How long will it take for innovative enterprises in the field of cancer screening or drugs to make a profit?
The answer is that for nearly a decade, Zhu Yeqing, CEO of nuohui health, recently interviewed by the first financial reporter, expects the company to start making profits in 2024. Similarly, the commercialization process of a large number of tumor drug enterprises such as cornerstone pharmaceutical, which was established in the same period, is accelerating, but it will take time to realize profits.
China Meheco Group Co.Ltd(600056) examination and approval reform has been accelerated, and the pharmaceutical innovation ecology is also gradually improved. However, the nature of the pharmaceutical field determines that its R & D, clinical trials and registration approval take a long time, and the commercialization of products will not be as smooth as hot knife cutting butter. The chill of the capital market has brought more variables to the industry. It still needs some concentration and patience for enterprises to get through the closed-loop innovation.
autohemopoiesis stage
“Our turnaround schedule is 2024”, Zhu Yeqing told the media including China first finance and economics in the high-level communication link after the disclosure of the 2021 performance announcement.
Nuohui health was founded in 2015. The company’s colorectal cancer early screening product Chang Weiqing was approved by the drug regulatory department at the end of 2020, and its commercialization began at the same time. Prior to this, the company spent several years conducting large-scale, prospective clinical trials and registration applications in the early stage.
In the process of pharmaceutical research and development, the clinical link often takes the longest time, and enterprises often fail here.
“Whether the ideas and technologies of innovative enterprises can be fully verified clinically and accepted in the clinical path has always been a great difficulty. The technology that the laboratory can do well will certainly perform differently in the real world, which is a great challenge.” Zhu Yeqing said.
Nuohui health has initially seen a return on its commitment to innovation risks.
Novell health achieved a total operating revenue of 210 million yuan in 2021, an increase of 201.5% year-on-year over 2020, and its gross profit margin rose to 72.7% from 52.8% in 2020, but its net profit is still in the stage of loss.
Standing in the middle of March 2022, looking back at the work in 2021, Zhu Yeqing was relatively satisfied that “the commercialization of approved products has achieved initial results, and the progress is faster than the expectation of the whole market.” He told reporters: “at least we will hand over a satisfactory answer in 2021. Of course, we still need to make continuous efforts from the large-scale commercialization we imagine.”
One direction of this effort is to awaken more people’s awareness of early screening for cancer. China is already the country with the largest number of cancer patients in the world. According to the data disclosed by the international cancer research agency of the World Health Organization, the number of new cancers in the world in 2020 was 19.29 million yuan, and China ranked first with 23.7%. Due to the lack of awareness of early screening and diagnosis, and even the resistance of avoiding medical treatment, among all kinds of high-risk cancer types, the discovery period of cancer patients in China is generally later than that of residents in the United States, Japan and other countries, and valuable treatment opportunities are wasted.
In fact, it is not just nuohui health. For tumor innovative drug enterprises, efficient matching of products with target audiences is a common problem.
“We need to find 18.8% of patients with lung cancer who have passed the exon gene test of Phuket. However, there are very few patients with lung cancer who have passed the exon gene test of Phuket this year.” Zhao Ping, general manager of Greater China of cornerstone pharmaceutical, said in an exclusive interview with China business.
Cornerstone pharmaceutical was also established in 2015. In terms of revenue, the revenue of cornerstone pharmaceutical is growing, but it is still in the stage of loss in 2020. In the first half of 2021, the revenue of cornerstone pharmaceutical was 79.4 million yuan, and the revenue of two approved cancer drugs avatinib and pratinib reached 33.6 million yuan and 45.8 million yuan respectively. However, its R & D expenditure reached 440 million in the first half of the year, and its administrative, sales and marketing expenditure was 210 million, which led to a loss of 630 million yuan in the first half of last year.
“Precision treatment needs to improve efficiency. Another thing is that patients are very scattered. How to improve efficiency? For most enterprises, the crowd strategy is also not feasible.” Zhao Ping said: “I see that many companies are in the process of improving efficiency. This is what enterprises need to consider in the future. The business model should be more effective.”
With the reform of the medical examination and approval system, a large number of enterprises dedicated to cancer prevention and treatment have emerged in China. They either start from the screening stage or start the journey of innovation from the perspective of drugs. After several years of development, the products of these enterprises have been approved by the Chinese Drug Administration and even the US drug administration.
These enterprises have now generally reached such a stage: in addition to continuous investment in R & D of new products, the key to the next step is to realize the commercialization of approved products and return funds to realize their hematopoietic function.
what is lacking in innovation ecology
“Over the past few decades, our talents have gradually matured, and many returning international talents have also laid a very good foundation for innovation and industry development.” Zhao Ping told reporters: “but now many innovative enterprises do not have the ability to circulate their own blood transfusion, but also rely on external funds.” Zhao Ping said that cornerstone pharmaceutical has not yet achieved a closed-loop business.
Similar to Shanghai Junshi Biosciences Co.Ltd(688180) and other tumor drug development enterprises.
On March 7 this year, Shanghai Junshi Biosciences Co.Ltd(688180) issued a fixed increase financing plan to raise another 3.98 billion yuan. The vast majority of these funds are prepared for R & D projects of innovative drugs, including clinical R & D projects such as js001 follow-up domestic and foreign clinical R & D, js004 domestic and foreign phase III clinical R & D, js111 domestic and foreign clinical R & D and preclinical research of other early projects.
Shanghai Junshi Biosciences Co.Ltd(688180) there are PD-1 drugs on the market. In 2021, Shanghai Junshi Biosciences Co.Ltd(688180) ‘s revenue reached 4.01 billion yuan, but its loss reached 730 million yuan. Before the new round of financing, it has accumulated more than 10 billion funds in the capital market. Refinancing highlights the difficulty of innovative drug enterprises in building a commercial closed loop.
Clinical is not only time-consuming, but also the most expensive stage of R & D funds. Chang Weiqing of nuohui health spent nearly seven years and nearly US $100 million from the beginning of research and development to clinical registration, and then before and after obtaining the registration certificate. At present, it is also developing products for liver cancer and other fields.
“The existing cash supports our company’s current products and pipelines, and there is no problem to break even by 2024.” Zhu Yeqing told the first financial reporter that nuohui health currently has about 1.89 billion yuan of cash and cash equivalents on its account, and there is no financing demand at present. However, he believes that the current capital winter may have a negative impact on the early screening industry. “This cold winter in the capital market is still a big challenge for new start-ups.” “Whether most start-ups have the courage to invest in high-risk clinical is actually a great challenge,” Zhu Yeqing told reporters
Several senior executives interviewed by the reporter all looked forward to encouraging innovation in medical insurance.
“For rare target drugs, if the national medical insurance price is too low, it will be very challenging for us,” Zhao Ping said. However, “medical insurance depends on its capital, how much money it has to do, and there is no way to stimulate innovation without money. So I think Dali developer insurance is a very good policy.”
At present, some provinces and cities in China are piloting the early screening of cancer into medical insurance, but Zhu Yeqing believes that large-scale deployment is not realistic.
“We believe that there are still many practical problems in the large-scale inclusion of medical insurance in the short term, mainly because there are not many approved products for cancer screening, and the scope of the whole application is not wide.” Zhu Yeqing believes that “with more good products approved and more applications, there will be a great possibility for cancer screening to be included in medical insurance.”
The chill of the capital market also brings more variables to medical innovation enterprises. Hong Kong’s Hang Seng Index has fallen 25% over the past year. The market value of cornerstone pharmaceutical has fallen by half, 70% from the highest point Shanghai Junshi Biosciences Co.Ltd(688180) market value fell by more than 30% from the highest point, while nuofi health’s market value fell by 80% from the highest point.
No matter in the research and development stage or commercialization stage, it is difficult for enterprises in the pharmaceutical field to win the victory of destroying the withered and tearing down the decadent. In the ups and downs of the capital market, enterprises and their leaders also need some concentration of “not happy with things, not sad for themselves”.
“Now I feel that everyone’s mentality is still relatively impetuous. When the product is pushed to the market before it is mature, I hope users will accept it. This is a less responsible behavior.” Zhu Yeqing said: “it still takes time for tumor early screening ecology. It is not enough to rely on nuohui alone. More companies need to have enough patience to do large-scale and forward-looking clinical trials for different cancer species, so that more products can pass clinical validation and bloom after commercialization.”
