How many hurdles does the internationalization of Chinese pharmaceutical companies need to pass?

According to the "14th Five-Year Plan" for the development of the pharmaceutical industry, it is mentioned that domestic pharmaceutical enterprises should be promoted to enter the international market at a higher level.
The measures include supporting enterprises to carry out simultaneous registration of innovative drugs at home and abroad, and conducting global multi-center clinical research for developed country markets.
There is a wider space to realize the value of innovative drugs; seize the opportunities in the international market of biosimilars, encourage vaccine manufacturers to carry out international certification, and produce and export vaccines in accordance with international vaccine procurement requirements
.

Increase the number of generic drug registrations in developed countries, and increase the proportion of first-time generic drugs, complex preparations and other high value-added products

In terms of drug administration, it is also necessary to consolidate the foundation of international pharmaceutical cooperation: strengthen international drug administration cooperation, deeply participate in the international regulatory coordination mechanism, play an important role in the formulation of relevant guidelines of the International Organization for Harmonization of Medicines for Human Use (ICH), and actively promote participation The International Drug Inspection Cooperation Program (PIC/S) promotes the integration of domestic and foreign regulations, mutual recognition of standards and mutual trust in quality
.

By promoting drug regulatory cooperation and mutual recognition with key regions, it will create conditions for pharmaceutical products to enter the international market more easily

The above policies all mean that the "14th Five-Year" pharmaceutical industry development plan hopes that domestic enterprises will actively respond to the new situation of the global pharmaceutical innovation chain, industrial chain, and supply chain reshaping, deepen industrial international cooperation, accelerate the cultivation of new competitive advantages, and achieve a higher level.
Integrating into the global innovation network and industrial system, which is often said in the industry, the internationalization of domestic pharmaceutical companies must be opened up during the "14th Five-Year Plan" period
.

01

01

Evaluate the business

Evaluate the business

However, how to open up the road to internationalization? What to do with internationalization?

The internationalization of pharmaceutical companies is actually a process in which drugs are launched in target countries and commercialization targets are completed
.

The goal of all product listing is to achieve commercial profits.

The assessment includes but is not limited to the following:

1.
Basic information of the product;

2.
The estimated time of listing;

3.
Situation analysis of the target listing country, including market size, leading products, scale of competing products, etc.
;

4.
Market demand research and assessment;

5.
Preliminary market research;

6.
Preliminary operating cost information;

7.
The price assessment of the target listing country, including the price of competitors;

8.
Status of intellectual property rights (patents, data exclusivity) of competing products and own products
.

After completing the above preliminary evaluation, it is initially determined whether this product is worthy of internationalization
.

Because of different laws and regulations in different countries, Chinese pharmaceutical companies usually open a local subsidiary when they are international, or cooperate with local companies with marketing conditions for commercialization

In addition, the following six factors need to be considered during the entire process of listing the drug in the target country and completing the commercialization target:

1.
Drug listing registration

2.
Post-market marketing planning

3.
Post-marketing prices and reimbursement by medical insurance

4.
Marketing team management

5.
Channel management and supply chain management

6.
Intellectual Property, Public Relations and Government Affairs

Each country has different registration standards for drug listings
.

The marketing authorization of innovative drugs in the United States, the United Kingdom, Germany, and France is considered relatively difficult by the industry; followed by the European Union, Spain, Italy, Switzerland and Japan
.

Southeast Asian countries are considered to be relatively easy to export, but because these countries do not have much market returns after listing, they may not be as good as the returns of a domestic province, so domestic companies are not willing to deploy in Southeast Asia

02

02

familiar with the rules

familiar with the rules

The internationalization of domestic enterprises actually refers to the successful registration and listing in Europe and the United States
.

At present, there are not many cases of Chinese innovative drugs being marketed in Europe and the United States.
The most frequently mentioned in the industry is that BeiGene zanubrutinib was approved for marketing by the FDA in November 2019.
cell lymphoma, which is the first FDA-approved anticancer drug in China
.

The FDA journey of zanubrutinib has been smooth all the way, so it also gives hope to Chinese innovative drug companies to impact the FDA

In addition to the regular listing, the FDA has an Emergency Use Authorization (EUA)
.

EUA allows FDA to help enhance national public health protections against chemical, biological, radiological, and nuclear threats by facilitating the availability of medical products needed during public health emergencies

Junshi and Eli Lilly's co-operative eltemirumab and banivirumab double-antibody therapy received the FDA's EUA in February 2021, and the current indication is for mild to moderate 2019-nCoV in high-risk pediatric populations Treatment of pneumonia and post-exposure prophylaxis
.

The double-antibody therapy has now been authorized for use in more than 15 countries and regions

Junshi's atelvizumab is a case in which domestic pharmaceutical companies have achieved quite good performance after internationalization
.

Junshi's international ambitions have been traced as early as 2018: in January 2018, Li Ning, the former director of the FDA branch, joined the company and is currently the CEO
.
Then, in August 2019, Wang Gang, the former chief scientist of CDE, also joined the company and became the company's senior vice president of industrial affairs and chief quality officer, responsible for the company's production quality and related work
.

In August 2020, Junshi appointed Patricia Keegan as Chief Medical Officer.
Patricia Keegan was originally a technical officer of the FDA.
Before joining Junshi Biotechnology, Patricia Keegan worked in the FDA for 30 years.
Deputy Director of Trial Design and Analysis, Director of Oncology Products, and last at FDA as Deputy Director of the Oncology Center of Excellence
.
After joining Junshi, she will manage the company's clinical development projects, be responsible for the strategy, direction and execution of clinical development plans, and participate in the company's overall strategy formulation
.

Companies that focus on the development of the US market will consider bringing in former FDA technical officials, such as WuXi Biologics, Tasly, Luye Pharma, etc.
This is because inviting former FDA technical officials to join will help to better understand the approval rules of overseas markets and demand, etc.
, to better deploy the global market
.

From November 2021 to the present, two products have attracted the attention of the industry to overcome the "denial" of FDA listing, one is plinablin and the other is PD-1
.

For the failure of plinabulin, some commented that Hengrui and Wanchun lacked understanding of FDA regulations, especially the differences in the details of domestic and foreign reviews, and failed to truly understand the issues reported by the FDA's communication letters.
The necessary clinical data and CMC data required for marketing were not adequately prepared, which ultimately led to the result of disapproval
.

On February 10, 2022, at the ODAC meeting for indigenous PD-1, the committee voted to recommend the need for additional clinical trials prior to approval to demonstrate the applicability of sintilimab in the U.
S.
population and in U.
S.
medical practice
.

The two cases of plinabulin and PD-1 were both due to insufficient clinical evidence, which reflected that the clinical trial design scheme did not meet the requirements of the FDA, especially the international multi-center clinical trial was not designed according to the ICH E17 guidelines
.

The case of PD-1 reflects the FDA's standard - only products that are better than existing therapies can be approved for marketing, and only after they are approved for marketing are they eligible to negotiate prices and medical insurance.
The sooner a target product is available for market review, the more beneficial the resources are
.

Correspondingly, the “Guiding Principles for Clinical Research and Development of Anti-tumor Drugs Oriented by Clinical Value” will only be released in China in 2021, reiterating that the clinical demand for new tumor drugs is better than existing therapies.
In response to the great market response, the valuation bubble of domestic new tumor drug projects was "squeezed out" to a certain extent
.

03

03

What about generic drugs?

What about generic drugs?

Generic drugs have already started the road of internationalization very early
.

In 2001, when China joined the WTO, it was discovered that the "new drugs" that had been considered domestically for a long time could only be regarded as generic drugs in the world market, with almost no competitive advantage
.
Therefore, apart from traditional Chinese medicines that entered foreign markets as "functional foods" or "health products", only low-end chemical raw materials and intermediates could be exported from China at that time, and none of the chemical drugs or traditional Chinese medicines passed the FDA's clinical review
.

After joining the WTO, a large number of pharmaceutical companies in China began to apply for ANDA
.

According to data from Yaozhi.
com, in September 2018, Chinese pharmaceutical companies had 226 generic drugs approved by the FDA (excluding drugs already approved before the acquisition), including 23 tentatively approved drugs
.
A total of 32 companies have obtained FDA-approved drugs, and Huahai Pharmaceutical has a total of 60 ANDA numbers, accounting for more than a quarter of domestic companies and the largest number
.

Many companies such as Huahai, Qilu, Hengrui, and CSPC started with APIs and gradually entered the field of generic drugs, importing a large number of high-quality generic drugs made in China into the mainstream market in the United States, bringing international reputation to the company and improving it accordingly.
With the improvement of the company's R&D strength, it has gradually become a major manufacturer of generic drugs listed in the FDA in China
.

The biggest risk in the internationalization of generic drugs by domestic companies is the patent litigation they face when competing for the first imitation
.

According to the 2015 US Patent Litigation White Paper published by Docket Navigator, a well-known US patent litigation information provider
.
Sunshine Pharmaceutical ranked 21st in all industries and 10th in the pharmaceutical industry in its US patent litigation rankings.
At that time, there were 6 generic drug products in the US patent litigation period
.
Sunshine is the domestic pharmaceutical company that has challenged the most patents in the United States
.

The most famous patent challenge of Sunshine Pharmaceutical is prasugrel
.
After several years of long-term research and development, Sunshine Pharmaceutical Co.
, Ltd.
has circumvented several related patents of prasugrel, and submitted the first generic ANDA application of prasugrel hydrochloride to the US FDA in July 2013, which contains the statement in the fourth paragraph.

.

July 10, 2013 was the earliest date when a generic drug manufacturer could submit an ANDA application for prasugrel to the US FDA.
Dongyang Sunshine was the first Chinese company to submit the first generic drug application to the US FDA at that time
.

The patent challenge of generic drugs to the original research and development may not be successful every time
.

In January 2022, the U.
S.
Court of Appeals for the Federal Circuit affirmed that Switzerland's Novartis Pharmaceuticals won the lawsuit against China's HEC Pharm Co.
,
Ltd.
The court found that Novartis' patent on the drug Gilenya was valid, and that the generic drug applied by Sunshine Pharmaceuticals may infringe this patent
.

Gilenya is a drug used to treat multiple sclerosis
.
According to Novartis' report, Gilenya will surpass $3 billion in sales in 2021, making it Novartis' second-best-selling drug
.
The ruling prevented Sunshine from starting selling generic versions of Gilenya before Novartis' patents expired
.

Domestic Me-better innovative drug companies also need to consider the intellectual property rights of their products when they internationalize
.

In February 2022, Pfizer sued two former employees and their China-based company in federal court in Connecticut, accusing them of stealing business for a small-molecule GLP-1R agonist related to Pfizer's diabetes and obesity treatments being developed.
confidential
.

Judging from the current cases, the first step in the internationalization of pharmaceutical companies is drug registration and listing.
Whether it is BeiGene or Junshi, the basis for drug listing in the United States is to rely on clinical data that meets local regulatory requirements
.
Although most of the pharmaceutical companies that advocate internationalization have teams from overseas returnees, domestic regulatory thinking is always thinking about how to "exempt" clinical research and reduce costs, instead of targeting the listing country after understanding the trend of regulatory changes.
Regulations require the completion of appropriate clinical studies as far as possible
.

This also means that internationalization in Europe and the United States has never been a game that small companies can play.
Only large companies that can afford international multi-center clinical research costs of more than 10 million US dollars in foreign clinical trials or the high patent fees faced by first generic drugs can hope to internationalize
change .

However, product listing is only a node of internationalization.
After domestic companies have overcome the registration barrier, the next step is to face the market barrier, which will be another battle
.