The number of innovative drugs listed in China is about to usher in an outbreak period. 1) The number of CDE declarations increased significantly. The number of projects first applied for listing each year is the leading indicator of the number of new drugs on the market. The number of innovative drug projects applied for listing in CDE has increased sharply from 2020, indicating that the number of new drugs on the market is about to increase significantly. By December 2021, the number of new drug projects applying for listing for the first time had reached 198, exceeding that of the whole year of 2020. By December 2021, the number of new drugs on the market had reached 97, a record high. According to the number of declared projects, we expect that the number of new drugs on the market in 2022 is expected to see a greater increase. China’s new drug market is about to usher in a blowout period. 2) The number of new drug clinical trial projects has exceeded a record high. The number of new drug clinical trial projects in China has continued to grow since 2016. Since 2018, the number of new drug clinical trial projects approved by CDE has increased by about 30% – 40%. In 2020, due to the impact of covid-19 epidemic, it has decreased. By December 2021, it has recovered to more than 40%, breaking a record high. The sustained and rapid growth of new drug clinical trial projects shows that China’s enthusiasm for new drug research and development is high, which lays a foundation for the continuous listing of follow-up innovative drugs. The number of phase III clinical projects roughly reflects the number of projects applied for listing. For most indications, the latter lags behind the former by 1-3 years. By December 2021, the number of phase III clinical projects had increased by a breakthrough, reaching 378, with a year-on-year growth rate of 36%, significantly higher than that in previous years. 3) China is playing an increasingly prominent role in the global trade of innovative drugs. The enthusiasm for global innovative drug trading is rising year by year. In 2021, the total number of transactions reached 981, with a total transaction amount of US $175.9 billion. China is playing an increasingly important role in the global trade of innovative drugs, which is second only to the United States. Two innovative drugs in China have been approved by FDA, and another 10 are in the NDA / BLA stage.
Chinese enterprises play an important role in global hot research fields. ADC, double antibody and car-t cells are three important directions of new drug research and development, especially for tumor treatment. These three directions are very likely to produce breakthrough drugs, and R & D forces outside China have also invested in these three fields. China plays an important role in global R & D. ADC projects account for 36% (144 / 400), dual antibody projects account for 44% (260 / 588) and car-t projects account for 37% (260 / 697). The top three companies in the field of ADC in China are Jiangsu Hengrui Medicine Co.Ltd(600276) , mayako and Rongchang biology. The top three companies in the field of double antibody are Baiji Shenzhou, followed by Bio-Thera Solutions Ltd(688177) and aismai. The top three companies in the field of car-t cell therapy are yako biology, legendary biology and Kaidi medical.
Stone from another mountain: leaders in subdivided fields enjoy valuation premium. From the perspective of biotechnology companies listed in U.S. stocks, companies with high market value have the following characteristics: they have rich product lines or outstanding technical strength in a certain segment. For example, due to the success of covid-19 vaccine, Moderna has become the second most valuable biotechnology company in the United States. SeaGen, as a representative company of ADC technology, has also been highly recognized by the capital market. Its market value has doubled in the past three years, mainly because the company has been approved to market seven new drugs since 2020. For benchmarking China, we can also screen the targets with long-term sustainable growth potential by using the two indicators of rich product lines or outstanding technical strength in a certain subdivision field.
Investment suggestion: after several years of preparation, China’s innovative drugs have reached a new wave of centralized listing period. It is expected that the number of innovative drugs listed in China will reach a record high in the next two years, and Chinese innovative drug enterprises have reached the harvest period one after another. After the correction and shock in 2021, most of the innovative drug targets of A-Shares and Hong Kong shares have good cost performance. It is recommended to pay active attention to them, including Jiangsu Hengrui Medicine Co.Ltd(600276) , Shanghai Junshi Biosciences Co.Ltd(688180) , Betta Pharmaceuticals Co.Ltd(300558) , Corning Jerry pharmaceutical, Cinda biology, Suzhou Zelgen Biopharmaceuticals Co.Ltd(688266) , Frontier Biotechnologies Inc(688221) , etc.
Risk tip: drug R & D failed, the progress time of drug R & D was less than expected, and the sales promotion of new drugs after listing was less than expected.
