【Medical Garden View Domain】The success or failure of overseas Biotech commercialization

After sorting out the phased results of the commercialization of domestic Biotech enterprises a while ago, I immediately thought of this image topic: What is the commercialization road of foreign Biotech enterprises? In recent years, after the domestic innovative drugs have entered the commercialization stage, especially after the medical insurance negotiations broke the PD-1 "100 billion market scale" expectations, there has been a fierce controversy over the commercialization ability of domestic Biotech enterprises and even the business model of the entire medicine; At the same time, there are complex and confusing opinions on whether the moon abroad is more round, or the US medical system is special, so their Biotech commercialization can make money, and it is not a reference for China, or where Biotech is not easy to make money, China is even more inappropriate for this road
.

What is the commercialization road of foreign biotech enterprises

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The starting point of the target screening range is to find more than 200 biotech companies listed on major exchanges and with revenues of more than $100 million in any year between 1990 and 2021, which are mainly innovative drugs.

Simulation of sales profit simulation net profit by selling drugs to form large-scale revenue and stable profitable sales

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The vast majority of Biotechs do not choose to sell their own drugs

We stratify companies by peak sales so far, and it is not difficult to see several macro conclusions:

1) There are very few Biotech that can truly achieve independent commercialization success, and only 20 of the 51 companies (which are confident that they can run out) can achieve sales of more than 1 billion US dollars, especially if they enter the pharma threshold by themselves, only the historical GILD/CELG/REGN/BIIB four monsters
.

Looking closely at the scattered distribution of sales and profitability of each enterprise, you can also more intuitively feel the dynamic evolution of the above conclusions: in the gray circle is a lot of people whose level of commercialization is not very good, gathered in sales of less than 200 million, and it is still relatively far from profitability, except for a few like GBT, which has just started, most of them may not have much to count on in the future; Most of the yellow circle is small and rich, sales can climb to 1 billion or so, may also cross the break-even point, but it is almost to the bottleneck, and it is not easy to break through; In the blue circle, these companies pursue the sea of stars, the current sales are not small, but the conspirators are large, and they are still spending a lot of money on sales and research and development, so they are still losing money in the short term, hoping to climb to a higher level; The green circle belongs to the successful commercialization that has been achieved in stages, and is the mainstay of the industry, with sales of two or three billion, which also reflects the profits of hundreds of millions or even billions; The red box has reached the peak of commercialization, entering or touching the threshold of pharma, with extremely high sales and strong profitability (easily achieving a simulated profit margin of more than 40%)
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The small wealth of all sentient beings is the mainstay of the sea of Anchen Star to reach the peak

In the end, to what extent these companies can make money selling drugs, it is not difficult to see that for most Biotechs, sales of hundreds of millions of dollars can almost cross the break-even point, and only a few of the most ambitious companies will invest more early profits in sales and research and development capacity building, and finally form a future giant status
.

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The scattered distribution of income and profit is also similar, and it can also be seen that the extreme poverty (gray) - food and clothing (yellow) - well-off (green) - chicken blood (blue) - wealth (red), this string of different stages
of development.

The distribution of break-even points is slightly characteristic, forming two clusters, one is small wealth is security, in 3-5 billion income to achieve profitability, and finally almost stop at 1-2 billion income, the other is reluctant to children can not set the wolf, until 1.

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1 Reaching the pinnacle

Companies that have grown up since the 1990s, led by GILD, are "definition-level" players in the commercialization of the entire Biotech field, representing the highest level
of independent commercialization in the industry.
The paths of these companies have a certain commonality, that is, in the past few years, they first relied on a variety to feed the team, pieced together the industrialization elements, and finally listed the follow-up super-heavy varieties in the research and development pipeline, making the performance take off rapidly, and in the window of 5-10 years after the start of commercialization, it quickly broke through several major marks
, such as billion sales + simulated net profit turned positive + 10 billion market value.

The paths of these companies have a certain commonality, that is, in the past few years, they first relied on a variety to feed the team, pieced together the industrialization elements, and finally listed the follow-up super-heavy varieties in the research and development pipeline, making the performance take off rapidly, and in the window of 5-10 years after the start of commercialization, it quickly broke through several major marks, such as billion sales + simulated net profit turned positive + 10 billion market value

GILD from the launch of the antiviral drug Cidofovir in 1996 out of the first step of commercialization, a short period of time to achieve simulated sales profit positive, but sales in 1-200 million for several years, has not obtained simulated net profit, the market value is also about 10-2 billion (of course, at that time this market value is also very high); By 2001, the HIV blockbuster drug Tenofovir was listed, and sales quickly exceeded the 1 billion mark in three years, and the simulated net profit turned positive the following year, after which the profitability level soared, and the valuation level also formed a double-click, breaking through the 10 billion mark in two years; Of course, the operation that finally made the company a god was Sovaldi, which was obtained by spending tens of billions of dollars to acquire Pharmasset, which was more than a decade later
.

CELG's commercialization story began with the famous transformation of decay into the magic of Thalidomide, and in the first few years after its launch in 1998, although it was strictly controlled due to the negative history of the drug, the company relied on off-label and other means to operate sales to the final peak of 500 million in a few years; Relying on this variety to raise the team, until 2005 finally ushered in the second dolamine variety Lenalidomide, the company achieved an outbreak, but also within two years of sales exceeded 1 billion, and the market value of the year exceeded 10 billion, reflecting the high recognition
of the market.

REGN's early years of fate is doomed to it is more accustomed to thick accumulation, in 2008 Rilonacept listed a few years later, sales have not grown, losses continue to expand, and even simulated sales profits have not improved, when the vast majority of revenue comes from licensing fees, the market is not buying it at all, P / S is only given to 5x early; By 2011, the big killer Eylea was held, sales took off rapidly, the market responded quickly, and the market value exceeded 10 billion in the following year; But the company is almost the most avid money burner in Biotech, almost all of the money earned by Eylea has been returned to research and development, the amount is an order of magnitude higher than the above two, so the profitability in the first decade of commercialization is not high, and the market has also given a high valuation level for the company's rapid development in recent years, and P/S has always been above 15x; Alirocumab in 2015, Dupilumab in 2017, Cemiplimab in 2018, a series of bombshells put the company on the altar
.

VRTX's legend is slightly different, after its establishment more than 20 years before coming up with the first self-commercialized variety Telaprevir, that year's sales were close to 1 billion, just when it seemed that the road ahead was bright, GILD's hepatitis C miracle drug Sovaldi turned out, and the company's anti-viral line was ruthlessly destroyed; However, in the cystic fibrosis of this barren land, another path, brought the dawn of willow dark flowers, 2012 Kalydeco, 2015 Orkambi, 2018 Symdeko three consecutive hits, completely laid the company's solipsistic position in the CF field, but also drove the company's revenue and profit all the way up
.

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2 Mainstay

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2 Mainstay

This batch is the ceiling level that ordinary Biotech strives to achieve, generally holding a bombshell of more than 1 billion sales, but the hand cards are far less abundant than the previous company, and the profit margin is far less exaggerated than the previous company
.

Generally hold the blockbuster of more than 1 billion sales, but the hand card is far less abundant than the previous company, the profit is enough to feed the company, but the profit margin is far less exaggerated than the previous company, if the research and development burns more money is not good, it is not too profitable

INCY has the opportunity to enter the previous gear, from so many years of huge investment can be seen in its activity in the research and development side, if the IDO does not fold then its growth curve is very close to REGN
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But even so, with Ruxolitinib, a blockbuster variety with sales of more than 2 billion yuan listed in 2011, it has contributed more than 1 billion yuan per year to the research and development side, and in 2012-2015, the market value has achieved a jump
from 2 billion to 20 billion in 2015.
Of course, in the case that the potential of a single variety will be exhausted and the follow-up heavy varieties are still far away, the market value has been in the range of 15-20 billion in recent years
.

Compared with the former, ATLN has a much calmer mentality, from the 2000 pulmonary hypertension drug Bosentan listed, the third year only took more than 200 million sales to achieve full profitability, the follow-up single variety broke 1 billion, in the past few years of climbing the market value has also risen from less than 1 billion to more than 7 billion
。 However, the company's R&D investment is obviously a notch lower, making the explosive power of the follow-up pipeline obviously insufficient (in fact, it is known that the company waited for the next batch of new drugs Macitentan and Selexipag to be approved in 2015-2016), making the market value hovering between 5 billion and 10 billion yuan for a long time
.

CEEL's blockbuster variety Cabozantinib was approved in 2013, especially in 2016 after the tablets were approved for major indications such as RCC/HCC, and became profitable the following year, and the market value quickly soared from less than 1 billion to the range of six or seven billion, and sales exceeded 1 billion
in five years.

NBIX is based on Valbenazine, which was listed in 2017, and achieved breakeven the following year, with sales of nearly 1 billion yuan in three years, and it seems that the growth rate of single products has slowed down
.
It may be that the product expectation reflects in advance, from the beginning of the approval of the market value reached 6 billion, and then at about 10 billion to today
.

UTHR is the lowest degree of dependence on a single product in this stall of the enterprise, but the sales climb and breakeven are not so fast, the fist variety PAH drug Remodulin from 2002 after the final peak to less than 700 million, simulated net profit turned positive took nearly 10 years, but finally the follow-up product Treprostinil topped up, can also contribute more than 500 million sales, and the market value is in the range of two or three billion for about
five years.

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3 Sea of Stars

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3 Sea of Stars

This series is a group of enterprises that have high hopes for the industry and themselves, and the sales of products are not low (at least more than hundreds of millions of yuan), but the amount of research and development investment is huge, making the company far from seeing profits
.
The market has greater expectations for existing products and future prospects, so it is willing to continue to give higher valuation levels even in the case of
losses.

Enterprises that have high hopes from the industry and themselves

SGEN as the former overlord of the ADC industry (now after all, have to bow to DS), commercialization ability is not bad, from the second year of simulated sales profits have turned positive, the current independent sales have already exceeded 1 billion, but the company continues to spend money on the platform and follow-up pipeline construction (self-research + outsourcing), resulting in losses not only not narrowed, but constantly enlarged
.
It can only be said that ADC is a general direction of industry consensus, and the DS trend has given SGEN great pressure on these veteran players, and it must be exchanged for more investment in exchange for leading opportunities
.
After all, in such a historical outlet, the market for the company's investment or high expectations, in the commercial decade is still losing money, still many years to give 15-20x P/S, in 2019 after Nectin-4 ADC and Tucatinib have been approved, the market value jumped from more than 10 billion to 30 billion
.

SRPT relies on a series of DMD drugs, but also to achieve commercialization of the following year simulated sales profit positive, the current sales of more than 600 million, but research and development costs than revenue, in the short term is far from profitability
.
However, the market is also very generous about valuation, from less than 1 billion before commercialization to less than market value, the highest rush to 13 billion in the process of volume release, and now it is also back to about
10 billion.

Both ALNY and BVHN have a short commercialization time, but the value potential of the company's platform and products has not yet been fully realized, so they are still on the way to profitability, and the valuation multiples are also very impressive
.

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4 A small fortune is a safe one

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4 A small fortune is a safe one

As the FIC GLP-1R agonist, Exenatide quickly increased the volume from 2005 after listing, and the next year achieved a positive simulated sales profit, and the third year's sales reached more than 700 million yuan and the simulated net profit basically began to stabilize
.
The company is clearly relatively satisfied with this situation, and investment in research and development and promotion is no longer increasing
.
The market capitalization rose from 2 billion to 5 billion for a period of time after the commercialization began, but gradually lost the increment and returned to the level of 10 billion, and was finally acquired
by BMS.

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5 All sentient beings

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5 All sentient beings

CLVS should never have belonged to this file, after all, it was once a star of hope with a market value of more than $4 billion, but in 2016, the PARP inhibitor Rucaparib was pushed to the market, under the ferocious strangulation of Niraparib and Olaparib's two opponents, sales have always been in place of more than 100 million, even the sales team is difficult to feed, naturally it is impossible to support other expenses, the market value has fallen again and again, basically has been classified into the old paper pile that no one wants
。

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Summary

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Summary

After combing through the commercialization path of overseas Biotech, it is not difficult for us to get the most intuitive feeling, that is, selling drugs by ourselves is definitely a road
of nine deaths.
Without diamond diamonds and porcelain work, these enterprises that can make medicine are already the most beautiful boys in Biotech Village, and they will still fall on the road of commercialization in large quantities, which shows that commercialization capabilities are scarce
all over the world.
This is why the big pharmaceutical companies that look decaying and depraved are still qualified to hunt the flop in the market with high spirits; It is also why the warriors who have been killed from this bloody road are entitled to the most lucrative profits
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Selling medicine yourself is definitely a nine-death road

In addition, we look at the data in more detail, in addition to the quantitative differences brought about by the Chinese and foreign medical systems and payment levels, may still be able to provide some qualitative and logical reference for the commercialization of Chinese Biotech enterprises: 1) Pharmaceutical companies want to achieve profitability need enough time to promote marketing capacity building and high enough peak product sales, no market is born to prepare profit margins for enterprises starting from scratch, even if those overseas Biotech companies are ultimately very successful.
It often takes 5-10 years and more than $1.
5 billion in sales to be profitable; For the vast majority of Chinese innovative drug companies, the independent commercialization road has not exceeded 5 years, sales are basically far less than 1 billion US dollars, even if for the sake of domestic sales and lower costs of research and development, it seems too early to argue that Chinese pharmaceutical companies sell innovative drugs to make money, not to mention that because of PD-1 and other historical opportunities, Chinese Biotech companies have obtained a very special starting point for commercialization, and its break-even point may be achieved
earlier than overseas counterparts 。 2) From the beginning of commercialization, to the gradual increase in volume, until the formation of large-scale sales and stable profitability (that is, commercialization success) process, often has several years, during which the probability is accompanied by the company's market value of several times or even ten times the increase, especially the product volume is expected to continue to release and cash, commercialization behavior to turn losses into profits, from quantitative change to qualitative change of the process, there will be a classic "Davis double-click", can give the correct judgment of the most lucrative profits of investors; Here is still to go back to Amway to the analysis of the commercialization of domestic Biotech, it is not difficult to find that there is more than one Chinese company, just in the first profitability and commercialization ability is verified watershed, and it is clear that the market is currently giving a high degree of pessimistic expectations for their prospects, then the expectation difference is the biggest source of
income 。 3) After the initial success of commercialization driven by a single blockbuster product, the company's investment value depends entirely on the follow-up expectations, that is, whether there is a second wave of even a steady stream of blockbuster products to push the company to the next level, for the follow-up enterprises that still have higher expectations, even if the long-term loss, the market may still give a high valuation, for the enterprises that are weak after the shallow taste, even if the book income is quite profitable, the market will not be too buying; This is the basic principle of finance, which is naturally applicable to Chinese companies, the best commercialization status is naturally the enterprise that already holds the blockbuster products such as PD-1, and their investment value judgment should be taken away from these varieties that are almost eaten dry and squeezed to see if there is a candidate drug in their pipeline that can support the next 1 billion sales, which is more meaningful than guessing whether this year's sales are 50 million more and 30 million less, because it may decide whether to give 20x or 5x P/ S
。

Pharmaceutical companies want to achieve profitability need a long enough time marketing promotion capacity building and high enough peak product sales at this stage on the vain discussion of Chinese pharmaceutical companies selling innovative drugs to make money seems to be premature break-even point may be earlier than overseas counterparts to achieve this high probability accompanied by several times or even ten times the company's market value is not difficult to find more than one Chinese company, It is precisely at the watershed of profitability and commercialization that the value of a company's investment depends entirely on the subsequent expectation of examining whether there are drug candidates in their pipeline that can support the next 1 billion sales

In any case, the commercialization of drugs is a metaphysics, and we can only explore and difficult to call insights
.
Spoil not be alarmed, idle to see the flowers blossom and fall in front of the court; Go to stay unintentional, drift with the clouds outside the sky cirrus cloud Shu
.
I hope that by seeing the success or failure of the world, we have more patience and determination
to blossom and fall before the court.

Spoil not be alarmed, idle to see the flowers blossom and fall in front of the court; Go to stay unintentional, drift with the clouds outside the sky cirrus cloud Shu
.
I hope that by seeing the success or failure of the world, we have more patience and determination
to blossom and fall before the court.