for2023In the healthcare industry in [year], the 'capital winter', "Rational Return", Words such as 'seeking change within tradition', 'settling in', and 'resilience' can be used to summarize the industry trends of this year.
Judging from the performance of the capital market, with2023yearAshareIPO listingThe pace has slowed down, and the number of companies entering the biopharmaceutical market is also shrinking.21Century Economic Report based onwindShenyin Wanguo Industry Classification Statistical Analysis2023The number of biopharmaceutical companies going public and the total fundraising amount decreased significantly, both year-on-year.57.14%and70.15%Specifically,2022total for the year49The listing of a biopharmaceutical enterprise, with the total initial public offering funds749.00100 million yuan;2023Only a year old21The listing of a biopharmaceutical enterprise, with total fundraising223.56yuan. Among them,2023yearly6A home biopharmaceutical company's share price hit an all-time low, with a decline of1%till17%Within, Hongyuan Pharmaceutical's largest decline on its listing day was16.1%, Minsheng Health had the largest increase on its first day of listing, reaching227.8%.
As the high valuation bubble of innovative drugs burst, the biopharmaceutical industry has entered an adjustment period.Astock marketIPO listingTightening, insufficient liquidity in Hong Kong stocks2024In [year], how can biopharmaceutical companies break through financing difficulties? And how should they plan their development paths?
With these questions,21A reporter from Century Economic Report interviewed Mao Hua, Partner and Managing Director of Frost & Sullivan Greater China. He stated that due to the cooling capital market in the biopharmaceutical industry and the market environment, the industry's expected growth rate will decline in the next two years. Although the pace of progress has slowed down, it is not stagnant. Looking at the long-term development curve of the biopharmaceutical industry, the current industry has entered a more mature and rational stage, and 'stable progress with improvement' may become the tone of industrial development.
"The underlying logic of the biopharmaceutical market remains unchanged; competitive advantage and profit growth come from continuous product innovation and growing market demand. In the face of future uncertainties, companies should proactively innovate their development strategies, strengthen their self-developed capabilities, broaden their international perspectives, and improve their adaptability to navigate through the current downturn and prepare to lead the next phase of new growth," said Mao Hua.
01
The cooling cycle is still advancing steadily
Affected by factors such as the relatively insufficient commercialization and hematopoietic capabilities of macroeconomics, geopolitics, biotech companies, and homogeneous R&D assets, the overall index of biotechnology is currently showing a downward fluctuating trend. At the same time, the cooling in the secondary market has compressed the valuation space of enterprises, which has also affected financing in the primary market to some extent.
Under this situation, Mao Hua also pointed out that although the number and total amount of investment and financing events have decreased compared to before, truly valuable enterprises have still stood out. Many enterprises have delivered impressive financing results, exceeding5RMB 10 billion financing events, such as Hisense Biology, Baimingxin Kang, Xiantong Pharmaceutical, Shenshi Technology, and Yanming Biology, with business segments covering cardiovascular metabolism, autoimmunity, allergic immunity, radiopharmaceuticals,AIPharmaceuticals, as well as small molecule innovative drugs, etc.
For example,2023year4Month, Haisen Biology Completes3.15$100 million in financing; same year5In the month, the company acquired Roche's long-acting broad-spectrum cephalosporin antibiotic Rocephin, and obtained exclusive licenses for Sitaxin's commercialization rights in Greater China and Switzerland;9Month ago, Hisense Biology obtained a long-acting lipid-lowering drugLerodalcibepIn terms of development and commercialization rights in Greater China, the construction of two major commercial territories for chronic diseases and critical illnesses has been completed.
As SinoPharmaceutical Group Co., Ltd. announced the completion of its initial public offering11RMB 10 billion in a new round of financing,2023Since the beginning of this year, the largest financing in the domestic healthcare sector has been made.2023year1Month-on-month, Adenosine Injection (trade name: Ouladale), a medicine for the respiratory system, saw a significant increase.®) Obtained approval from the National Medical Products Administration (NMPAApproved for marketing, it is used for myocardial perfusion imaging and echocardiogram drug loading tests to assist in the diagnosis of coronary heart disease. It is currently the only loading drug in China with both indications, helping to create an integrated radiological targeted diagnosis and treatment solution.
"The healthcare industry is influenced by many factors such as the macroeconomy, national policies, and breakthrough technologies, and its development has its own unique cyclical nature. In previous years, there was a surge in investment and financing activity in the global healthcare industry. However, as the macroeconomic development slowed down and the capital market cooled down, activity began to decline, leading to a 'deflationary bubble'. This is a rationalization and maturation of the pharmaceutical industry. Once the bubble has dissipated, truly outstanding companies will grow and become globally competitive enterprises," said Mao Hua.
This is also because R&D capability, as a key indicator testing the 'value' of pharmaceutical companies, has drawn particular attention from exchanges for companies with lower R&D expense ratios than their peers, longer-established companies with fewer approved products on the market, and those with 'large market space.' For instance, behind the termination of listings for Taolue Biotech and Huahao Zhongtian, detailed lists were required including the expected sales, market space and share of major products, and the progress of competitors.
In fact,2023Since the beginning of this year, China's pharmaceutical industry has continued to move forward steadily despite a cooling cycle. For example, the rules for medical insurance negotiations have become clearer, and at the same time, support is provided for the development of innovative drugs.23The negotiation for innovative drugs outside this catalog was successful, with a higher success rate than the overall effort.7.4Percentage points, with a low average price decline4.4Percentage points. Secondly, the overseas launch of innovative drugs is experiencing another small peak. The innovative drug products of BeiGene, Junshi Biosciences, Yifan Medicine, and Hutchison MediTech have been successfully approved for overseas marketing, once again recognizing China's innovative R&D capabilities. In addition, China has a huge patient population, and many clinical needs remain unmet. The improvement in patients' health literacy further drives demand, which in turn drives the development of the pharmaceutical industry for the long term.
Continuous innovation remains the driving force and core competitiveness of the pharmaceutical market. In the changing landscape, many companies are also focusing on innovation, including increasing investment in innovative pipeline development, developing differentiated technical products, introducing innovative talents, and integrating innovative technologies such as artificial intelligence. In addition, the vast overseas market is also an option for domestic companies to cope with the current environmental uncertainties.Biotechimplementlicense-out operationCooperating with large pharmaceutical companies can complement each other's strengths, generate a certain amount of cash flow, and concentrate resources on advancing pipeline projects.
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The enthusiasm for pharmaceutical companies to 'go global' will continue
atLicense-out of the Mainlandlevel, whether2023At the end of the year,2024At the beginning of the year, they are always the "keywords" that the industry focuses on. Especially aroundADCThis popular track, relatedLicense-out of the MainlandEvents kept coming one after another.
2023yearADCblockbuster in the fieldLicense-out of the MainlandEvents include and pivmune, Pfizer, Balyx Biologics and Wuxi Pharmaceutical, Innovent Biologics andBioNTechHaosen Pharmaceutical, GlaxoSmithKline, Hengrui, Merck, etc. According to the latest data,2023In the year, nearly70Pen-invented drugsLicense-out of the Mainlandtransaction, more2022Throughout the year44The pen has grown32%In terms of transaction volume, disclosed2023yearLicense-out of the MainlandThe total transaction amount exceeds465billion US dollars, compared to2022year275.50$100 million growth69%Among them,2023Multinational pharmaceutical companies made a mad dash for stocksADCPharmaceuticals, over half of which come from Chinese pharmaceutical companies, and this wave is in2024The year is expected to continue.
"At present, domestic pharmaceutical companies are actively exploring new models for 'going global'. Whether it's through licensing commercialization after independent clinical trials or adopting a model that combines independent clinical trials and commercialization to control the details of clinical development and commercialization, they are leveraging their strengths to strive to open up broad overseas markets and seek new incremental growth," said Mao Hua.
However, while accelerating their layout, every innovative pharmaceutical company aiming to 'go global' will inevitably face market challenges. Currently, with the continuous enhancement of innovation capabilities, more and more Chinese innovative pharmaceutical companies are on the path to accelerating their 'going global'. Over the past two years, local innovative pharmaceutical companies have also frequently improved the quality and safety of their drugs by strengthening R&D and technological innovation to gainFDAApproval and opportunities to enter the international market. At the same time, Chinese innovative pharmaceutical companies are also continuously collaborating with domestic and international partners to jointly carry out clinical trials, drug registration, and other work, in order to accelerate the research and development and market launch of drugs.
On one hand, a major challenge pharmaceutical companies face when 'going global' is that clinical trials are becoming increasingly complex. At the same time, innovative pharmaceutical companies must generate local clinical data in their home countries if they want to 'go global'. The current challenge in the US market is that the number of patients is very small, and there are fewer professionals in clinical trials, which has led to slower progress in clinical trials in the US. However, for Chinese innovative pharmaceutical companies, the US market is a must-visit destination and must be pursued.
On the other hand, the overall complexity of clinical trials is currently very high. This is why many companies now focus on combining data from China with that from the United States and other countries in Australia, as this provides a better basis for proving the reliability of clinical trials using data from two different regions. In addition, there is a clear regulatory direction, which requires companies to strengthen communication with local governments, fully understand local laws and regulations, and avoid taking 'detours'.
After all, from drug discovery to preclinical trials, and then to clinical trials and commercialization, innovative drugs face many uncertainties. Coupled with factors such as the rational return to rationality in the external economic environment and capital markets, the return on investment of innovative drug companies has attracted much attention.
"At present, many enterprises are also facing the reality of cutting expenses and streamlining pipelines. Behind this is actually a focus on innovation and rationality. This also requires enterprises to concentrate on advantageous tracks, optimize pipeline layout, and integrate resources into core projects to help innovative pharmaceutical companies improve resource utilization efficiency and reduce the uncertainty of overall R&D investment," Mao Hua further stated. As the R&D strategies of innovative pharmaceutical companies gradually mature, with some pipelines advancing into later stages and shifting from a broad pipeline strategy towards lean and efficient development, they should focus on investing in pipelines with high technological content and clinical value. Adopting a lean R&D strategy can, on the one hand, achieve the effect of 'concentrating efforts on major projects,' which is expected to accelerate the market launch of innovative drugs and realize innovation returns; on the other hand, resource integration and optimization help innovative pharmaceutical companies smoothly navigate the current 'changing landscape.'
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2024Integrated development is becoming a trend?
With the continuous changes in the global pharmaceutical market environment, how to better navigate cycles and achieve healthy development is a topic that multinational pharmaceutical companies must consider. Against this backdrop, there are instances where multinational pharmaceutical companies are frantically buying local products in China, as well as those purchasing local innovative pharmaceutical companies at premiums...
According to21Century Economic Report reporters sorted out, since2023year12month26Since2024year1month9Today, in just15Within the day, at least5A large-scale M&A case involving AstraZeneca, Novartis, Merck, Johnson & Johnson, and GlaxoSmithKlineGSK) and other global leading pharmaceutical companies. This includes,2023year12In January, AstraZeneca announced that it would pay a total12The acquisition of GenScript for $1000 million is the first time a multinational pharmaceutical company has acquired a domestic companyBiotechEvents. Following the acquisition of GenScript by AstraZeneca, this year1Yuenova Pharmaceuticals announced the acquisition of Xinrui Pharmaceutical to strengthen its presence in the nephrology field, among other things.
Speaking of this market performance, Mao Hua pointed out that under the combined effects of a cooling industrial environment in biomedicine, stricter listing requirements, and increasingly severe investment and financing conditions, biotech companiesIPO listingThe contraction in volume and slowdown in pace have affected the exit mechanisms of enterprises to a certain extent. Therefore, current core products that have not yet been commercialized and lack their own self-sustaining capabilitiesBiotechFaced with complex survival tests, investors also face tremendous exit pressure, especially for those who have entered early on.
"The recent two acquisitions in China's biopharmaceutical industry indicate that being acquired can provide investors with new exit routes, in addition to successful listing and developmentBiopharma company,BiotechThe ending actually has more possibilities. Globally, there are more possibilities for multinational pharmaceutical companies to make acquisitions.BiotechIt has already become a mature operating business model. In the midst of capital freezes, multinational pharmaceutical companies with abundant capital chains are making repeated investments. Based on aligning with their own development strategies, multinational pharmaceutical companies conduct meticulous evaluationsBiotechAfter acquiring pipeline assets and innovative value, the target company is acquired to perfect the industrial layout.BiotechIn the current industry environment, being acquired by multinational pharmaceutical companies can be considered a new option to break through survival difficulties.
"Multinational pharmaceutical companies possess mature drug development and commercialization experience, and in the futureBiotechWe can leverage the resources of multinational pharmaceutical companies to continue advancing the development and operation of optimization projects." Mao Hua said. However, we have also found that domesticallyBiotechThe number of integrated mergers and acquisitions is on the rise, but it will not become the mainstream trend in the short term. In the future, there may be more.MNCacquisitionBiotechThe event occurred, and China, holding high-quality assetsBiotechYou will see more industry opportunities.
thus,2024year,BiotechHow can we seize industry opportunities and achieve high-quality development? In this regard, Mao Hua emphasized that products with technological innovation and clinical value are always in demand by the market, demonstrating their development potential. New breakthroughs continue to emerge in the fields of traditional macromolecular drugs, small molecule targeted drugs, and monoclonal antibody drugs.ADCDual-antibody drugs,CGTAs the track has become a research hotspot in recent years, significant progress has also been made in technological innovation and clinical advancements. For example, gene therapy.2023InCRISPR-Cas9 systemGene editing therapyCasgevyReceived successivelyMHRAandFDAApproved for marketing.
At the enterprise development level, on one hand, companies should attach importance to continuously promoting innovation and research and development, establishing technology platforms with high technical barriers and independent intellectual property rights; building differentiated innovation pipelines, focusing on core pipelines, and developing products that can meet high clinical needs; forming strong R&D teams, and actively introducing innovative talents from home and abroad.
On the other hand, we are actively promoting improvements in operational qualityBDWork, focusing on patient needs and market dynamics, to proactively adjust strategic decisions; pay attention to overseas markets, seek partners or build an overseas operation team internally, and seek more commercial value through going global; consider more flexible and diversified ways to introduce funds, such as technology licensing, equity investment in joint ventures with clinical pipelines, etc., to raise funds and share R&D risks.
"In the face of a complex development environment, enhancing innovation capabilities, optimizing the effective combination of resources, and improving operational quality are the keys for pharmaceutical companies to achieve sustainable development," said Mao Hua.
*This exclusive interview is published in 21Century Economic Report Author: Ji Yuanyuan Published with media authorization.
