International cooperation is a major development trend of the pharmaceutical industry

BD, as the name implies, Business Development, is to continuously optimize the company's product pipeline through authorized cooperation (In/Out), joint development and other methods around the company's long-term strategy
.

The earliest BD in China originated from multinational pharmaceutical companies in China.
The previous main work was the landing of products in China and commercialization support (Alliance), while the rapid rise of local biotech companies (Biotech) originated from a group of BD, who has an overseas Ph.
D.
work background, returned to China, coupled with the transfer of research and development and sales of domestic enterprises, has continuously expanded the current BD camp
.

The rapid development of BD in recent years, on the one hand, due to the early transfer of approval documents between domestic drugs has been unable to meet the needs of enterprises, the transfer of products in more research and development stages has become a trend
.

On the other hand, with the reform of China's medical policy, innovation has become the main theme
.

With the advancement of medical reform and drug reform, in recent years, the license-in and license-out of pharmaceutical companies have become hot, and they have gradually become a trend
.

Normalized License-in

In terms of strategic layout, capital operation, and profit creation, many outstanding cases have emerged in China in recent years
.

In terms of strategic layout, on May 7, 2018, Luye Pharmaceuticals obtained the rights and interests of AstraZeneca Seroquel and Seroquel Sustained-Release Tablets in China and 51 regions around the world for US$546 million, enhancing Luye’s global supply chain capabilities And the ability to control global commercial channels will bring synergies to products listed in Europe and the United States
.

In terms of capital operation, Zai Lab was listed on the Nasdaq three years after its establishment, Okvision was listed on the Hong Kong Stock Exchange 28 months after its establishment, and Genting Xinyao, which was incubated by Kangqiao Capital, was listed on the Hong Kong Stock Exchange three years after its establishment.
The rapid rise has quickly proved its value
.

In terms of actual revenue creation, the license-outs of companies such as Baiji, Cinda, Jacos, and Rongchang Biotechnology have benefited tens of millions of dollars and hundreds of millions of dollars in milestones
.

For traditional pharmaceutical companies, the main reason for promoting their license-in is centralized procurement, especially those companies that have not won the bid in centralized procurement, such as Huadong Medicine’s acarbose and Hengrui’s contrast agent product iodixanol.
Etc.
, have a greater impact on the company, and also promoted the recent frequent project introduction of the two companies
.

In the current environment, if there is no good product, no amount of sales team can do it
.

Looking further at China's license-in characteristics, it can be divided into two categories according to traditional pharmaceutical companies and innovative pharmaceutical companies
.

However, Zai Lab's model can hardly be replicated and it is a major trend and surpass in the development of the pharmaceutical industry to enter overseas
.

Cross-border transactions: the only way for the development of Chinese pharmaceutical companies

License-in transactions tend to be normal, and they also tend to be rational.
Companies will find suitable targets based on their own needs, and traditional pharmaceutical companies that do not develop and transform rapidly will be eliminated
.

As of August 31 this year, in the field of License-in, 90 cross-border transactions have been officially announced this year, plus 137 in 2020, and the two years together accounted for 50% of the past 6 years
.

The internationalization of Chinese medicine can be divided into three stages: 1.
0 R&D internationalization
.

2.
0 Internationalization of products
.
In a narrow sense, product internationalization is actually License-out, and companies sell products
.
If subdivided, it can be divided into three categories.
One is the external authorization in the industrial field, the second is the product authorization in the commercial field, and the third is the establishment of overseas factories, which first appeared in API or some preparation companies
.

3.
0 Sales internationalization
.
At a brokerage meeting of Hengrui this year, Sun Piaoyang mentioned that Hengrui will definitely do internationalization in the future.
Internationalization is not necessarily about selling its own products.
He is more inclined to take a "Henrui->
.
If a pharmaceutical company wants to license-out, the first core element is that the product itself must be hard enough.
The target should preferably be the global TOP level, especially the target that MNC is doing.
For example, Roche is doing it, except for Roche.
Companies, this product will be very popular; second, professional BD capabilities are required.
The current industry is developing rapidly.
Most Chinese pharmaceutical companies do not have a complete BD system or manpower, and there is no third-party organization to internationalize BD around customers.
Provide full-process support services for the needs of the company
.
Among them, a professional BD talent or a license-out for the team to guide the enterprise project is required
.

In the future, there will be more and more license-out projects for Chinese pharmaceutical companies.
Chinese Biotech companies sell their products overseas.
There are reasons for their lack of commercial capabilities, and there are reasons why external companies have this demand
.
License-in is always buying, but there will always be fewer and fewer things to buy, but as long as the license-out is done, there will be more and more things
.
In the future, the license-out of Chinese pharmaceutical companies will definitely be prosperous, and even exceed the license-in
.
Looking at the development trends of various industries, China's pharmaceutical industry is gradually moving towards the center of the world stage.
Whether it is license-in or license-out, international cooperation in medicine will become the new normal
.

BD's "catfish effect"

Innovation is the direction of the country's medical reform, and it is also an inevitable trend for the medical field to master "hard technology".
Looking at the world, few large generic drugs have become global giants
.
The BD of foreign pharmaceutical companies is the earliest prototype of BD in China.
At present, the BD team of each foreign pharmaceutical company in China also has a certain scale.
It can be seen that BD is not a new profession.
License-in has become the new normal for companies to acquire assets.
Take Pfizer's TOP10 drug as an example.
There are 6 mergers and acquisitions, 1 introduction, 1 joint development, and 1 independent research and development
.
As a new growing profession in China, BD will become a trend in the future, but as the future investment in innovative drugs becomes more rational, the BD industry will also have a round of reshuffle
.

The aspect of enterprise BD is divided into external BD and internal BD
.
For external BDs, project search, screening, docking, and negotiation all have different difficulties.
The core is to clarify what projects to look for and how to achieve smooth negotiation and landing of projects
.
Many pharmaceutical companies are usually not clear about the target they are looking for in the BD process, and there is no clear positioning of the indications, targets, and clinical stages.
This process of exploration is a necessary stage for most companies
.
After finding a good project, it is often not easy to talk about.
Candid communication and presentation of advantages will test BD’s ability to sort out and persuade, but in fact there is no perfect project.
It is also a test of BD’s ability to weigh the advantages and disadvantages of the project based on the company’s situation.
Ability
.

As the front-end department of the company, BD is also a very important skill for coordinating different departments of the company
.
Early determination of the strategic direction requires collaboration with the chairman, strategy, R&D and other departments to reach a consensus, and finally determine the direction of pipeline layout
.
In the process of project communication and negotiation, it is necessary to coordinate with different internal departments and make final decisions.
It is also very difficult for the conflict of interests of the departments to determine the internal BD.
Usually R&D will say that the product is not worth so much money, and the sales will say that it is impossible to sell in the future.
With a lot of money, BD is like a catfish in continuous communication and coordination among different departments to ensure the final implementation of the project
.

With the changes in the industry's general trends, the functions and roles of BD may also change subtly.
For example, the demand for project license-in tends to be rational and professional capabilities continue to change
.
The only major change may be that a certain black swan event has led to a rationalization of China’s pharmaceutical investment and financing environment, the market value of the secondary market is too low, and the investment and financing of the primary market is difficult.
As a result, Biotech companies will accelerate product cooperation or transfer.
Domestic traditional pharmaceutical companies with sales teams will benefit
.

Dai Youwen

Partner of Meibai Capital

Dai Youwen graduated from China Pharmaceutical University and has more than ten years of work experience in the pharmaceutical industry.
He once held key marketing and sales positions in the cross-border pharmaceutical company Sanofi, and is familiar with the Chinese pharmaceutical market and clinical needs
.
2015 ~ 2017 deep tumors in the medical field, and as a co-founder of the firsttumor biological and medical assistants, commercialization and market leadership to work with AstraZeneca, CSCO and other partnerships
.

In 2017, Mr.
Dai Youwen joined MEBO Healthcare as one of the early senior management team members.
He was successively responsible for platform business, government cooperation, and MEBO Capital business.
He established a wide network of resources in the Chinese pharmaceutical industry and led the team for many Chinese listed pharmaceutical companies provide cross-border BD consulting services
.