% for the whole year, hitting a record high. In the first quarter of 2022, Hengrui Pharmaceutical's R&D expenses + development expenses accounted for 31% of its revenue, and CSPC's R&D expenses increased by 30% year-on-year. China Biopharma's R&D expenses in 2021 will increase by 40% year-on-year.

The growth rate of BeiGene's R&D investment will be 40% in 2020 and 15% in 2021. Innovent's R&D investment growth rate will be 43% in 2020 and 34% in 2021. Zai Lab's R&D spending in the first quarter of 2022 decreased by 74% year-on-year, mainly due to the lack of new authorization to introduce upfront payments. The growth rate of Junshi Bio’s R&D investment will be 107% in the first quarter of 2021 and 13% in the first quarter of 2022. CStone's R&D expenses are expected to decrease significantly over the next two years with the completion of some large-scale indication registration trials and the initiation of early-stage development programs for lower-cost Pipeline 2.0 assets.

In the early stage of the product launch, Biotech often has the phenomenon that the sales expenses are greater than the income, which is ridiculed as excessive money-burning. But this is the only way to go. Building a brand new sales team and channels requires a lot of investment. After the infrastructure is built, the sales expense ratio will continue to decline as the company expands the denominator.

While expanding the commercialization team, in the first quarter of this year, sales, general and administrative expenses (SG&A) were $294.6 million for BeiGene, down 4% from the previous quarter, and $57 million for Zai Lab, down 18 percent from the previous quarter. %.

Referring to Hengrui Medicine's financial indicators, the ultimate form of Biotech's break-even will be that the sales expense ratio is around 30%, the management expense ratio is lower than 30%, the R&D expense ratio is around 20%, and the net profit rate is around 20%.

This process will be expedited.

The gradual improvement of the payment environment has not been paid enough attention. At the end of last year, in the medical insurance negotiation, 67 exclusive drugs outside the catalogue were successfully negotiated, and domestic production accounted for 63%, a record high. 27 innovative drugs were included in the medical insurance in the year they were launched, accounting for 40%, realizing the seamless connection between drug review and medical insurance review, which is good for maximizing commercial value.

Countries in the field of innovative drugsThe process of production substitution has been quietly promoted.

More changes are coming. A number of Biotech's newly-launched products have achieved high volume without being included in medical insurance, all pointing to the same fact - there are signs of the rise of commercial medical insurance.

CStone's avatinib and pratinib are included in more than 60 commercial/city insurance plans, which will increase to more than 80 this year. Cooperate with the three major comprehensive innovative medical service platforms in mainland China, Meixin Health, Yuanxin Technology and Sipai Health, to improve the distribution and affordability of drugs by promoting the enrollment of urban insurance programs.

The improvement of the payment ability of the non-medical insurance market will improve the bargaining power of pharmaceutical companies and provide solid support for the high prosperity of innovative drugs.

Development status and trends of innovative biological drugs

Cancer is the largest therapeutic area covered by the research and development of biological innovative drugs. With the improvement of treatment methods and the development of social economy, the proportion of anti-tumor drugs in the overall pharmaceutical market in China will continue to rise. The largest pharmaceutical market.

The new incidence of cancer in my country is high, and there is a large unmet clinical need in the tumor treatment market. In 2020, the number of new cancer cases in China will reach 4.5688 million, accounting for about a quarter of the global number of cancer cases. Due to the impact of an aging population, environmental pollution, smoking, lack of exercise, high-calorie diet and other unhealthy lifestyles, it is estimated that by 2025 The number of new cancer cases in China will further increase to 5.1957 million in 2018.

From 2020 to 2025, it is estimated that the market size of China's anti-tumor drugs will increase from 197.5 billion yuan to 416.2 billion yuan, with a compound annual growth rate of 16.1%, and will reach 683.1 billion yuan by 2030.

Meanwhile, biologics will replace chemotherapy drugs as the mainstay of cancer treatment.

In 2020, in terms of the distribution of tumor treatment methods, my country's anti-tumor drug market is still dominated by chemotherapy drugs, accounting for 63.4% of the overall market, but it is expected that by 2030, targeted therapy and immunotherapy will dominate the tumor drug market. The market share of targeted therapy and immunotherapy drugs will increase rapidly, reaching 45.9% and 39.9% respectively. The future market space for targeted therapy and immunotherapy drugs is huge.

Globally, targeted drugs have replaced chemotherapy drugs as the main treatment drugs, but immunotherapy drugs will show greater growth potential in the future.

From 2016 to 2020, the global biopharmaceutical market grew from USD 220.2 billion to USD 297.9 billion, with a compound annual growth rate of 7.8%. USD, with a CAGR of 12.2% from 2020 to 2025. The global biopharmaceuticals market is expected to further grow to USD 804.9 billion by 2030.

At the same time, the domestic biopharmaceutical market maintained faster growth. From 2016 to 2020, the scale of China's biopharmaceutical market increased from 183.6 billion yuan to 345.7 billion yuan, with a compound annual growth rate of 17.1% from 2016 to 2020. China's biopharmaceutical market is expected to reach RMB 811.6 billion in 2025, with a CAGR of 18.6% from 2020 to 2025, and further increase to RMB 1,294.3 billion in 2030, with a CAGR of 9.8% from 2025 to 2030 .

In order to encourage pharmaceutical companies to innovate at the source and enhance the international competitiveness of China's pharmaceutical industry, the Center for Drug Evaluation (CDE) of the State Food and Drug Administration officially released the "Clinical Value-Oriented Clinical Research and Development of Antitumor Drugs" on November 19, 2021. "Guiding Principles", clarifies the direction of innovative drug development oriented by clinical value, and promotes the accelerated development of pharmaceutical companies' R&D model into the field of FIC (first-in-class).

According to WuXi AppTec, an upstream pharmaceutical R&D service outsourcing company, the domestic new drug R&D service department's customer demand has shifted from Fast-Follow to FIC, and policy changes have caused some customers to turn to innovative R&D projects.

With the continuous improvement of the drug registration and approval supervision system, it is difficult for products with no clinical value or controversial clinical programs to be approved. In recent years, the number of FIC projects has increased, and the prosperity of the innovative drug industry has continued to heat up;

In the primary market of China's innovative drugs, the amount of financing continued to grow, reaching 109.1 billion yuan in 2021, a year-on-year increase of 36.89% compared with 2020. The early investment of investors has injected vitality into the early development of the industry.

At the same time, the number of innovative drugs approved for marketing and the sales of innovative drugs have grown rapidly. The rapid increase in sales of innovative drugs is closely related to the demand for innovative drugs themselves and the inclusion of medical insurance policies.

In the first half of 2019, 2020 and 2021, the number of innovative drugs approved by the NMPA (NMPA) was 10, 16 and 21 respectively;

According to the sales data of PDB sample hospitals, the post-market sales growth rate of PD-1 products launched in recent years is significantly higher than that of products launched 5 or 10 years ago.

As of now, most innovative pharmaceutical companies have or are about to have commercial varieties, and the industry has entered a stage of intensive harvesting.