"Hing Zong" or "Lian Heng"?

In recent years, China's innovative drug industry has boomed.

If "Lianheng" conforms to the trend of internationalization of innovative drugs, does "Integration" represent a new trend of "domesticization" of innovative drugs in the context of economic internal circulation?

Figure 1.

Source: Zhongkang Industrial Capital Research Center

The importance of cooperation between innovative drug companies is highlighted

One of the cores of the development and commercialization of innovative drugs is a race against time, not a "friend of time"

The most obvious is to cultivate endogenous growth momentum and strengthen its own R&D and commercialization capabilities

The emergence of the new generation of biotech has given birth to the prosperity of China's CXO industry.

As the national medical insurance negotiations accelerate the iteration of generic innovative drugs (me-too), and the policy emphasizes that the development of new drugs is clinically value-oriented, the competition of innovative drugs is no longer a pure pursuit of speed under the me-too drug development idea.

The pros and cons and general situation of the "continuity" between domestic and foreign pharmaceutical companies

Under the upsurge of innovative drug research and development in China, in the past few years, Chinese pharmaceutical companies, especially traditional pharmaceutical companies, rushed to buy innovative drug projects overseas, which gave rise to a valuation bubble and increased the difficulty of subsequent introduction

Through the introduction or transfer of innovative pharmaceutical companies at home and abroad, the realization of "continuity" has accelerated the process of internationalization of domestic pharmaceutical companies

The "link" between domestic and foreign innovative pharmaceutical companies is mainly for licensing cooperation, which includes both the introduction (license-in) and the outbound (license-out)

In June 2020, Innovent Biotech reached a strategic cooperation with Roche.

Figure 2.

Source: Company announcement, Zhongkang Industrial Capital Research Center

With regard to going global, with the strengthening of R&D capabilities of domestic companies, the number of externally authorized projects has gradually increased, and overseas authorizations for listed products have begun to appear, such as BeiGene, Junshi Biologics, Xinda Biologics and Hengrui Pharmaceuticals PD-1 Monoclonal antibody

Figure 3.

Source: Company announcement, Zhongkang Industrial Capital Research Center (Hua Medicine's transaction volume is converted according to the exchange rate on the date of signing)

The rise and reasons of "integration" among domestic pharmaceutical companies

Since 2021, cooperation between domestic pharmaceutical companies around the authorization of innovative drugs, that is, "integration" has become more common

Hengrui Pharmaceuticals has recently conducted two consecutive transactions due to the failure of centralized procurement and the failure of sales of innovative drugs to meet expectations.

Chart 4.

Source: Company announcement, Zhongkang Industrial Capital Research Center

It is worth noting that 2 of these 6 "combinations" were between biotech, and they were all related to Cinda Bio
.
Innovent’s current products include PD-1 mAb Sintilizumab and 3 biosimilar drugs (bevacizumab, adalimumab, rituximab), among which PD-1 mAb is currently in In the fierce market competition, biosimilar drugs will be included in centralized procurement in the future
.
Under the pressure of future growth, Cinda Biosciences will jointly commercialize the third-generation BCR-ABL inhibitor HQP1351 with Yasheng Biosciences in order to obtain new growth drivers as soon as possible; on the other hand, joint development with Jinfang Pharmaceutical has obtained clinical trials.
The approved KRAS G12C inhibitor GFH925 quickly set foot on the popular track and increased the influence of the capital market
.

Concluding remarks

Whether it is the "linkage" between domestic and foreign pharmaceutical companies, or the "integration" between domestic pharmaceutical companies, it is of great significance to the development of China's innovative drugs
.
The wave of globalization has promoted the "Lianheng", and the changes in the economic and political environment in recent years have also promoted the "Integration"
.
Chinese pharmaceutical companies must not only improve their own R&D and commercialization capabilities, but also accelerate their development through timely diversified external cooperation
.