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Reporter Zhang Min, Xu Linyan, trainee reporter Jin Wanxia.
In 2023, the pharmaceutical and biological industry can be described as an undercurrent.
On the one hand, innovative drugs have encountered a capital winter and the performance of CXO (pharmaceutical outsourcing services) track is under pressure, suggesting that the industry may still need time to recoverOn the other hand, the R&D of GLP-1 (glucagon-like peptide-1) drugs, and the digital technology represented by AIGC (generative artificial intelligence) have driven the new development of the medical industry, leading the prosperity of the segmented track to continue to rise.
In terms of the high-profile innovative drugs going overseas, some innovative drug companies "passively" withdraw the rights and interests of overseas development and commercialization of products under development, which means that the overseas development and commercialization of innovative drugs is not a smooth road, and there are also reefs and twists and turns. What has regained the confidence of the market is that China's innovative drugs have gradually entered the harvest period, the quantity and quality of license out (external licensing) have been greatly improved, and the number of transactions** has reached new highs. Some innovative pharmaceutical companies have achieved overseas listing of innovative drugs, and bravely fought for a broader overseas market.
At a time when challenges and opportunities are intertwined, favorable policies to boost the innovation and development of the pharmaceutical and biological industry continue to converge. For example, the results of the negotiation of the National Medical Insurance Catalogue announced at the end of 2023 have released the warmth of policies to further favor innovative drugs and encourage the development of innovative drugs. After the overall valuation of innovative drugs has experienced the best and returned to rationality, the pharmaceutical and biological industry is ushering in a moment of reversal.
Innovative drug companies
Take multiple measures to deal with the capital winter
"Capital winter" has become a key word frequently discussed in the pharmaceutical industry in the past two years.
In 2023, the secondary market of the pharmaceutical and biological industry will generally show a volatile downward trend. "The innovative drug industry is in the process of squeezing the bubble, and investors' expectations for the innovative drug market space are reduced. Xiong Shuirou, a partner of Yoyin Medical, told the reporter.
According to Wu Xiaoying, Co-Managing Partner of Life Sciences and Healthcare, Greater China, Ernst & Young, "Since 2023, although the pharmaceutical and biological industry is still moving forward, the impact of pharmaceutical centralized procurement and the new crown epidemic on the secondary market is gradually clearing, and there are certain signs of thawing in the market winter. ”
While the market has returned to rationality, investors have begun to take a more cautious attitude towards pharmaceutical companies, especially innovative pharmaceutical companies. "The pipeline layout, overseas measures, cooperation dynamics, and even the internal team structure and sales expenses of major domestic pharmaceutical companies are exposed to the more critical eyes of investors. Wu Xiaoying thinks.
In this regard, Luo Yongqing, CEO and executive director of the board of directors of Genting Xinyao, told the reporter that in the past few years, China's new drug research and development has advanced by leaps and bounds, and talents and capital have gathered rapidly, and the adjustment of the current market environment requires biotechnology companies to formulate corporate strategies more prudently, and the company's management needs to re-evaluate the financial situation, the success rate of drugs under development, the clinical value of the product pipeline and the competitive landscape, and commercialization partners.
In the face of market challenges, industry companies are actively paying attention to and seeking new financing opportunities on the one hand, and on the other hand, they are constantly strengthening their commercialization capabilities.
The company continues to follow up on the latest regulatory developments, prepare for the A-share IPO declaration, and wait for the opportunity. At the same time, the company will also look for strategic investors or refinancing opportunities in Hong Kong stocks, and at the same time supplement cash flow through the realization of equity assets invested in the early stage. The staff of Lepu Biotechnology said in an interview with the ** reporter.
Since the approval of marketing in 2020 and the inclusion of orelabrutinib in 2021, the core product of InnoCare, an innovative pharmaceutical company, has continued to grow in sales. "In the next three to five years, the company will accelerate clinical development and promote the launch of five to six innovative drugs. InnoCare staff told the reporter.
Despite the challenges, industry insiders remain optimistic. An unnamed investor told reporters: "At present, domestic innovative pharmaceutical companies are in a period of survival of the fittest and valuation de-bubble, which is a good time to select truly high-quality projects, and can use reasonable valuations and more suitable ** to buy the core assets of innovative pharmaceutical companies." ”
From the perspective of the long-term logic of the industry, the pharmaceutical industry still has a strong long-term growth momentum, and there are still many unmet clinical needs in the industry. He Wanyi, a senior analyst of the medical industry at the Toubao Research Institute, believes.
Innovative drugs go overseas
Harvest time begins
At present, subject to multiple factors such as intensified domestic competition, "going overseas" has become an important measuring stick to measure the market value of innovative drugs. "Although it is hard to find thousands of waters, blowing all the wild sand begins to reach gold. "After experiencing capital irrigation, continuous promotion of R&D and long-term investment, China's innovative drugs have gradually entered the harvest period, and the industry has also ushered in a "bright future".
In 2023, there will be many innovative pharmaceutical companies, including Jacobio, whose license out projects will end in "breaking up" and encountering obstacles in going overseas. However, there are also domestic innovative drugs that have been practicing their internal skills for many years and have successfully gone overseas. Since the end of October, toripalimab independently developed by Junshi Biosciences, fruquintinib, a small molecule innovative drug independently developed by Chi-Med, and ibergostim injection, a biologic innovative drug independently developed by Yifan Pharma, have been approved for marketing by the US Food and Drug Administration (FDA), marking the continuous entry of China's domestic innovative drugs to the international stage.
Compared with the "spark" of innovative drugs directly approved for marketing overseas, another way to go overseas - license out will show a "prairie fire" trend in 2023.
According to the statistics of the nextpharma pharmaceutical transaction database, the reporter found that as of December 15, 2023, the total number of domestic innovative drug license out transactions reached 58, an increase of 32% from 44 in 2022. In terms of transaction value, the total value of licensed out transactions disclosed in 2023 exceeded US$46.5 billion, up from 27.5 billion in 2022$5 billion, an increase of 69%.
From a regional point of view, in addition to European and American countries, the choice of countries and regions going overseas has also become more diversified: Southeast Asia, West Asia, North Africa, Latin America and other markets have gradually become the target destinations for Chinese innovative pharmaceutical companies to go overseas.
In 2023, the number of large pharmaceutical companies going overseas using the license out model will gradually increase, and traditional large pharmaceutical companies such as Hengrui Pharmaceutical, CSPC Pharmaceutical Group, and Hansoh Pharmaceutical will appear on the list of "licensors" of license out.
After overseas self-declaration, big pharmaceutical companies found that there were too many uncontrollable factors in terms of investment resources, timeliness and risks. With the intensification of competition in the industry, the time window for new drug applications is also compressing, and if companies choose to declare themselves, they may not be able to grab the top positions by the time the products are approved for marketing overseas. Chen Zhen, founding partner of Yixin Capital, believes that after several years of self-declaration of the overseas path model, China's big pharmaceutical companies are becoming more and more pragmatic.
It is worth noting that in 2023, for the first time, the number of external license outs of Chinese innovative pharmaceutical companies exceeded the number of projects introduced from overseas to China (license in). According to Chen Zhen's observation, in the past three to five years, Chinese pharmaceutical companies have completed a strategic reversal from license in to license out.
In addition, in many subdivided fields, domestic innovative drugs, especially application-oriented innovative R&D based on known targets, have been at the forefront of the world, and ADC drugs (antibody drug conjugates) are one of them.
A set of data from Sullivan shows that from January to November 2023, antibody drugs such as ADCs accounted for 56 percent of license out transactions3%, and most of the transaction hotspots are concentrated in the early-stage R&D pipeline, of which the transaction volume of preclinical and phase I products accounts for nearly half. An industry source commented that this shows that "the level of domestic ADC drug research and development has approached the international advanced level".
In 2022, Columbus Biotech reached three major licensing collaborations with multinational giant Merck & Co., Ltd. (Merck), for ADC drug candidates, with a total contract value of nearly US$11.8 billion, which ranked first in the history of international licensing transactions in China's pharmaceutical industry at that timeIn December this year, Baili Tianheng and Bristol-Myers Squibb reached an exclusive license and cooperation agreement for ADC drugs, with an initial payment of US$800 million and a potential total transaction amount of US$8.4 billion, which not only set a record for the down payment of domestic innovative drug license out transactions, but also set a new record for the total price of global ADC single drug transactions in one fell swoop.
The emergence of more license out cases will boost the confidence of China's innovative drugs, and it is believed that the development of China's innovative drugs will enter a new era of steady and vigorous development. Chen Zhen said.
Subdivide the track
Get out of the "most beautiful boy".
In 2023, GLP-1 will become the "most beautiful boy" in the pharmaceutical segment.
In the GLP-1 track, which integrates the two major fields of "diabetes + weight loss", the main market share of this class of drugs in the world is occupied by multinational pharmaceutical giants Novo Nordisk and Eli Lilly. The sales of GLP-1 drugs drove the performance of the two pharmaceutical giants in the third quarter to exceed expectations, and the sharp increase in sales also drove the stock prices and market value of the two pharmaceutical giants to soar. Among them, Eli Lilly's share price once hit a record high, and its market value once exceeded $570 billion. Novo Nordisk, on the other hand, surpassed LVMH to become the most valuable listed company in Europe.
Based on the broad market prospects in this field, the multinational giant Roche Pharmaceuticals spent more than US$3 billion to acquire GLP-1 drug companies, and domestic pharmaceutical companies have also followed suit. In 2023, two domestic GLP-1** drugs, liraglutide from Huadong Medicine and benaglutide injection from Renhui Biologics, will be approved for marketing.
The core patent of Novo Nordisk Semaglutide will expire in 2026, and domestic companies have rushed to lay out, and the biosimilars of many companies such as CSPC Pharmaceutical Group are in the clinical stage. With the continuous increase in the number of entrants, the competition in the GLP-1 track is intensifying, and the research and development of GLP-1 drugs is developing in the direction of long-acting, multi-target, and oral, while constantly exploring more new indications, the weight-loss drug market is expected to usher in rapid expansion. He Wanyi told this reporter.
The rapid development of GLP-1 has brought new growth momentum to the pharmaceutical market, promoted enterprises to accelerate R&D and innovation, and stimulated the vitality of the entire pharmaceutical industry. "This momentum provides business opportunities for industry players and injects new vitality and opportunities into the pharmaceutical market. Wu Xiaoying believes that GLP-1 will gradually become the main driving force for the growth of the global hypoglycemic drug market, and will drive the rapid development of the entire industrial chain, including the upstream raw material suppliers of GLP-1, midstream CDMO service providers and downstream pharmaceutical companies.
However, the GLP-1 track is not a "rainbow all the way". In December, Pfizer announced the development progress of its investigational GLP-1 drug and announced that it has no plans to advance it to Phase 3 clinical trials. The setback in the research and development of GLP-1 drugs from multinational pharmaceutical giants, coupled with the risk warnings of regulatory agencies for the use of GLP-1 drugs, has recently seen a "cooling" trend in the primary and secondary markets. "The cooling phenomenon of the GLP-1 drug market is not only affected by the fierce competition and clinical data in the primary market, but also by the combination of various factors such as potential safety risks, and investors will take a more cautious attitude in the future. Wu Xiaoying said.
In addition, with the increase in entrants, how can latecomers get a piece of the pie, and whether there will be a first-class battle on the GLP-1 track is also quite concerned by the market.
* The key to successfully breaking the oligopoly is innovation. Companies need to differentiate themselves in key areas such as efficacy and medication cycle to attract the attention of patients and healthcare professionals. At the same time, a competitive strategy is also a key factor in winning the market. While new players are expected to make breakthroughs in innovation, they also need to carefully balance the risks of the battle to ensure the sustainability of their products. Wu Xiaoying thinks.
Technology empowers
Activate digital wellbeing
Under the two national strategies of "Digital China" and "Healthy China", the development of the digital health industry has become an inevitable trend. At present, artificial intelligence and big data technology, especially generative AI technology, are accelerating the deep integration with the medical industry.
Large models are the soul of the AI era. The medical model can provide more intelligent, accurate and convenient solutions for the medical industry in many fields, including hospitals, scientific research institutions, pharmaceutical and medical device companies, Internet hospital platforms, etc., connecting the whole chain of production, education, research and application. The relevant technical person in charge of Kirin Hesheng Network Technology Co., Ltd. told this reporter.
Taking AI pharmaceuticals as an example, "AI is expected to shorten the new drug development cycle and reduce costs by empowering multiple aspects of drug development, such as target discovery, new use of old drugs, compound screening, molecular design and optimization, crystal form**, dosage form design, preclinical experimental results**, auxiliary clinical trial design, patient recruitment grouping, etc." Ren Feng, co-CEO and chief scientific officer of Insilico Medicine, told this reporter.
At present, in overseas markets, Google has launched Medilm, a model focused on healthcare. In China, in September 2023, the first "industrial-level" medical model in China, the Lingyi model, was released, and it has realized iterative upgrades in three directions: service architecture expansion, model performance enhancement, and experience customer surge. In addition, Zhiyun Health and Yidu Technology have also released large-scale model products related to medical and big health.
Wang Wenhua, partner of CIC Insight Consulting, told the reporter that the more mature development of medical digitalization depends on large-scale structured and standardized medical data, and more accurate algorithm models are trained based on it. At present, medical digitalization is still in a relatively early stage, although there are some surprising attempts in various segments, but on the whole, the application scenarios are still relatively limited, and there is still a distance from mature landing applications.
At present, how to reshape the medical industry and achieve a leap in productivity through AI large models has sparked market discussions.
In this regard, Professor Wang Peijun, Vice President of Tongji Hospital and Director of the Department of Medical Imaging of Tongji Hospital, said: "In the field of AI, data is the foundation, computing power is the support, and algorithms are the core. At present, there are three main development trends: building a large-sample multi-center database;Improve data sensitivity, specificity, accuracy, and stabilityComputing power needs to be greatly improved. ”
Xu Jiming, CEO and co-founder of Yidu Technology, told the reporter that under the wave of large model technology, people have formed a collective consensus faster, that is, only when the large model enters the vertical from general to vertical and quickly transfers to the industrial landing can it prove its true value.
Specific to AI pharmaceutical, Ren Feng told reporters that AI pharmaceuticals need more time and accumulation to truly achieve the development from 1 to N in order to obtain richer high-quality data, compound talents, and revolutionary breakthroughs in algorithms. The two most critical cores are data and validation. "Biopharmaceutical R&D is a long-term process, and no AI drug has passed the critical efficacy and safety verification of Phase II clinical trials. I think if an AI drug completes the full validation process and is approved in the clinic, or is successful in the second phase of clinical trials, it will be a huge achievement, and even a major benefit for the industry. ”
Pharmaceutical and biological industry
Welcome to the four major changes
The pharmaceutical and biological sector has undergone major adjustments in the past three years, and is currently at the bottom of history, with a good long-term growth logic. The marginal impact of policy factors such as centralized procurement and negotiated price reduction has gradually decreased after digestion, and at the same time, many enterprises in the industry are actively transforming to seek future development directions. He Wanyi said about the overall performance of the pharmaceutical industry.
In 2024, what trends will be presented within the pharmaceutical industry to attract market attention.
First, industry differentiation is accelerating. On the one hand, from the perspective of the entire industry, "with the continuous progress of technology and the improvement of innovation capabilities, the biomedical industry will pay more attention to R&D and innovation, promote new drug research and development, technological innovation and product upgrading, and some enterprises that are not competitive or do not meet market demand may be eliminated." He Wanyi said.
On the other hand, the biotech track will also usher in differentiation. Companies with better product pipelines and product strength will have more optimistic prospects for valuation and refinancing, while companies with weak product pipelines and technical strength need to shrink expenses, cut off low-value pipelines, and retain the most core assets.
Second, "going to sea" is still the main theme. At present, China's innovative drugs are gradually moving towards the harvest period. For pharmaceutical companies, "going global" represents a breakthrough in R&D, a broader market, and higher commercial returns and company valuations to a certain extent.
Chen Zhen believes that the pipeline will be licensed out faster, which can not only complement the advantages of overseas pharmaceutical companies, quickly develop overseas sales channels, but also increase corporate cash flow, whether it is for start-up companies or traditional large pharmaceutical companies will be the future trend.
At the same time, pharmaceutical companies will face new challenges such as overseas commercialization, market access, and patent issues. "This also requires pharmaceutical companies to further improve their agility and response capabilities in many aspects. Wu Xiaoying told reporters.
Third, the cooperation between innovative pharmaceutical companies and traditional pharmaceutical companies will continue to accelerate, and mergers and acquisitions are expected to heat up. On the one hand, the advantages of traditional pharmaceutical companies in financial strength, product industrialization and commercialization have emerged, which can make up for the shortcomings of biotech in these fields. On the other hand, traditional pharmaceutical companies can use Biotech's R&D strength and product pipeline to enrich their product pipelines and innovate and upgrade.
Wu Xiaoying said: "Whether it is a domestic company or a foreign company, there will be more forms of cooperation and restructuring in the transformation of the pharmaceutical industry, especially pharmaceutical enterprises with complementary business models in the upstream and downstream of the industrial chain. We believe that M&A activities in the market will heat up, industrial integration will also accelerate to a certain extent, and multinational pharmaceutical companies and biotech will give full play to their respective advantages in commercialization layout and R&D capabilities, and cooperate more closely. ”
Fourth, the wave of digitalization is unstoppable. At present, digital technology is increasingly integrated into all fields and processes of medical and health care, and medical institutions, medical equipment manufacturers, drug R&D and manufacturing enterprises, and emerging Internet medical technology companies are using digital technology to create and upgrade medical products and services, and even create new models and business models. The continuous innovation and evolution of medical intelligent technology will bring more changes and convenience to the medical industry, and the enterprises in the track will also promote the expansion of medical technology to a deeper and wider field.