Key investment points
Event: announcement of MPP authorization results, 5 Chinese companies selected
On March 17, 2022, MPP announced that it had signed contracts with 35 generic drug suppliers around the world, authorizing them to supply Pfizer’s anti covid-19 small molecule therapeutic drug paxlovid and its API for 95 low – and middle-income countries. According to the official website of MPP, qualified suppliers in China include Apeloa Pharmaceutical Co.Ltd(000739) , Desano, Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , Zhe Jiang Hua Hai Pharmaceuticalco.Ltd(600521) , Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) and others, of which Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) is authorized to supply drugsubstance and drugproduct. According to the MPP official website, the authorization is expected to cover 53% of the world’s population. (MPP official website link: https://medicinespatentpool.org/news-publications-post ）
Viewpoint: supply chain companies can benefit from the accelerated volume of specific drugs
We believe that the imitation authorization of Pfizer MPP is the expected fulfillment of covid-19 specific drugs to enlarge the scope of use. We mainly recommend specific drugs, Chinese supply chain and independent and controllable drug companies.
① capability verification: we believe that obtaining MPP authorization is the verification that the applicant company has the global compliance production capacity. From the perspective of API and preparation internationalization, the sales volume of the company after being authorized depends on the international sales network construction and supply chain management ability of each company. From the perspective of performance fulfillment, We suggest paying attention to ① production capacity reserve (whether the authorized company has sufficient production capacity to explore the market of low-income countries without affecting the production scheduling of existing projects); ② Build an international sales team (companies with promotion teams in Asia, Africa and Latin America may benefit more).
② marginal change: we believe that small molecule specific drugs are an important means of global epidemic prevention and control. Under the formal implementation of MPP authorization, the order expectation of authorized companies, the application scope of specific drugs and the independent and controllable expectation of domestic covid-19 drugs may be marginally strengthened. From the perspective of capacity release and order delivery, we suggest paying attention to the potential incremental performance contribution of relevant companies in 20232024.
③ potential space:
(1) Pfizer’s original API supply: according to Pfizer’s sales target of 120 million courses in 2022 mentioned in its annual report, we estimate that about 120 tons of ritonavir API and 360 tons of pf-07321332 API are needed (paxlovid is administered by a combination of 300mg (two 150mg tablets) pf-07321332 and one 100mg ritonavir tablet for covid-19 patients orally, twice a day for 5 days).
(2) supply of Pfizer’s original intermediates: according to the reply of Aba Chemicals Corporation(300261) on January 6, 2022, “Carbenoic anhydride can be obtained by oxidation and cyclization of inulin, or cyclopropane can be generated from isopentenol (3-methyl-2-butene-1-alcohol), oxidative degradation and cyclization. According to the preliminary calculation of existing literature, we believe that the unit consumption of synthetic pf-07321332, SM1: API is about 1:1; SM2: API is about 1:1; the unit consumption of carbenoic anhydride is 1.8-2.0; if inulin route is adopted, the unit consumption of inulin is 3.5-4; if isopentenol route is adopted, the unit consumption of isopentenol is 2.2-2.5”. Based on this information, we estimate that 360 tons of pf-07321332 API corresponds to about 360 tons of SM1 and 360 tons of SM2. 360 tons of SM2 requires about 648720 tons of carbonic anhydride. If the route of inulin is adopted, 12601440 tons of inulin are required; If the isopentenol route is adopted, about 792900 tons of isopentenol are required.
Investment advice
① supply chain of beneficial specific drugs: in terms of MPP authorization, companies such as Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Apeloa Pharmaceutical Co.Ltd(000739) , Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , Zhe Jiang Hua Hai Pharmaceuticalco.Ltd(600521) , etc. are recommended; Cdmo company, recommend Wuxi Apptec Co.Ltd(603259) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) , etc.
② China self controlled pharmaceutical company:
(1) chemical drugs: it is suggested to pay attention to Shanghai Junshi Biosciences Co.Ltd(688180) (vv116 global phase III, with the fastest progress and better data in phase I), Frontier Biotechnologies Inc(688221) (American phase I), Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) (preclinical), Fujian Cosunter Pharmaceutical Co.Ltd(300436) (preclinical), Yunding Xinyao, Xiansheng pharmaceutical and Geli pharmaceutical, etc;
(2) neutralizing antibody: it is suggested to pay attention to tengshengbo medicine (China’s EUA in 2021, incorporated into covid-19 diagnosis and treatment scheme (trial version 9)), Shanghai Junshi Biosciences Co.Ltd(688180) (United States and other EUA);
(3) traditional Chinese medicine: it is suggested to pay attention to Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) (Lianhua Qingwen capsule), Jiangsu Kanion Pharmaceutical Co.Ltd(600557) (Reduning Injection), etc.
Risk tips
Risk of sharp decline in sales price; Order delivery volatility risk; Production safety accidents and quality risks, etc.
