Junshi PD-1 chases the deer in the Middle East! East China Pharmaceutical, Henlius, BeiGene...The "Belt and Road" market has become a blue ocean of innovative drugs in China?

On December 25, Junshi Biologics announced that it has reached a cooperation
with Hikma MENA FZE (hereinafter referred to as "Hikma") for its PD-1 drug teripulimab.

According to the announcement, Junshi Biologics and Hikma signed an exclusive license and commercialization agreement, which will grant Hikma Teripulimab injection an exclusive license to develop and commercialize in 20 countries in the Middle East and North Africa region, including Jordan, Saudi Arabia, the United Arab Emirates, Qatar, Morocco, and Egypt, with a total payment of up to US$12 million, plus a tiered share
of nearly 20% of net sales.

As a mature product that has been approved for marketing, the transaction amount of "US$12 million payment plus a tiered share of nearly 20% of net sales" can only be regarded as modest compared with many license out projects of domestic pharmaceutical companies
.
The capital market reacted flatly, and as of today's close, Junshi Biologics' share price trend has not fluctuated
.

Analysts pointed out that China's innovative drugs are taking the road of internationalization, and if they only focus on mature markets in Europe and the United States, they are likely to miss other broad markets in the world; With policy encouragement and support, strengthening investment cooperation with countries that jointly build the "Belt and Road" and actively exploring emerging pharmaceutical markets will not only meet the unmet clinical needs of global patients, but also be a choice
that will impact broader commercial returns.

Domestic pressure, FDA extension

A different way to open up the international market?

Teripulimab is the first domestic monoclonal antibody drug targeted at PD-1 approved for marketing in China, and its tortuous commercialization road is regarded as a microcosm
of the tragic "involution" of domestic innovative drugs.

According to the financial report of Junshi Biologics, in the third quarter of 2022, teripulimab achieved sales revenue of about 218 million yuan, achieving three consecutive quarters of sequential growth, and the total sales in the first three quarters was 516 million yuan
.

Although, looking at the data alone, the sales of teripulimab in the domestic market have entered a positive cycle, but compared with tislelizumab, carrelizumab, and sindilimab, as the first PD-1 product listed in China, Junshi Biologics, which has caught up early, has shown a decline under the competition of BeiGene, Hengrui Pharmaceutical, Innovent Biologics and other companies
.

In fact, since the commercialization of Junshi Biologics' PD-1 in China, the progress in the expansion of indications has obviously not satisfied the capital market, and coupled with the "sniping" from Hengrui Pharmaceutical, Innovent Biologics, BeiGene and other enterprises, the sales volume is not ideal; If the internationalization strategy of teripulimab can be launched, the unfavorable situation
of the drug in the domestic market can be improved.

Unfortunately, on the same day that the collaboration was announced, Junshi Biologics issued an announcement that as of December 23, 2022, the target review date of the Prescription Drug User Payment Act (PDUFA), it has not received the review conclusion letter
from the US FDA regarding the biological product license application (BLA) for the treatment of nasopharyngeal carcinoma with teripulimab.
This undoubtedly brings new uncertainty
to the listing of teripulimab in the United States.

Although the US FDA is the "dream" of many Chinese innovative drugs to chase overseas, it is by no means the only option
.
Market analysts believe that the listing of teripulimab in the United States should be fought for, but it is not the only choice, and Junshi Biologics does not press the weight on a plate, which is the key
to ensuring stable internationalization.

On the one hand, Europe, as the world's second largest pharmaceutical market, Junshi Biologics has opened the situation
.
On December 6 this year, the indication BLA for teripulimab for the first-line treatment of patients with nasopharyngeal carcinoma and esophageal squamous cell carcinoma has been accepted
by the European Medicines Agency (EMA).

On the other hand, Hikma, a partner of Junshi Biologics in this transaction, is a company registered in the United Arab Emirates and a wholly-owned subsidiary of Hikma Pharmaceuticals PLC, the world's generic drug giant (hereinafter referred to as "Hikma Pharma"
).

Founded in 1978, Hikma Pharmaceuticals is mainly engaged in the development, production and sales of generic drug products and provides partial contract processing services
.
It is reported that Hikma's pharmaceutical business covers more than 50 countries around the world, mainly distributed in the Middle East and North Africa region, the United States and Europe, and is divided into three modules
: branded drugs, injections and generic drugs.
Hikma Pharmaceuticals is particularly competitive in the Middle East pharmaceutical market, ranking 5th in the Middle East in 2015, followed by Sanofi, Novartis, GSK and Pfizer
.

In China, the commercialization agreement between Junshi Biologics and Hikma is one of the few domestic innovative pharmaceutical companies to grant pipeline rights to emerging countries such as the Middle East and North Africa for cooperation
.

In addition, Hikma Pharmaceuticals has successfully entered the US market, and whether the two parties will expand the cooperation area in the future is also full of imagination in the industry
.
Hikma's U.
S.
market business is primarily operated by Westward, its Eatontown, New Jersey-based subsidiary, and has become the sixth-largest generic drug company (by sales) and the third-largest generic parenteral generic company (by sales)
in the United States after the completion of the acquisitions of Bedford and Roxane in the past two years.

Notably, in this transaction, Junshi also granted Hikma priority negotiation rights for future commercialization rights of three R&D stage drugs in one or more countries within the Hikma region
.
It can be seen that Junshi Biologics may not only bet on immediate interests, but also tear open a few more international market openings is its wishful thinking
.

"One Belt, One Road" as a breakthrough?

The potential of emerging markets is yet to be tapped

In addition to the United States and Europe, emerging countries in the "Belt and Road" market have also become the choice
of domestic innovative pharmaceutical companies to go overseas in recent years.

Taking the Middle East and North Africa region as an example, extending from Morocco to Iran, this region connects the three continents of Asia, Europe and Africa, connects the Atlantic Ocean and the Indian Ocean, the Caspian Sea, the Black Sea, the Mediterranean Sea, the Red Sea, and the Arabian Sea, located in the land of "two oceans, three continents and five seas", between the active East Asian economic circle and the developed European economic circle, is a vast "hinterland"
with huge economic development potential.

Industry experts said that in the vast majority of Middle East and North Africa countries, the managers of their medical regulatory systems have a background in studying in Europe and the United States, and although the overall economic development level of some countries is not as good as that of China, in terms of supervision in the field of medicine, the relevant systems of the US FDA have also been introduced, and they are in line with international standards in terms of regulatory standards; This also means that pharmaceutical innovation enterprises with a high level of internationalization and able to carry out innovative drug research and development in accordance with international standards will have huge R&D advantages
.

In fact, there are not a few domestic innovative pharmaceutical companies like Junshi Biologics that are targeting the markets of emerging countries along the "Belt and Road", and companies such as Huadong Pharmaceutical, Henlius, and BeiGene have noticed the potential market value
of these countries.

In June 2022, East China Pharmaceutical, a subsidiary of East China Pharmaceutical, reached a cooperation with Gulf Pharmaceutical Company (Julphar) in the United Arab Emirates to grant Julphar the right to develop, manufacture and commercialize the two indications of diabetes and weight loss of its liraglutide injection in 17 countries in the Middle East and North Africa including the United Arab Emirates and Saudi Arabia
.

In May 2022, Henlius licensed the development, production and commercialization rights of rituximab, trastuzumab and bevacizumab in 16 Latin American countries to Eurofarma
.
As early as 2018, Henlius granted Biosidus the right to develop and commercialize rituximab in Argentina, Paraguay, Uruguay and other South American countries
.

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The commercialization scope of BeiGene's core product BTK inhibitor zebratinib has covered more than 50 markets around the world, including the Middle East, Africa and other emerging markets and regions
.

In June this year, Fosun Pharma invested RMB1.
054 billion to acquire one of the largest private oncology specialist medical centers (7 private clinics) in Singapore, aiming to expand the anti-tumor market
in Southeast Asia.

In addition, in addition to pharmaceutical companies, device giant Mindray Medical, CXO "Yige" WuXi AppTec, ophthalmic giant Aier Ophthalmology, etc.
have also opened their commercial layout
in Southeast Asia.

In July 2022, WuXi AppTec entered Singapore, the "bridgehead" of the Asian market, announcing that it plans to invest approximately RMB 9.
73 billion to establish a R&D and production base
in the country over the next decade.

In June 2022, Mindray registered a branch in Uzbekistan, becoming the first large-scale international medical company to establish a branch in Uzbekistan, and is the earliest medical enterprise
in China to enter the Ukrainian market (2008).
Mindray's emphasis on Southeast Asia can be seen from the fact that its products such as blood cells, biochemistry, and ultrasound have ranked first in the market share in Uzbekistan for five consecutive years
.

In August 2019, Aier Eye acquired ISEC, the leading ophthalmic medical institution in Southeast Asia, which at that time had 11 ophthalmology and general practice clinics
.

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The key to the commercialization of drugs approved for marketing is that the drugs are "competitive", that is, they can meet the unmet clinical needs
of patients.
In contrast, international mature markets such as Europe and the United States have long been highlands of fierce competition, while the "Belt and Road" countries also have huge unmet clinical needs, and these regions may become another possibility
for Chinese innovative pharmaceutical companies to go overseas.

Experts said that although some countries in the "Belt and Road" region may have a certain gap with developed countries such as Europe, the United States and Japan in terms of ability to pay, it is precisely because of this that the demand for innovative drugs in these countries is also very strong, and there is also a test of accessibility and affordability of high-priced innovative drugs, and this part of the unmet clinical needs can also allow Chinese companies to find their own living space
outside the developed market.

There is no shortcut for innovative drugs to go overseas, with the acceleration and deepening of the reform of China's drug review system, actively integrating with international standards, and further releasing the vitality of pharmaceutical innovation, the innovation content of domestic innovative pharmaceutical enterprises in research and development is also greatly improved
.