Advancing the research and development of pet drugs, looking forward to Kangchen Pharmaceutical to create a Chinese version of the Pfizer model

Recently, Kangchen Pharmaceutical issued an announcement that, after research by the Ministry of Agriculture and Rural Affairs, it agreed to conduct clinical trials for veterinary drug registration of hemocoagulase for injection
.
It is intended to be used for hemostasis in dog surgery and trauma
.
This article will interpret the significance of domestic pharmaceutical companies advancing pet drug research and development from the perspectives of strategic value and market space
.
China's pet market is full of opportunities, and it will create another American market in 10 years
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The pet drug market is not yet saturated and will show rapid growth in the future
.
The scale of urban single-living and retired people in China continues to expand, and the companion role of pets is becoming more and more important
.
According to data from the Ministry of Civil Affairs, China's single adult population reached 240 million in 2018, of which more than 77 million adults live alone, and it is expected to rise to 92 million in 2021
.
As of the end of 2020, there were 160.
68 million people receiving benefits from urban and rural residential insurance in China.
With the addition of those who have undergone new retirement procedures in 2021, the total number of retirees in China is expected to exceed 300 million
.
Such a large group of people can decompress, relieve loneliness and increase the interest of life, and keeping pets has become a natural choice
.
With the increase of China's per capita disposable income, more people can afford pet-related expenses
.
In 2011, the scale of China's pet market was 22.
1 billion yuan, and it will grow to 240 billion yuan in 2020, with a CAGR of 25.
8%
.
In 2020, the size of the pet market in the United States is 684.
75 billion yuan, and it is expected that the size of the Chinese pet market will reach 400 billion yuan by 2024
.
Pet medical care includes pet diagnosis and treatment and pet health care.
Pet diagnosis and treatment refers to the diagnosis and treatment of pet diseases, and pet health care refers to comprehensive measures to maintain pet health and prevent pet diseases, including immune deworming, nursing, nutritional management, etc.

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Pet medical care is a rigid demand for pet raising.
According to mature experience in Europe and the United States, pet medical care accounts for about 1/4 of the overall market size of the pet industry
.
The domestic pet market is in its infancy, and pet medical care accounts for about 10% of the market
.
In the future, with the development of the pet industry and the adjustment of the industry structure, China's pet medical market still has 7-10 times the market space
.
Pet medicine is the segment with the greatest growth potential in the pet market
.
In 2020, the sales of pet drugs in the United States will be about 180 billion yuan, while China's pet drugs have just started.
In the past five years, the compound annual growth rate of China's pet drug market has exceeded 40%.
It will reach 150 billion yuan, reaching a level comparable to that of developed countries
.
In the future, the growth of China's pet drug market will mainly be driven by the following aspects: 1) The number of pet hospitals in China is growing rapidly
.
In 2011, there were about 1,000 pet hospitals in China, which will increase to 21,000 in 2020 and are expected to exceed 30,000 by 2030
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The vigorous development of pet hospitals will surely promote the synergy of the pet medical industry chain and drive the growth of the pet drug market
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2) At present, China's pet ownership has a large room for growth (mainly counting dogs and cats)
.
In 2021, there will be 58.
06 million pet cats and 54.
29 million dogs in Chinese urban households, but the domestic per capita pet-keeping ratio is only about 1/6 of that in developed countries, and there is still a lot of room for growth
.
Domestic pets are basically the same as those in the United States in terms of quantity, species, disease spectrum and incidence.
It is foreseeable that with the continuous growth of the number of pets, the demand for pet medicines will be huge in the future
.
3) With the gradual transformation of pets into family members and partners, the status of pets in the family continues to improve, and pet owners pay more and more attention to the physical and mental health of pets, and expenditures for physical examinations, vaccines and diagnosis and treatment have increased rapidly
.
However, most of the existing pets in China are relatively young.
As a large number of pets enter old age, the demand for medication for geriatric and chronic diseases will increase significantly
.
Compared with the United States, the domestic pet pain management and geriatrics market has huge growth potential
.
Pet medicine is the highest threshold and the most valuable segment in the global pet market
.
The leading companies in the global pet market are all well-known pharmaceutical companies and their subsidiaries (such as Pfizer, Boehringer Ingelheim, etc.
), and their shares are highly concentrated
.
Take Zoetis (Zoetis, whose parent company is Pfizer) as an example, its current market value has reached 95.
713 billion US dollars, and its pet drug business revenue in China has increased by 8.
5 times during the seven years from 2014 to 2020, with sales exceeding 800 billion yuan.
The proportion of business has approached or even exceeded that of economic animals
.
In August 2019, Elanco (Lilly, which was spun off from Lilly Animal Health) announced the acquisition of Bayer Animal Health for US$7.
6 billion, making it the second largest animal health company in the world
.
Elanco's revenue for the third quarter of 2021 was $1.
131 billion and gross profit was $629 million, or 55.
6% of revenue
.
The current market value of Elanco has reached 12.
173 billion US dollars
.
Similar to the international market structure, the top 10 imported pet medicines in China are basically from Zoetis, Bayer, Boehringer and Merial
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The pet drug business in most European and American countries is higher than the economic animal drug business, and China is also developing towards this trend
.
Representative domestic companies include Ripple Bio, Pleco, Hisun Animal Insurance and Obofang, etc.
In addition, many large-scale pharmaceutical companies are deploying pet drugs
.
In the early days, there were no laws and regulations specifically for pet medicines in China, and the market was relatively chaotic.
Domestic pharmaceutical companies did not pay enough attention to pet medicines, and resource investment was also very limited.
As a result, the current domestic pet medicines are far from meeting the needs of pet diagnosis and treatment
.
In recent years, the state has promulgated a number of pet drug-related standards, determined the special label for "pet use" veterinary drugs, and vigorously standardized the pet drug market
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Limited by the approval cycle of new drugs, the number of pet drugs approved for marketing in recent years is relatively small, which has led to the embarrassing situation of a serious shortage of compliant pet drugs
.
However, in response to the serious shortage of pet medication, the Ministry of Agriculture issued an announcement in 2020 to relax the clinical data requirements for the registration of some pet medication, and to formulate relevant regulations for the transfer of human medication to pet medication
.
In July 2021, the Ministry of Agriculture replied again that it would further accelerate the implementation of the regulations related to the conversion of human medicines to pet medicines
.
Therefore, it is foreseeable that the development trend of pet drugs in the future will mainly rely on the transformation of human drugs, and the favorable policies will attract more domestic pharmaceutical companies to enter the bureau
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The pet drug market is a semi-consumer market that attaches great importance to brand and quality.
The life cycle of new pet drugs is longer, and the replacement rate of generic drugs generally does not exceed 10%, which is far lower than the 80% replacement rate of generic drugs for human use
.
Therefore, domestic pharmaceutical companies need to actively develop innovative drugs that are safer, more effective and more convenient.
Only with international competitiveness can companies become bigger and stronger in both domestic and foreign markets
.
Although the prospects are attractive, the research and development of new pet drugs is extremely difficult, and the challenge of entering the market is no less than that of human drugs
.
First, the research and development process, content and standards of new pet drugs and human drugs are almost the same: Second, the diversity of pet species and the differences in targets and metabolism of human pets will increase the difficulty and uncertainty of drug development
.
In the past 10 years, the FDA has newly approved 79 new pet drugs, with an average of 2 new drug molecules and 6.
9 original new drugs per year
.
Among them, Zoetis launches an original research new drug every 2 years on average, MSD launches an original research new drug every 5 years on average, and BI launches an original research new drug every 3 years on average, which shows the difficulty of research and development of original research drugs
.
In addition, the incidence of pet diseases is completely different from that of people, and the disease spectrum is also evolving.
Whether the demand for pet drugs and the future competition pattern can be accurately grasped is the premise for the success of the enterprise
.
Although the research and development is difficult, due to the blank drug market, if the indications of the research and development drugs are just clinically needed, the difficulty of clinical enrollment of pets will be correspondingly reduced, and the clinical trial time of some pet drugs will also be shortened
.
It is also stipulated in the relevant regulations of pet drugs that compared with human drugs, the time from research and development to marketing of pet drugs will be relatively short, which also brings opportunities and motivation for the research and development of many new drugs
.
Although there are many challenges, multinational pharmaceutical companies with high capital investment and R&D level can usually better resolve R&D risks.

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Taking Pfizer as an example, it is a very efficient business model to produce new medicines for pets and new medicines for human use based on the same R&D system, and it can obtain huge profits by virtue of its advantages in sales channels
.
In contrast, there are very few domestic pharmaceutical companies with successful experience in the research and development and commercialization of new pet drugs
.
More than 80% of cats and dogs will be neutered, and the main surgical procedures for pets include orthopedics and soft tissue surgery
.
According to Obofang, the current pet surgical operation exceeds 2 million units per year, and the compound annual growth rate is expected to exceed 25%, and it will reach about 20 million units per year in 10 years
.
The detection of coagulation function and the use of hemostatic drugs are routine operations in pet surgery, and currently there is a lack of hemostatic drugs for pets.
amines, etc.
, and even non-compliant people use hemostatic drugs
.
Taking fenacetamide as an example, it can be used for bleeding before and after various operations, as well as for bleeding caused by poor platelet function and increased vascular fragility, as well as for the treatment of hematemesis and hematuria
.
It can also be used for intestinal bleeding caused by parvovirus in dogs and cats
.
Epistaxis, pulmonary bleeding, and uterine bleeding from upper respiratory tract infections
.
Among them, the usage and dosage for preventing postoperative bleeding in dogs and cats are: intravenous infusion or intramuscular injection 15-30 minutes before operation, and 2ml after 2 hours if necessary
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Viper hemocoagulase for injection ("Suling") is currently the only national first-class innovative drug in the domestic market for human hemocoagulase preparations
.
Compared with this, hemocoagulase from Viper for injection has better clinical safety and hemostatic effect
.
With the improvement of the income level and concept of pet owners, they will pay more attention to the brand effect and quality of medicines, and are relatively insensitive to price
.
Therefore, only in terms of surgery, it is estimated that the market space of hemostatic drugs for pets in the future will reach about 4 billion yuan (200 yuan * 20 million units/year).
If other indications that can be expanded are considered, the future sales revenue will be very considerable.

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With the help of the research and development experience accumulated in the field of Viper hemocoagulase over the years, Kangchen Pharmaceutical has actively expanded the application scope of hemocoagulase preparations in pets through continuous research, which will have a positive impact on the company's future performance growth
.
At present, many original innovative drugs in Kangchen's pipeline are eligible to enter the pet market
.
Entering the pet drug market with the quality and quantity of original innovative drugs, it is very feasible to benchmark against the Pfizer model (Pfizer firmly occupies the first place in the global market with the current 4 new pet drugs), the entry point is high, and it is sustainable and fast development
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It is expected that Kangchen Pharmaceutical will make full use of the advantages of innovative drug companies and take the lead in building the Chinese version of the Pfizer model, which will produce new pet drugs and human innovative drugs based on the same R&D system, so as to rapidly expand the pipeline layout and improve the ability to resist risks
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*The opinions in this article are for reference only and do not constitute investment advice.
The author does not assume legal responsibility for any actions based on this article
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References [1] "2021 White Paper on China's Pet Industry" [2] "2021 Blue Book of Pet Industry" - Development Report of China's Pet Industry [3] Kangchen Pharmaceutical on the clinical trial of hemocoagulase for canine injection Announcement[4] Information of Obofang Pharmaceutical Technology Group[5] Ping An Securities-Pet Industry Series Research Report 2: The rise of domestic pet medicines is imminent, the market pattern of pet hospitals is preliminarily determined, commercial due diligence and project value assessment: serving many innovative medicines in China The company, together with nearly 30 well-known VC/PE at home and abroad, involves a total investment and financing amount of more than 20 billion yuan; provides product strategy and BD opportunity services for well-known multinational companies; Product line planning services; Provide industry training services for many generic drug companies and secondary market customers