This article comes from WeChat WeChat official account:Deep blue view (id: mic-sh 366), Author: Gao Yi, editor: Wang Chen, head picture from: vision china.
In May, 2023, with the latest data of the most Alzheimer’s disease drug from Lilly, this century-old pharmaceutical company continued to sound the upward horn, and its market value climbed to the $400 billion mark, becoming the most valuable pure drug enterprise in history.
When the stories in the field of cancer were exhausted, the investors on Wall Street found the track of "losing weight" and continued to write the myth that the pharmaceutical industry will always go up, which also contributed to the market value growth of Novo Nordisk and Lilly this year. Years of hard work in the CNS field has added a icing on the cake to Lilly.
However, Lilly global is flourishing, and the voice of Lilly China seems to be getting smaller and smaller this year.
Lilly’s last big event in China was the 2022 new medical insurance catalogue at the beginning of this year. Four new products/indications successfully entered medical insurance, including two cooperative products from Cinda. In the past year, the only pipeline renewal that can be seen in China, one is RET inhibitor and the other is a hair loss product, which obviously goes against the thickness of Lilly global’s powerful product pipeline.
Photo: Lilly’s Q1 product performance in 2023.
Source: official website, Jibao finishing
From the time point of view, Lilly is one of the first batch of big manufacturers to bet on China. As early as 2012, Lilly moved its R&D center to China, trying to speed up the listing of global products in China. However, the R&D center in China District opened early and closed early. Perhaps it is the long-term single-digit income ratio in China District, which makes this MNC factory unwilling to invest more energy in cultivation;The rise of local enterprises in these years has also had some run-on effects on foreign enterprises to some extent. In 2022, Lilly’s China business contracted to 1.453 billion US dollars, down by 10 percentage points.(Source: Huachuang Securities).
More than courtesy, under the double pressure of competition between VBP and local enterprises in the past two years, the domestic business of multinational giants has shrunk. One is that the speed of introducing products from foreign companies is slower than in previous years, and the other is that the demand for talents is becoming more and more Buddhist.
A headhunter said that since the second half of last year, the recruitment needs of foreign pharmaceutical companies in all functions, whether business or clinical, have declined; Some non-business core positions that were quite popular a few years ago(such as "digital innovation", etc.)In the past two years, it has almost disappeared completely.
The basic executive positions such as medical representatives were originally the most mobile, but the post pattern has not changed much in the past two years. A person who pays attention to this kind of market mentioned that this is related to the slow iteration of new products in the past two years. Even if new products are listed, they are basically handed over to the original team to do it together. For example, BMS set up a separate team for PD-1 in 2018, which has not been seen in the last two years.
However, although Lilly’s pharmaceutical business in China is operated by Buddhism, it does not prevent Lilly from embracing the rapid growth of this emerging domestic market in other ways. For example, Lilly cooperates with Hutchison and Cinda to help them bring their products to the market, even to Europe and America, and use the resources of their own big factories to earn a share of the money; Another example is LAV, which is synonymous with the success of domestic biomedical first-level investment.
Neither the introduction/authorized cooperation nor the next incubation is exclusive to Lilly. Other multinational pharmaceutical companies have been running in China for nearly 30 years, and now they are slowly adapting to the ever-changing new market with some comfortable postures.
First, "retreat to the high-end route"
In January, 2023, the annual meeting of Huizhi, which was formed by the merger of Pfizer’s mature business units Puqiang and Mylan, was held in Macau, with an exceptionally grand scale.
Behind the luxury annual meeting is its solid growth. According to a participant, Huizhi’s in-hospital sales data this year is obviously better than expected, and the business authorities dare not talk about the specific figures too high-profile, but only give a growth curve that looks obviously upward. Last year’s Huizhi, the bonuses of the sales teams were also exceptionally good.
The number of hospital growth data of Huizhi China is unknown, but from the financial report of Huizhi last year, Greater China was in Q4 last year.(after the epidemic)Year-on-year growth reached 10%. Last year, China earned 2.201 billion US dollars, making it the only market with positive year-on-year growth in net profit.
The main driver of the growth of Huizhi China is Lipitor.(atorvastatin)Luo huoxi(amlodipine)And Xanax(Alprazolam)Among them, the first two were included in the national procurement catalogue long ago. This makes the whole market rethink a question:Is volume a good business after all?
Although the head foreign companies represented by Pfizer and AstraZeneca have launched a series of "grassroots" movements in the past few years, in 2021, Pfizer’s grassroots team reached 600 people, and AstraZeneca’s county team reached a maximum of 4,500 people.
At first, everyone’s idea was to be in a vast market with a super large base. Every 1 percentage point increase in penetration rate is a big increase in the overall scale. However, the following nationwide procurement with quantity not only greatly reduced the profit margin of drugs, but also introduced a large number of "barefoot" players who had never paved the way for the market, which made the "grass-roots strategy" of these large foreign companies a decoration.
Considering the welfare and per capita output, the sales efficiency of foreign pharmaceutical companies is inherently inferior to that of local players, so they can only "retreat" to the high-end market.
Of course, choosing a "high-end market" also requires selective capital. "High-end" doesn’t really mean that products are much higher than competitors in quality and clinical data, but more is a process of brand and doctor-patient psychological cognition, which is inseparable from the long-term market education made by these big manufacturers and the dozens of academic forums that have been smashed in the past decade.
Therefore, sales is not a simple "department meeting" and a dinner party. Whether it is a foreign pharmaceutical company or a local rising star, if you really value your products, the work of the marketing department is indispensable. It should be pointed out that this budget often needs to be integrated into the pricing of a drug.
Both centralized purchasing and medical insurance negotiation can solve the problem of "accessibility" to a certain extent, but the effective use of drugs also needs the promotion of pharmaceutical companies themselves.
Back to Pfizer’s business in China, as long as this "high-end" strategy can still operate normally at present, new products from global will be continuously injected and then profits will be contributed to the world.
This kind of "China agent of multinational pharmaceutical companies" business is also the most classic and good game for foreign pharmaceutical companies. Pfizer is doing it, and Takeda, Novartis, GSK and so on are basically following this strategy at present.
When the global products of these multinational pharmaceutical companies are not strong enough, these companies will also make some deeper attempts in China.
Second, BD cooperates to make a fire by the stove.
Among them, the most representative belongs to Merck.
Although the ceiling of tumor immunotherapy and drug K have now become the proper "drug king", Merck has actually had nothing to do with the treatment field of tumor for a long time.
Merck secured the TOP5 position in the world with simvastatin and losartan. Since then, it has been supported by two major categories: anti-infection and vaccine, and has made heavy income in several sub-sectors such as AIDS, hepatitis C and HPV. Therefore, even in the early 21st century, Roche’s three monoclonal antibodies have already begun to take shape, but the proud Merck seems to have no need to know what antibody drugs are, so he met Schering-Plough.(K medicine source prescription)Before, there were almost no macromolecular products in Merck’s laboratory.
In the second decade, biopharmaceuticals slowly moved to the center of the stage. Half of the TOP10 best-selling products in the world were protein drugs, and Merck himself tasted the sweetness of K drugs. However, the cultivation cycle of biomedical technology needs to be calculated in ten years. It is not easy for Merck, which lacks macromolecular genes, to come up with a mature antibody drug platform to adapt to the pipeline development of such a billion-dollar giant in a short time.
So,When ADC took over the immune products and went to the foreground, Merck, who couldn’t wait, had to put down his body and seek external cooperation.
Therefore, Merck found Seagen, the "originator of ADC", because of his great family business. However, Seagen, whose price has been difficult to negotiate, ended up with Pfizer, which paid an extra $12 billion directly to intercept Hu Merck.
Merck, on the other hand, had to focus on Collen, an old friend of China, and directly won nine ADC molecules in one breath, which was less than a quarter of Seagen’s acquisition even if all the total package prices were included. Merck’s deal could not be said to be uneconomical.
In May this year, Ms. Ji Juan, the head of Merck’s business development and authorization in Greater China, mentioned at the third Sequoia Global Medical and Health Industry Summit: "Merck’s product introduction is distributed in various treatment fields, clinical stages and different mechanisms." Merck will not only focus on one or two big therapeutic fields now, as long as things are good, it can be digested. To some extent, it also reflects the comprehensiveness of large factories.
Merck’s eclectic products contributed half of the company’s revenue last year. If the ADC field continues to deepen and become more and more accepted by the global market, a considerable part of Merck’s tens of billions of dollars in revenue in the future may come from laboratories in China.
With the domestic R&D-clinical capability reaching a higher level, it is not uncommon for China to feed back the world.License out has also become a commonplace topic.But an interesting point is that the number of domestic and foreign authorizations and the total amount of cooperation are increasing, but the down payment is decreasing.
On the one hand, "returns" have become more frequent in the past two years, such as the ADC of Genting Xinyao, the PD-1 of Cinda, and the BTK of Nuocheng Jianhua, which has reduced the certainty of this authorized cooperation;
On the other hand, whether local enterprises or partners, everyone is more willing to seek innovation in the model, and both sides make a concession and take what they need to tell the story more satisfactorily. For example, Cinda and Sanofi, and for example, Merck and Columbine Botai, both of which are mixed with equity transactions.
However, in a mature market, the BD transaction of License in/out itself is a very common thing. The details such as transaction amount, down payment, object and method only reflect the strategic choice of participants at this time node. When the valuation is high, the efficiency of self-research is higher than that of external mergers and acquisitions, and when the industry is deserted, large companies with spare money are more suitable for expansion.(rather than self-research).
The diversification and normalization of BD cooperation shows that the biomedical market in China is slowly maturing.
Third, hatch in person
After the dissolution of AstraZeneca China R&D Center, it became Di Zhe. After running for less than three years, it landed in science and technology innovation board and rose from the bottom of last year, and its share price tripled at the highest. AstraZeneca, as a major shareholder accounting for 26% of the shares, in addition to the premium on financial investment, it can carry out in-depth cooperation on the product pipeline through Dizhe in the future.
More importantly, AstraZeneca can use the business card Dizhe to do some deeper cooperation in finance and project mergers and acquisitions in the future. A typical example is AstraZeneca Zhongjin Medical Industry Fund, which was established with CICC the year before last. It is very comfortable in fundraising and investment, and currently holds 13 medical and medical projects. AstraZeneca’s business in China is increasingly diversified.
In addition to AstraZeneca, Deqi Medicine, which was established in 2016 with the support of Xinji Medicine, a leading global biopharmaceutical company, also has a little "incubation nature".
The founder of Deqi Medicine comes from the R&D executives of Xinji. Half of the main projects come from Xinji, and some of the money from Angel Wheel just landed is given by Xinji. However, considering that Xinji’s share in Deqi was less than 6% at the time of IPO, it was not controlled, but it was an enterprise hatched by Xinji after all.
What can be controlled is called "incubation", and what can’t be controlled can only be called "deep cooperation"In addition to Deqi, another big hand of Xinji is Baekje.
In 2017, Xinji awarded a cooperation with a total amount of US$ 1.393 billion, which not only helped Baekje just listed on the US stock market, but also boosted its prosperity. At the same time, it used its own mature products and the commercialization team of Xinji Company acquired by Baekje in China to promote Baekje to establish a commercialization system.After this cooperation, Baekje was arrogant all the way, and the market value of US stocks almost caught up with Japan’s MNC giant Takeda. However, Xinji itself sold herself to BMS in 2019, and this cooperation was suspended. The "breakup" between Xinji and Baekje may have been doomed.
Amgen replaced Xinji and continued to cooperate with Baekje in depth, which is also "giving money and products". Perhaps it is more optimistic about the potential of this company. Unlike Xinji, Amgen directly turned itself into a major shareholder of Baekje.
It is worth mentioning that nowadays, the cooperation between multinational pharmaceutical companies and local companies is more and more diversified, not limited to one or two ways.
For example, Baekje and Amgen are deeply bound, and Baekje also supports the construction of its tumor pipeline to Novartis License out products, while the latter, while the pipeline is supplemented, can also empower Baekje to commercialize in the world;
Furthermore, AstraZeneca’s cooperation with the local area can be described as "dazzling": green leaf exchange products, binding with Internet channel geeks, introducing the ADC of No.1 and No.3, and introducing the ADC of Connoa/Lepu Bio at the same time … As for other sales and market cooperation, there are countless more.
The reason why foreign companies are more and more willing to play is that the rules of the game are more and more fair.
In the past two decades, a few domestic enterprises have the ability to develop compound technology to meet the differentiated needs of the low-level market that foreign pharmaceutical companies cannot cover. Most so-called pharmaceutical companies only earn coins in the circulation field.
With the improvement of the independent ability of the pharmaceutical industry, the wave of innovation is superimposed. From following imitation to innovation self-sufficiency to "in China for global", the productivity of foreign companies’ products is no longer suppressed, and the policy protection of local pharmaceutical companies is becoming more and more negligible. Everyone is playing together at the same level and conditions.
Behind this is the growing maturity of the entire pharmaceutical industry in China.
Maturity also means that local pharmaceutical companies need to abandon the luck of "home advantage" and come up with 100% strength to compete with these large foreign companies with a history of 100 years.
This article comes from WeChat WeChat official account:Deep blue view (id: mic-sh 366), Author: Gao Yi, Editor: Wang Chen