Multinational pharmaceutical companies set off a wave of rare disease mergers and acquisitions, domestic pharmaceutical companies take orphan drugs to go to sea, Ascentage, Shiyao, Junshi ...

Rare disease track, domestic layout is few, but foreign mergers and acquisitions are in waves
.

On December 12, Amgen announced the acquisition of Horizon Therapeutics for more than $28 billion to expand its rare disease product pipeline
.
Companies participating in the bid to acquire Horizon include Sanofi and Johnson & Johnson
.

In fact, this is only the "tip of the iceberg"
of frequent mergers and acquisitions by foreign pharmaceutical companies in the rare disease track.
Based on this, the rare disease track is gradually heating up from the previous "unpopular" and niche to a hot track
.

First, there are about 300 million patients with rare diseases in the world, and there are huge commercial interests in the market

Due to the significant characteristics of small patient population, difficult drug research and development, and high cost, the rare disease track has always been a well-known "unpopular" and niche track, unlike anti-tumor, autoimmune and other popular tracks, attracting many pharmaceutical companies to compete and fight fiercely
.

Low incidence and small patient population are the most significant features
of the rare disease track.

Rare diseases refer to uncommon diseases with a very low prevalence and a small total number of patients, such as albinism, hemophilia, osteogenesis imperfecta, multiple sclerosis, amyotrophic lateral sclerosis (frozen people), etc
.

A rare disease defined in the United States is a disease
with a prevalence of less than 5 per 10,000 or a total of less than 200,000 patients, but its therapeutic drug sales are expected to struggle to recover research and development costs.
According to the "China Rare Disease Definition Research Report 2021", "diseases with neonatal incidence less than 1/10,000, prevalence less than 1/10,000, and fewer than 140,000 patients" are listed as rare diseases
.

In terms of the number of patients, there are currently about 300 million rare disease patients in the world, more than 20 million patients with rare diseases in China, and 200,000
new rare disease children are born every year.

The difficulty and high cost of drug development are another distinctive feature of
the rare disease track.

Due to the complex causes of pathogenesis and insufficient research on rare diseases, many rare diseases are "no drug to treat, less medicine can be treated"
.
According to statistics, there are currently more than 7,000 known rare diseases in the world (accounting for 10% of the total human diseases), of which about 95% have no effective treatment drugs
.

In addition, due to the small number of drug users for rare diseases and the high cost of drug research and development, pharmaceutical companies may not be able to recover the cost, resulting in limited
enthusiasm for research and development.

However, although the rare disease market has few participants, it also means that there are huge commercial interests
in the market.

Due to the high difficulty of research and development of rare disease drugs (also known as orphan drugs), which has formed extremely high industry entry barriers and relatively relaxed market competition, pharmaceutical companies can build moats through high technical barriers and enjoy high profits
.
Moreover, the rare disease market has extremely high policy barriers, and pharmaceutical companies can enjoy higher pricing power
.

All countries and regions around the world have always attached great importance to the research and development of rare disease drugs, and have given many strong policy supports, including market exclusivity, tax credits for clinical trials, R&D funding, and accelerated approval
.

The market exclusivity period is to prevent another product with the same active part from being used for the same disease or condition, protecting the brand-name drug from generic competition
.
For example, Australia and South Korea have market exclusivity periods of 5 and 6 years respectively, the United States has 7 years, and the EU, Japan and Singapore have market exclusivity periods of up to 10 years
.

Domestically, in recent years, China has supported
rare diseases from research and development, registration, payment and other links.

In May 2022, the NMPA clarified that "for new drugs for rare diseases approved for marketing, a market exclusivity period of up to 7 years will be granted under the condition that the drug marketing authorization holder promises to ensure the supply of drugs, during which the same varieties will not be approved for marketing
.
" ”

Support policies in the field of rare diseases in China Source: National Health Commission, Ping An Securities Research Institute

Second, more than 60 kinds of rare disease drugs have been approved in China, and imported products are dominant

It is precisely because of the huge commercial interests in the rare disease market that makes foreign-funded pharmaceutical companies hesitate to spend a lot of money on a strong layout
.

For example, Merck acquired Acceleron Pharma, a new drug research and development company for rare diseases, for $11.
5 billion; Sanofi spent $20.
1 billion in cash to wholly acquire the rare disease "unicorn" Genzyme; AstraZeneca acquires Alexion Pharmaceuticals for $39 billion.
Takeda Pharmaceuticals bought European rare disease giant Shire for $62 billion
.

In addition to the above-mentioned tens of billions of mergers and acquisitions, there are not a few billion-level and billion-level mergers and acquisitions, involving GlaxoSmithKline, Novo Nordisk, etc.
, and the ambition and layout of foreign-funded pharmaceutical companies in the field of rare diseases can be seen
.

In contrast, due to the small layout of Chinese pharmaceutical companies in the field of rare diseases, the domestic market is still dominated by imported drugs
.
Moreover, in the number of rare disease drugs on the market, there is still a big gap
between China and the United States.

However, in recent years, China has also achieved many good results
in the field of rare diseases.

The First Batch of Rare Disease Catalogue formulated by the National Health Commission contains a total of 121 rare diseases
.
At present, more than 60 kinds of rare disease drugs have been approved for marketing in China, of which more than 40 have been included in the national medical insurance catalog, involving 25 diseases
.

In addition, according to the East Asia Qianhai Securities Research Report, since November 2018, the State Food and Drug Administration and the National Health Commission have successively released three batches of lists of urgently needed overseas new drugs for clinical use, covering 40, 26 and 7 drugs respectively, with a total of 73 drugs
.
Among the 73 drugs in the three batches of lists, 37 rare disease drugs accounted for 50.
68%.

Among the 46 drugs that have been approved, 21 are rare disease drugs, accounting for 45.
65%.

From the perspective of market prospects, due to the existence of a large number of untreated rare disease patients in China, and with the improvement of diagnosis and treatment awareness and the advancement of precision therapy, China's rare disease drug market is expected to achieve rapid growth
.

According to Frost & Sullivan, the total rare disease drug market in China increased from US$500 million in 2016 to US$1.
3 billion in 2020, with a compound annual growth rate of 29.
9% during the period, which is much higher than the growth rate of the global rare disease drug market (5.
5%), and is expected to grow at a compound annual growth rate of 34.
5% to US$25.
9 billion from 2020 to 2030, while the market growth rate of the United States and the rest of the world in the same period is 10.
5% and 10%,
respectively.

Third, orphan drug identification, the "other leg" of domestic innovative drugs going overseas

Although China's rare disease market is still in its infancy, due to the huge commercial interests and market prospects and the impact of the same type of drugs in the hot track, there are currently many listed pharmaceutical companies in China to seize the layout of rare disease tracks
.

CANbridge, which focuses on the development and commercialization of rare disease drugs and rare oncology specific drugs, was listed on the Hong Kong Stock Exchange at the end of 2021 and is known as the "first rare disease stock", and has built 13 innovative product pipelines (including 7 global patents), including 3 marketed products, 4 clinical drug candidates, 1 IND-ready, 2 pre-clinical, and 3 gene therapy projects in the pilot identification stage
.

Among them, in the field of rare diseases, it has 7 biological agents and small molecule products and product candidates for the treatment of mucopolysaccharidosis type II (i.
e.
Hunter's syndrome) and other lysosomal storage diseases (L SDs), hemophilia A, etc.
; In the field of rare tumors, CAN008, which treats glioblastoma, and tumor products
such as Caphosol (CAN002) and Nerlynx® (CAN030) have also been deployed.

CANbridge R&D pipeline Source: 2022 Interim Report

In addition to CANbridge, many domestic pharmaceutical companies have entered the rare disease track
through independent research and development or the introduction of overseas innovation pipelines.

For example, as of the 2022 interim report, Ascentage Pharma has obtained two fast-track designations from the FDA and two rare diseases in children, as well as 16 orphan drug designations granted by the FDA and the European Commission (EC), continuing to set a record
for a Chinese biopharmaceutical company to obtain FDA orphan drug designation.

Specifically, the orebatinib (Nerick) developed by Ascentage Pharma has been granted three orphan drug designations and one fast-track qualification by the FDA, including acute myeloid leukemia (AML) and acute lymphoblastic leukemia, which is also the first and only third-generation BCR-ABL inhibitor approved for marketing in China.

Lisaftoclax (APG-2575), a new selective inhibitor of oral Bcl-2, has been granted five orphan drug designations by the FDA, including follicular lymphoma, Waldenstrom macroglobulinemia, chronic lymphocytic leukemia, multiple myeloma, etc.
;

Alrizomadlin, a small molecule inhibitor targeting MDM2-p53 PPI, has been granted six orphan drug designations by the FDA, including soft tissue sarcoma, gastric cancer, acute myeloid leukemia, retinoblastoma, stage IIB-IV melanoma, and neuroblastoma;

Pelcitoclax (APG-1252) is a novel high-potency small molecule drug that restores apoptosis by double inhibition of Bcl-2 and Bcl-xL proteins for the treatment of small cell lung cancer (SCLC), non-small cell lung cancer, neuroendocrine tumors, and non-Hodgkin lymphoma, among which it has been granted orphan drug designation by the FDA for the treatment of SCLC
.

In addition, domestic pharmaceutical companies such as CSPC Pharmaceutical Group, Junshi Biologics, and Corning Jerry have also obtained orphan drug certification for many products, and have gradually opened up the international market
.

For example, CSPC, which has accumulated a lot of experience in internationalization, has carried out more than 10 overseas clinical studies and obtained 10 orphan drug or fast-track designations as of 2021, of which SYSA1801 for the treatment of pancreatic cancer and NBL-015 for the treatment of gastric cancer (including esophageal gastric junction cancer) have been granted orphan drug status
by the FDA.

At present, its core product teripulimab has obtained five FDA-issued orphan drug designations, including mucosal melanoma, nasopharyngeal carcinoma, soft tissue sarcoma, esophageal cancer and small cell lung cancer
.

KN035 (envolimab) developed by Corning Jerry is the world's first and only approved subcutaneous PD-L1 inhibitor, the first immunotherapy drug for cross-tumor indications in China, and the first domestic PD-L1 drug, which was granted orphan drug designation
by the FDA in 2021 for the treatment of advanced biliary tract cancer and soft tissue sarcoma, respectively.

It can be seen that the "going to sea" model of first entering the international market through orphan drug identification and gradually expanding more indications has become the "other leg" of domestic innovative drugs going overseas
.