In the fierce competition for the stock market, some PD-1 products are beginning to decline, and the income growth space is relatively limited.
In addition to Jiangsu Hengrui Medicine Co.Ltd(600276) , a number of local innovative pharmaceutical companies including Baiji Shenzhou, XinDa bio and Shanghai Junshi Biosciences Co.Ltd(688180) have announced their earnings in 2021.
For local innovative pharmaceutical companies, PD-1 has become one of the most competitive markets in terms of product competition. According to frost Sullivan’s analysis data, the global PD – (L) 1 inhibitor market reached US $38.1 billion in 2021 and is expected to reach US $63.9 billion by 2023. In China, the market scale of PD – (L) 1 inhibitors is expected to reach 66.4 billion yuan in 2023 and 98.8 billion yuan in 2030.
From the published financial report data of major innovative pharmaceutical enterprises, it can be seen that in the fierce competition for the stock market, some PD-1 products have begun to decline, and the income growth space has been relatively limited. Other drugs continue to enter the commercialization stage, becoming a new strong growth point driving the performance of enterprises.
In view of the current market competition pattern of innovative pharmaceutical enterprises, Pei Lidong, data director of smart bud biomedicine, said in an interview with the reporter of 21st Century Business Herald that China’s innovative drugs are currently developing at a high speed, but they mainly focus on quickly following up overseas cutting-edge projects and developing me too and me better, with insufficient originality. Once a field has achieved very positive clinical results, Chinese pharmaceutical enterprises tend to flock to the same field and invest a lot of resources in drug R & D, laying potential risks for future commercial competition.
“With the extension of human life span, aging diseases and cancer have gradually become the largest market for drug research and development. At present, the global new drug intelligence database of smart bud pharmsnap contains a total of 39000 + new drug data. Drugs in the field of cancer account for 17%, including chemotherapy, radiotherapy, targeted therapy, immunotherapy and many other therapies.” Pei Lidong said that the average R & D cycle of a new drug is 12.5 years, the average cost is as high as $2.6 billion, and the average clinical success rate is less than 10%. This is a fact that the R & D of innovative drugs must face. Most of China’s local pharmaceutical enterprises are biotech companies with weak commercialization ability. In order to achieve sound development, enterprises need to be more cautious in the layout of R & D pipelines and find the blue ocean market with unmet clinical needs.
In other words, in the long run, the innovative drug enterprises holding heavy products fight for product competitiveness and subsequent commercialization ability. In the future, innovative pharmaceutical enterprises will compete for new indications, drug quality, production capacity, channels, sales team and medical insurance.
“old brand” competition: some PD-1 products are in decline
On March 31, Shanghai Junshi Biosciences Co.Ltd(688180) released the financial report for 2021. In 2021, the operating revenue was about 4.025 billion yuan, with a year-on-year increase of 152.36%; The net profit loss attributable to the shareholders of the listed company was about 721 million yuan. From the perspective of income composition, there are mixed results: the income of antitumor drugs is 412 million yuan, and Shanghai Junshi Biosciences Co.Ltd(688180) of the products listed in the field of antitumor are only treprizumab, so this represents the sales performance of treprizumab in 2021. In 2020, the income of dapril decreased by 96.58% compared with that of dapril in 2021. This also shows that although the price of treprizumab has been reduced into medical insurance, it has failed to exchange the price for the quantity.
In contrast, Cinda bio has considerable sales in PD-1 market and still achieved growth. According to the 2021 financial report released by Cinda biology on March 30, the operating revenue in 2021 was 4.261 billion yuan, of which the product revenue was 4.001 billion yuan, a year-on-year increase of 69.0%. Its core product, PD-1 inhibitor cindilimab, has four major indications included in medical insurance in 2021, so the sales in China has exceeded 3 billion yuan, while in 2020, the sales of PD-1 was 2.49 billion yuan.
Also maintaining a relatively stable growth trend is Baiji Shenzhou, which is also one of the first innovative pharmaceutical enterprises to release performance reports. According to the 2021 US stock performance report and A-share performance express released by Baiji Shenzhou on February 25. During the reporting period, the accumulated revenue of Baiji Shenzhou reached US $1.2 billion (about 7.6 billion yuan), a year-on-year increase of 281%; The net loss decreased by about 1.3 billion yuan year-on-year, narrowing by 13%.
Among them, in the PD-1 market, by the end of 2021, Baiji Shenzhou baizean (tirelizumab) had five indications listed. With the first-line treatment of non-squamous non-small cell lung cancer (NSCLC) and other three new indications included in the new national medical insurance catalogue, Baiji Shenzhou surpassed Jiangsu Hengrui Medicine Co.Ltd(600276) , Shanghai Junshi Biosciences Co.Ltd(688180) , Xinda biology, making baizean the PD-1 product most included in the medical insurance catalogue. The demand for new patients brought about by the expansion of the scope of medical insurance reimbursement, the further expansion of the sales team and the increase in the number of drugs entering the hospital have continuously promoted the expansion of baizean’s market penetration and market share. In 2021, the total sales volume of baizean in China reached about 1.6 billion yuan, with a year-on-year increase of 56%.
According to the 2021 national medical insurance drug catalogue released by the national medical insurance administration, four PD-1 products including Baiji, Junshi, Xinda and Hengrui have been included in the medical insurance catalogue, mainly focusing on the new indications, including Xinda biological xindilimab’s new three indications of “first-line squamous non-small cell lung cancer (NSCLC) + first-line non-squamous NSCLC + first-line liver cancer”; Baiji Shenzhou tirizumab added three indications of “first-line squamous NSCLC + first-line non squamous NSCLC + second-line liver cancer” Jiangsu Hengrui Medicine Co.Ltd(600276) carrelizumab added 2 indications of “first-line + third-line nasopharyngeal carcinoma”, and Shanghai Junshi Biosciences Co.Ltd(688180) treprizumab added 2 indications of “third-line nasopharyngeal carcinoma + second-line urothelial carcinoma”.
From the perspective of market situation, the price reduction of national medical insurance negotiation in 2021 is really higher than in the past, which will also bring more fierce market competition.
“upstart” competition: looking for growth space in fierce competition
In addition to Xinda, Junshi, Hengrui and Baiji PD-1 included in the medical insurance, three domestic PD-1 products, kangfang biology / Zhengda Tianqing, Harbin Gloria Pharmaceuticals Co.Ltd(002437) / Yaoming biology and Fuhong Hanlin, have been approved for listing.
Although kangfang PD-1 was just listed last year, it also achieved good returns for new enterprises in 2021. According to its annual report, the company achieved an operating revenue of 226 million yuan in 2021. According to the financial report, the growth of sales revenue during the reporting period was mainly due to the listing and sales of anico (paanpril, PD-1 monoclonal antibody) at the end of August 2021.
Within about 4 months after listing, the product created sales of about 212 million yuan.
According to the public information, paianpuli is commercialized by the subsidiaries established by kangfang biology and China biopharmaceutical (parent company of Zhengda Tianqing), and both parties enjoy 50% rights and interests respectively. At present, the only approved indication of paclitaxel is lymphoma. In 2021, kangfang biology successively applied for the first-line treatment of locally advanced or metastatic squamous non-small cell lung cancer and the third-line treatment of metastatic nasopharyngeal carcinoma with paclitaxel combined with chemotherapy. It is expected to be approved for listing this year.
In addition to paianpulimab, kangfang biological submitted its application for listing in China of its PD-1 / CTLA-4 dual antibody product – kadonili (ak104) for the treatment of recurrent or metastatic cervical cancer in September 2021 Zhongtai Securities Co.Ltd(600918) research report points out that as the most anticipated variety of kangfang biology, kadonili is expected to become the first PD-1 / CTLA-4 dual antibody product. At present, it has more than 10 clinical trials and the peak sales is expected to reach 5 billion yuan.
At the same time, on March 25, Fuhong Hanlin announced that its first self-developed innovative biological drug PD-1 inhibitor Sullivan injection was officially approved by nmpa for the indication of adult advanced solid tumors with unresectable or metastatic microsatellite high instability (MSI-H) after previous standard treatment failure. Previously, in terms of commercialization, Fuhong Hanlin has established a 200 person commercialization team for the drug.
With the continuous approval and listing of PD-1 / PD-L1 monoclonal antibody products, the “inner volume” of market competition will become more and more intense. According to the statistics of Anxin securities, a total of 17 PD-1 / PD-L1 monoclonal antibodies and 1 PD-1 / CTLA-4 dual antibody will be listed in China by the end of 2022, including 14 domestic PD-1 / PD-L1 (including dual antibodies). At present, in the PD-1 market, the subsequent declared drugs include genomab of Jiahe biology and puterimab of Lepu biology, Among them, Jiahe biology submitted the NDA only two months later than kangfang biology / Zhengda Tianqing’s paianpulimab, which is expected to be approved within the year.
Pei Lidong told the 21st Century Business Herald reporter that through the smart bud global new drug information system, we can retrieve the competitive intelligence of global and Chinese research projects, and find the future competitive risks in the early stage of the project. For example, at present, around the distribution of drugs in the three stages of KRAS target treatment of tumor, there are already one drug on the market, a total of 8 drugs from clinical phase 2 to application for marketing, and 46 drugs are under preclinical research and development. If the project is approved now, after 10 years of development, it is likely to compete with generic drugs, and the project risk is very high.
From the side, for many PD-1 products still in different research and development stages, the subsequent market competition will be more anxious. In order to consolidate the market position, enterprises need to be cautious before project approval.
In view of the current PD-1 market situation, Zhang Wenjie, chairman, executive director and CEO of Fuhong Hanlin, told the 21st century economic report at the company’s 2021 annual performance meeting that he was not afraid of the inner volume. “The first indication of PD-1 monoclonal antibody sululi of Fuhong Hanlin is MSI-H solid tumor. This market has hardly been developed. There are about 300000 new patients in China every year. Therefore, this market is still a blue ocean to be developed.” Zhang Wenjie said that if the tumor is treated as a single market, the competition is very fierce. But as we all know, tumor itself is a kind of disease. PD-1 is different in different tumor species, different indications and different markets.
enterprise new layout: global R & D and commercial two wheel drive
In fact, with the increasingly crowded Chinese market, innovative pharmaceutical enterprises have arranged the global market one after another, and continuously attracted the favor of multinational pharmaceutical enterprises through R & D and product advantages, so as to go to sea and bring large cooperation income to enterprises.
For example, in January and December 2021, Baiji Shenzhou reached global development and commercialization cooperation with Novartis on baizean and tisperizumab, a tigit inhibitor. The total potential transaction amount brought by the two record global cooperation will exceed US $5 billion. In addition, in 2021, Baiji Shenzhou submitted to the FDA for the first time the new drug marketing application of baizean for second-line squamous esophageal cancer (ESCC), which is also based on the phase 3 trial data of multiple centers around the world. Data show that baizean is currently carrying out about 50 clinical trials in 35 countries and regions around the world, with more than 9000 subjects, of which nearly 3000 are from overseas. Baizean is expected to go to sea for the first time in July 2022.
From the perspective of overseas development, at the beginning of February last year, the US and Canadian rights and interests of Shanghai Junshi Biosciences Co.Ltd(688180) treprizumab were authorized to coherus company. The company also attaches great importance to the combination of PD-1 + tigit and takes overseas clinical exploration in this regard as the focus of follow-up development. According to the prediction of insight database, in the process of clinical development, Junshi will continue to obtain the milestone funds of these two projects, and enjoy 20% and 18% of overseas sales share respectively after listing.
Cinda bio’s PD-1 internationalization is a cooperation with Lilly pharmaceutical. Recently, the two sides also received a complete reply from the US Food and Drug Administration (FDA) on the new drug marketing application (BLA) of cindilimab combined with pemetrexed and platinum chemotherapy for the first-line treatment of patients with non-squamous non-small cell lung cancer (NSCLC). The FDA said in its reply that it had completed the review of the BLA, but failed to approve the application, which was consistent with the results of the FDA Tumor Drug Advisory Committee (ODAC) meeting held in February. The response letter included a proposal for an additional clinical study, suggesting that cindilimab combined with chemotherapy and standard therapy for first-line metastatic NSCLC should conduct a multi regional non inferiority clinical trial with the end point of overall survival. The company is working with Lilly to evaluate the next step of cindilimab in the United States.
For innovative pharmaceutical enterprises, how to go steady to the sea?
Zhu xiuxuan, President and director of Tianjing biology, said in an interview with the reporter of the 21st Century Business Herald that first, the globalization strategy of innovative pharmaceutical enterprises should focus on the best product pipeline, that is, the best products must be developed first, and only the best products can you bring them to the world. Secondly, drug development should be based on the principle of the earliest international intervention, rather than considering internationalization when thinking of listing. Moreover, in the early stage of layout, we should build corresponding clinical operation teams overseas, build professional talent research teams locally, and be able to communicate directly with FDA.
Pei Lidong believes that in terms of internationalization, on the one hand, as the world’s most stringent drug regulatory agency, FDA approved zanubrutinib (zebutinib) for the treatment of mantle cell lymphoma in China in 2019, marking that the standards of Chinese pharmaceutical have been aligned with the highest standards in the world, and more and more overseas pharmaceutical enterprises are more and more willing to cooperate with Chinese pharmaceutical enterprises to develop new drugs, giving Chinese local pharmaceutical enterprises the confidence to go global. On the other hand, China’s drug payment system relies on medical insurance payment. The R & D cost of new drugs is high. The R & D cost of innovative drugs developed in China is fully recovered, and the R & D cost cycle is very long.
“At present, the gap between China and European and American countries in cancer treatment schemes is decreasing year by year. The only way for Chinese local pharmaceutical enterprises to move towards globalization is to transfer the rights and interests of overseas markets or build their own overseas commercialization team. The goal is to obtain income in the global market and transform the operation of enterprises from relying on market financing to realizing Book profitability.” Pei Lidong said.
This also means that the following China’s pharmaceutical enterprises in the international market, local innovative pharmaceutical enterprises who can seize the early treatment market, who is expected to remain green in the future market.
