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When you are in the cold winter, the first thing you should do is not panic
.
If you're prepared, use the crisis as your best chance
.
If you are not prepared, start preparing now, you can be stronger
through the winter.
Huawei's Ren Zhengfei blows the cold air to everyone, and if you only perceive the cold winter now, it is already an afterthought
.
Since July last year, in fact, the tension of the situation has been perceived, and the capital market was the first to notice this change, and the vigilant has already begun to tighten its investment strategy
.
In 21 years, I told the team that the instruments and equipment developed should be bought into the budget, and in 22 years there may not be funds for this purpose, and now it seems that the forecast is quite accurate
.
Where does winter come from? Let's take a look at a few macro angles to see what factors have led our biopharmaceutical industry to enter a once-in-a-decade winter
.
The chart below shows the changes in the biological index of Hong Kong stocks in the past two years, mainly in two distinct stages
.
The first rising period, the beginning of the epidemic, began on March 2020, the domestic epidemic was properly controlled, the world was shrouded by the new crown epidemic, the economy and life order remained normal, CDMO, medical testing,
APIs, vaccines and biologics companies are driving at full capacity, generating unprecedented revenue growth and technological developments, rising market valuations and hot money
.
However, the successive blows that followed turned a good situation into a menacing bear market
.
The first is that the state collects a number of domestic PD-1s that have just been listed and beats them into cabbage prices (the impact of this incident will be analyzed in detail below).
This was followed by the issuance of new guidelines by the science and technology innovation version, raising the threshold for IPO, and the heaviest round of blows to the notice
from CDE's "Clinical Value-oriented Clinical Research and Development Guidelines for Antitumor Drugs".
One stone stirs up a thousand waves, and the collective pile of fast-follow,
Pseudo-innovation/micro-innovation, biosimilars, etc.
have all been affected, as if thousands of troops rushed to the edge of the cliff, but there is only one wooden bridge
in front of them.
Players who lag behind have to additionally conduct head-to-head clinical comparison trials
of potency.
A notice made China's biopharmaceutical index begin a rout, which shows the huge impact on the intrinsic value of China's biotech pipeline.
And the rigidity and suddenness of the policy caught the market off guard
.
Although the intention of ZF to cool down is good, the goose policy should not be too rigid, the river is crowded, and it is advisable to drain and expand the drainage instead of blocking the waist
.
Then the United States also made continuous attacks, all of which were ruthless moves
to see you sick and kill you.
First, the U.
S.
Department of Commerce announced plans to add some Chinese biopharmaceutical corporate entities to the Entity List, causing a panic sell-off
.
Subsequently, several domestic PD-1s went to sea were also subjected to various cold receptions and refused, and the FDA's attitude was also a 180-degree turn, semi-blocking the path
of internationalization at sea.
The world's unbinding of the epidemic and the surplus of new crown vaccines have made domestic vaccine groups, which are still working hard for the first generation of technology, have been catching up and never kept up, and their valuations have been far left
behind by the market.
So we fell into this long winter
.
Chinese biotech is like a child who is bullied by bad guys outside, and is beaten by his parents when he comes home, and both ends are squeezed
.
In fact, the United States also has a very deadly killer weapon, when it begins to force everyone to take sides, it is similar to a nuclear bomb impact
on the entire pharmaceutical industry.
Looking at the crisis at a macro level, a major external factor is that the United States has entered a rapid interest rate hike cycle, and the figure below is a trend chart of interest rates in the past 20 years, which is also an invisible hand
in regulating the market.
After the subprime mortgage crisis in 2008, the US government bailed out the market, and since then began the era of loose low interest rates, through printing money and borrowing, increasing the liquidity of the market, but the goose economy seems to be addicted to loose money, and for a time all kinds of capital poured into the stock market and investment, contributing to the high valuation of the high-tech industry and the high growth
of the past 20 years.
The Fed has also tried several interest rate hikes to cool down, but has repeatedly punctured the bubble and braked sharply to return to low interest rate policy
.
The Biopharmaceutical Index XBI, correspondingly in 2008, 15, 18, 20 epidemic, 22 years saw a bear market retracement
.
The combination of low circulation during the epidemic and the Russian-Ukrainian war has shattered the already fragile world supply chain, soared prices of various raw materials and energy, forced the Fed to accelerate interest rate hikes with poor skills, and the high-valuation market with the US dollar as the pricing system suffered a fatal blow
.
What we are currently experiencing is also one of the top three de-foaming processes
in history.
The cost of financing and loans is increasing, the pressure on the rate of return is increasing, all bubbles that deviate from the intrinsic value are bursting, and the international geopolitical conflict is also a violent reaction
to economic contradictions.
Every bubble is both a crisis and an opportunity, and only through the cold winter can it bloom more vigorously
.
The thunderstorm of the US biotech market is also full of warnings, such as the hot IPO market flooded through SPACs, backdoor listings, I warned that we may face a big bubble
that is about to burst.
For example, Zymergen
It has fallen by 92% of its peak valuation and has now been overshadowed
.
Where does the involution come from? An important macro-control in China in the past decade is supply-side reform
Where does the involution come from?The pharmaceutical industry has also received a lot of policy and capital dividends
.
So with our vigorous PD-1 pile, pharmaceutical companies in the past few years are embarrassed to say that they are making drugs
if they do not have a PD-1 pipeline.
Just like the current enterprises, or say that they have ADCs on their pipelines, they are embarrassed to go out for financing, but ADCs are not monoclonal antibodies, the probability is not rolled, most of the companies involved in it have now regretted it, and many of the companies that introduced ADCs in front should already have buyers
remorse.
Not long ago, Genting Sun Yao just returned to Trodelvy.
The "China Innovative Biopharmaceutical Market Research Report" released by Frost & Sullivan predicts that China's PD-1 and PD-L1 inhibitor market will grow at a CAGR of 67.
0% to RMB81.
9 billion in 2024, and then increase to RMB100 billion
in 2030 at a CAGR of 3.
4%.
At present, 10 PD-1 monoclonal antibody drugs have been approved in China, and the approved indications are as follows:
Data is collected on the Internet and company reports, if there are any errors and omissions, please refer to the company information
.
Innovent Biologics' sindilimab injection was the first to enter the national medical insurance drug list, and was estimated to be 2843 yuan per unit after the original price of 7838 yuan/100mg basic price reduction, an amprise of 64%.
The 2021 Hengrui annual report disclosed that the price of carrelizumab dropped from the initial 19804 yuan to 2928 yuan, a decrease of 85%.
Junshi's trepilimab also dropped from 7200 yuan to 1912 yuan, also reaching 73%.
The latest price of tislelizumab has also been directly reduced to 1450 / bottle
.
The annual treatment cost of the four antibodies ranges from 33,000 to about 50,000, and at the same time, it also drives the price of K drugs or O drugs to reduce the corresponding price, and compared with the price of K drugs in the United States, nearly one million yuan a year greatly reduces the economic burden of domestic patients, even if the company fails to make a profit, it can be regarded as a great contribution
to the country and the people.
A new round of centralized procurement is about to begin, and the four new homes will start new bidding
in the two indications of lymphoma and MSI-H/DMMR solid tumors.
Piamplimab was menacing, directly prescribing a minimum fee
of 39,000 for two years.
Latecomers need to carefully calculate their own costs and expenses, and whether they can compete for a place
in this cruel competition.
From the sales of the first half of the year, the sales of trepilimab increased slightly after the approval of the new indication, the sales of sindilimab and carrelizumab should be lower than last year's sales, and tislelizumab is the only competitor that can significantly increase sales, thanks to its as many as 9 approved indications
.
However, due to high R&D and sales expenses, these companies are running large deficits
.
The huge sales team and expenses make these companies basically sell one dollar and lose one dollar, and the per capita cost of Baekje's sales expense / income ratio is higher than 2 or 3,000 people in half a year, reaching a staggering 900,000 per person in half a year, nearly 2 million people a year, which is also a record
in the medical circle.
After the supply-side reform, should the country focus on market-side reform, which is the key bottleneck that restricts China's pharmaceutical development and patients' lack of good medicine, and also hinders the source of future two-wheel drive and innovation
.
Often friends ask which PD-1 is stronger in China, in fact, the results have emerged, and which is the worst is actually obvious
.
Should the national centralized procurement process consider the evaluation of efficacy and cost performance, and whether the pricing can also ensure quantity
.
Biosimilars are another area of involution hardest hit
About 180 domestic pharmaceutical companies have laid out the product research and development of biosimilars, focusing on VEGF, HER2, TNFa and other popular targets
.
There are a total of 10 kinds of bevacizumab drugs approved for marketing in China, and the first generic Qilu Pharmaceutical occupies 55.
34% of the market with
its strong sales network.
Adalimumab has been approved by 6 companies
.
Gene therapy, cell therapy and nucleic acid drugs are also expensive and volatile fields
.
These fields of hot money pouring in in recent years have formed a strange circle, people who do gene therapy to grab antibodies, people who do cell therapy to grab gene therapy, and people who do mRNA to grab everyone
.
The sky-high price offered, one dares to recruit and the other dares to go
.
.
The sky-high price offered, one dares to recruit and the other dares to go
.
When the cold winter comes, the first wave is companies with poor survival adaptability, lack of core technical capabilities, and slow product advancement
.
After all, the era of relying on PPT financing is gone, and the key is to look at hard indicators and deliverables
.
Those C-round dare to bet 7 billion on mRNA is pure gambler psychology, have you remembered the first principles
of investment.
When these top funds squeeze through the heavy injection of ultra-high valuation mRNA companies, I predict that this is the last madness of this wave, and then these top funds will be deeply trapped in the continuous high valuation trap, whether there will be brave takers behind, and whether the secondary market will accept it are big questions
.
.
Investors are also key promoters in this storm, and in the past decade, the soul of many investors and founders has asked which foreign company your project is benchmarking, whether the target has been verified, and whether your team is an MNC executive
.
The loose monetary policy has allowed the world's hot money to pour into China's fast-growing biopharmaceutical field, shaping it
The high-rise license-in model with Chinese characteristics, the homogenization and innovation of fast food, and the unique high-valuation water seller
.
Rat race
The crazy money-burning model and radical R&D layout cater to investors' strategy of continuous financing and packaging and listing
.
In the past ten years, the price of monkeys has risen from less than 10,000 to nearly 200,000, and CMC production costs, labor costs, and clinical resources have risen in such a crazy competition
.
The value of time is interpreted by many people as a matter of seconds, rather than a long-term view of the timeline
.
Today's investors will ask you if you have a new target, but you ask rhetorically, I have a new target, can your fund accept a 90% failure rate, 3-5 years of verification time, the answer is silence
.
There are also big VC investors who say that they only look at companies
with cash flow in the short term.
In the cold winter, everyone is more prudent and rationally evaluates the project and value, and those who dare to start a business now must be firm and confident, with a few brushes
.
Now those who dare to invest in innovative drugs are also more rational and discerning investors, who can accompany the founders for a longer time, look at each other, do the right things, set a good position, perform their own responsibilities, and complement
each other.
What is winter? In the cold winter, if benign reforms can be carried out in the following five directions, they will inject fresh impetus
into biopharmaceuticals.
Chaotic and disorderly entropy increases and competition without guidelines are extreme waste
of resources.
• Innovation ecology
• Innovation ecology• Payment systems
• Payment systems• Regulatory system
• Regulatory system• Medical & pharmaceutical system
• Medical & pharmaceutical system• Patent system
• Patent systemWhat people should panic
What people should panicThe follower wearing the emperor's new clothes is indiscriminate, and Mr.
Nanguo, who is highly paid and incompetent
Businesses that do not adequately anticipate risks and overdraft budgets
Companies and executive executives who are indecisive in strategic decisions and fail repeatedly
If you compare a pharmaceutical company to a forest, the king of the forest, the king of the beasts should be a tiger, but some companies have tigers, old eyes or put little sheep on the
king's seat.
Tigers like loyal dogs the most, even if they are stupid or bark
.
Then there will be cunning foxes, greedy wolves, mighty lions, horses for thousands of miles, honest scalpers, industrious bees and Buddha-like piglets
.
Such an interesting combination, according to its number and proportion of power, determines the development and life of
the company.
How we face winter
How we face winter1: Survival of the fittest, talk to some investors, some biotech that develops below expectations may be left to its own devices
.
Many people say that pharmacy is a marathon, describing its long process and will-to-do grinding
.
I said that this is not a marathon, there are professional and amateur marathons, tens of thousands of clouds, uneven
.
We should use the standard frame of the 100-meter race to select the ten people
who can stand at the starting line.
2: Resource integration, learn from the strong to make up for the weak
.
For example, the proposed large-scale merger of the J Division and the Z Division will form a natural complementarity, and the biggest obstacle is the big
ego
。
3: Survival with broken arms, the fixed capital that Biotech blindly expanded in the past has now become the biggest burden, Kewang, Harbour, Genor, etc.
are dealing with redundant fixed capital and selling projects to replenish blood
.
4: Open source and throttling, financing may be the biggest headache for many bosses, the corresponding cost control is poor, and the financially loose company needs to balance revenue and expenditure, control big money and endogenous moths
.
5: Spin-off function, blind capacity expansion in the past, and huge excess capacity in some leading enterprises, which has become an operational burden
.
This spin-off model also suggested that J Division, but I didn't expect that Cinda took the lead, and vigorously split the CMC department into CDMO, followed by Henlius and Betta
.
This model is not new, and there are successful cases
of AbbVie and BI abroad.
The key is execution and cutting, the transition
from Party A to Party B.
6: Personnel project optimization, individuals have always opposed excessive personnel reduction, resulting in military distraction
.
Project personnel optimization must be open, well-planned, and compensation orderly
.
First of all, we must optimize the top management, starting with the indiscriminate, high-paid and incompetent management
.
Projects are prioritized in stages, and cooperative development and transfer mechanisms
are introduced.
Talking about project cooperation with a certain company, being opened by lions, everyone knows that instead of the project rotten in the pot, it is better to let the good cooker make a big dish and achieve a win-win situation
.
ConclusionIf you make a summary and prediction for the development of Chinese pharmaceuticals, it should be roughly five stages: chaos, warring states, hegemony, inheritance, and to the
world.
We are now in the chaotic period of warring states, and the next integration and competition will determine several strong ones, and after consolidating their position in the subdivision field, they will compete on a larger international stage and become strong or even king
.
We need several rounds of transformation in this process, as well as more courageous and strategic decision-making leaders
.
Takeda, Pfizer, these large factories have grown from small pharmacies for hundreds of years to become today's top pharmaceutical companies
.
The vigorous biosimilars and PD-1s of the past decade have exercised a group of excellent Mesozoic generations, hoping to learn from the previous experience, just like The Billion Dollar
According to Molecule's book, Vertex's early setbacks and failures sparked the boom of biopharmaceuticals in Boston
.
Many of the partners who have worked side by side since returning to Japan have started their entrepreneurial careers, so I wish you all the best of luck
.
Ten years from now, we will also write a book of China's billion drug molecules
.
