Industry news

All good ways walk with the time." At the start of a transformative year in 2024, the number of licensing deals or M&A transfers in the pharmaceutical industry is simply dizzying.

According to incomplete statistics, since January 1, the medical industry has received more than 13 mergers and acquisitions, the amount of more than 17 billion US dollars. Among them, there were 10 cross-border cooperation cases involving domestic pharmaceutical companies, including Chinese companies such as Yiunited Bio, Anri Bio, Sino Pharma, Minxing Pharmaceutical, Blot Pharmaceutical, etc., and multinational MNC including Roche, Astrazeneca, Boehringer Ingelheim, Bayer and so on.

Since the second half of 2023, medical mergers and acquisitions and other transactions have been frequent. An investor told Yiou Great Health that a number of MNC will face patent expiration around 2027, and the pharmaceutical giant has opened the acquisition layout in advance under the pressure of the "patent cliff". In addition, Chinese biopharmaceutical companies with the value and potential of innovative drugs have also attracted the attention of many international giants, this trend indicates that in 2024, Chinese biopharmaceutical companies will form a new ecological pattern with international pharmaceutical giants to jointly promote the development of the pharmaceutical industry.

The formation of this new ecological pattern will provide more opportunities for Chinese biopharmaceutical companies to cooperate with international pharmaceutical giants, accelerate the research and development process of innovative drugs, and enhance the global competitiveness of Chinese biopharmaceutical companies. At the same time, it will also provide a broader market and resources for international pharmaceutical giants to promote the further development of their business.

The innovation ability of local pharmaceutical companies is becoming more and more mature

After nearly 20 years of research and development reserves, at present, China's innovative drugs have gradually entered the stage of innovation and upgrading, and their innovative research and development capabilities have been further enhanced, and progress has been made in many fields such as ADC, GLP-1, double antibody, and AD, and gradually achieved domestic listing.

According to the data of the Pharmaceutical Rubik's Cube, in 2023, the State Drug Administration approved a total of 82 new drugs, including 48 chemical drugs (small molecules, small nucleic acids), 22 biological drugs (monoclonal antibody, double antibody, ADC, cell therapy, enzyme replacement therapy, fusion protein, blood products), 4 vaccines, and 8 traditional Chinese medicines. A total of five first-in-class drugs have been approved by regulators, including Haihe's c-Met inhibitor Glumetinib, Sentient's 3CL protease inhibitor Leritvir, Henzhu's proton pump inhibitor Anelrazole, Hausen's EPO drug Pemoxatide, and Privity's Zerbetumab.

It is expected that in 2024, in addition to the tumor track, which is the traditional focus of attention, diseases such as autoimmune diseases and cardiovascular diseases will also usher in a harvest period.

At the same time, the government has introduced a series of policies conducive to the development and support of innovative drugs, which has prompted enterprises to accelerate the transformation from imitation to innovation, and promote the innovation of technology and research and development models. In addition, on July 21 last year, the National Healthcare Security Administration issued the "Negotiation drug renewal Rules" and the "non-exclusive Drug bidding rules", which also indicates that the future medical insurance catalog adjustment drug reduction or more moderate, good for the innovative drug industry chain.

From the perspective of licensing transactions or mergers and acquisitions in the industry in 2024, the controversial CAR T cell therapy (chimeric antigen receptor T cell immunotherapy) that has suffered from "cancer risk" is still attracting attention, and on January 2, Pharmaceutical Ming Juno announced a strategic cooperation with 2seventy bio. To jointly develop, manufacture and commercialize chimeric antigen receptor (CAR) T cell therapy products for autoimmune diseases in the Greater China region in a $10 million deal that also kicked off the 2024 pharmaceutical deal.

ADC drugs (i.e., antibody drug couplings, a class of targeted biologics consisting of antibodies, connectors, and cytotoxic drugs) are also a popular area of cross-border trade. YL211, the next-generation ADC candidate developed in collaboration with Roche, targets interstitial epidermal conversion factor (c-MET) and is currently in the clinical application phase with a potential value of more than $1 billion.

According to the views of many experts, in recent years, the scale of China's drug development pipeline has shown a booming growth trend, and the proportion of innovative drugs developed by local pharmaceutical companies has gradually increased. At the same time, the acceleration of multinational drug deals is likely to continue in 2024, and there may be more Chinese companies.

Small nucleic acid drugs usher in a blockbuster trade

As a new generation of new drug research and development technology platform, small nucleic acid drugs can break through the limitations of small molecule drugs and antibody drugs, and show great potential in the treatment of major diseases. At the beginning of 2024, the local small nucleic acid field ushered in a blockbuster deal, on January 3, Rubiobiologic announced a collaboration with Boehringer Ingelheim on the joint development of small nucleic acid innovative therapies for the treatment of non-alcoholic or metabolic dysfunctions associated steatosis (NASH/MASH). The total transaction value is more than $2 billion.

A few days later, Blot announced two licensing cooperation agreements with Novartis for RNAi therapeutics (ribonucleic acid interference molecular therapies) that will receive a down payment of $185 million from Novartis and qualify for potential option and milestone payments, as well as tiered royalties from commercial sales. The combined value of the two deals is potentially as high as $4.165 billion.

This figure refreshes the license out transaction volume of pharmaceutical companies since the beginning of the year. As a pharmaceutical company established less than 3 years ago, there are currently 4 pipelines in the clinical stage, 1 pipeline is about to enter the clinic, and a number of pipelines determine PCC. The indications cover cardiovascular diseases, rare diseases, hepatitis B, autoimmune, nervous system diseases, etc. It has obtained clinical approval documents in China, the United States, Australia and other places.

The principle of small nucleic acid drugs can be simply understood as treating or preventing disease by regulating RNA. Currently, popular small nucleic acid drugs mainly include small nucleic acid therapy targeting nucleic acid and Aptamer targeting protein.

Among them, small nucleic acid therapies targeting nucleic acids, such as antisense oligonucleotides (ASO) and interfering RNA (siRNA), achieve therapeutic purposes by regulating gene expression or RNA cutting. Aptamer, on the other hand, is a nucleic acid molecule that can bind to specific proteins and play a therapeutic role by regulating protein activity. In addition, there are other types of small nucleic acid drugs that target protein coding or antigen mRNA. These drugs have a wide range of application prospects in disease treatment, prevention and diagnosis.

Institutional data show that the global market for small nucleic acid drugs in 2020 is $362 million, and it is expected that the market will reach $25 billion in 2030. China's small nucleic acid drug market is expected to be about $4 million in 2022, and is expected to reach more than $300 million in 2025, with a compound annual growth rate of more than 300%.

In fact, a number of MNCS have long regarded small nucleic acid drugs as an important research and development track, and have conducted in-depth cooperation with a number of partners. For example, GSK836, developed jointly by GSK and Ionis, aims to achieve a functional cure for hepatitis B; Roche works with Alnylam on zilebesiran, a long-acting blood pressure drug; Sanofi partnered with Alnylam to develop fitusiran, which targets hemophilia treatments. These collaborations demonstrate MNC's forward-looking and strategic approach to innovative drug discovery.

Domestic enterprises such as Shengnuo Pharmaceutical, Tengshengbo Pharmaceutical, Junshi Biology, Yuekang Pharmaceutical, Qilu Pharmaceutical and other enterprises also through self-research and external introduction in the field of small nucleic acid drugs have a layout.

According to the research report of securities companies, there are currently 14 ASO/siRNA small nucleic acid drugs on the market in the world, except for Fomivirsen and Mipomersen, which are delisted due to the decrease in the number of cases and safety issues, the other 12 products on sale have been listed in 2016. In terms of indication layout, all products on sale, except Inclisiran, target rare diseases. In the future, the industry is expected to accelerate with the approval of large indications such as ATTR-CM and the expansion of products for chronic diseases such as Inclisiran.

With the two small nucleic acid field to break the ice at sea, this field has gradually become another local innovative drug widely recognized in the global market after ADC, monoclonal antibody and other segments.

The wave of overseas commercialization of domestic innovative drugs continues

At present, the trend of Chinese Biotech going overseas is hot. In the investment value sub-forum of the CHS2023 8th China Health Industry Upgrading Summit Forum held on December 16 last year, Tang Hao, managing partner of Tianfeng Capital, believes that global BD cooperation is the direction of enterprises to break the situation, develop a clear strategic map, and deeply understand overseas markets, customer needs and access requirements.

2023 is known as the "first year" of Chinese pharmaceutical companies going to sea, and while the scale of foreign authorization cooperation has reached a new high, a number of new drugs have successfully entered the European and American markets and been approved for listing.

Data show that at present, a total of 12 domestic innovative drugs of 9 domestic enterprises have been successfully commercialized in the planning markets of the United States, the European Union and Japan, among which many indications have been identified as breakthrough therapies by the United States FDA, and several indications are in the market application. These include Zebutinib and Tirellizumab from Beigene, Carrellizumab from Hengrui Medicine, and triplizumab from Junshi Biology.

In recent years, the license out model has become the most important way for innovative drugs to go to sea, data show that there have been nearly 70 innovative drug license out transactions in China this year, and the total amount of transactions has been disclosed to be more than 35 billion US dollars, showing an increasing trend year by year in terms of the number of transactions, transaction amount and project types.

The largest amount comes from the partnership agreement between Benefi and BMS, in which Benefi licensed development and commercialization interests in its HER3/EGFR double antibody ADC product BL-B01D1 to BMS for a total transaction value of up to $8.4 billion, including $800 million upfront, $500 million in potential near-term payments and $7.1 billion in mileage.

According to the data, from January to November 2023, the proportion of antibody drugs such as ADC in license out transactions reached 56.3%, and the trading hotspots were mostly concentrated in the early research and development pipeline, of which the trading volume of preclinical and clinical phase I products accounted for nearly half.

Overall, with the growing capacity of local innovation and research and development, innovative drugs have become an important strategy in the development stage of relevant pharmaceutical companies, compared with the domestic market, overseas developed countries have a broader market potential and more relaxed pricing space, but overseas markets also put forward higher requirements for Chinese enterprises in differentiated innovation, policies, regulations, cost control and other aspects.

It is worth mentioning that the current is also a precious window period for MNC, some insiders revealed that the RMB exchange rate changes have a positive effect on transnational mergers and acquisitions of enterprises, more and more signals show that the US dollar interest rate cut cycle or early opening, valuation will also rise, at this time for biomedicine related transactions, more cost-effective.

For biomedicine, capital always favors those pharmaceutical companies with clear strategic planning on the drug development technology path, good clinical data performance, high possibility of patent drugs and broad market prospects, and cost-effective drugs and devices will create more commercial value.