MSQ Viewpoints
We expect cross-border licensing deals to maintain its growth momentum in 2023. Small and medium-sized biotech companies are becoming more prudent with in-licensing opportunities, and out-licensing should continue as an ongoing trend for Chinese biopharma. Ophthalmology and infectious disease areas should continue to grow, as neurology is emerging. Chinese biotech companies are showing more interest in therapeutic areas other than just oncology. Chinese companies will continue to search for true cutting-edge tech to differentiate in the market. Collaboration between Chinese companies and MNCs are becoming more frequent and flexible, as R&D capabilities of Chinese companies are being better recognized. In our 2023 Outlook, we include 2022 highlights, analysis and insights on cross-border in-out licensing deals, China-originated healthcare company IPOs, relevant case studies - ie Beigene’s Zanubrutinib head-to-head win over Ibrutinib, innovative ways to raise funds, and updates on new NMPA published regulations.
We expect cross-border licensing deals to maintain its growth momentum in 2023. Small and medium-sized biotech companies are becoming more prudent with in-licensing opportunities, and out-licensing should continue as an ongoing trend for Chinese biopharma. Ophthalmology and infectious disease areas should continue to grow, as neurology is emerging. Chinese biotech companies are showing more interest in therapeutic areas other than just oncology. Chinese companies will continue to search for true cutting-edge tech to differentiate in the market. Collaboration between Chinese companies and MNCs are becoming more frequent and flexible, as R&D capabilities of Chinese companies are being better recognized. In our 2023 Outlook, we include 2022 highlights, analysis and insights on cross-border in-out licensing deals, China-originated healthcare company IPOs, relevant case studies - ie Beigene’s Zanubrutinib head-to-head win over Ibrutinib, innovative ways to raise funds, and updates on new NMPA published regulations.
In China, 5% of adults have been diagnosed with autoimmune diseases. The number of patients is estimated to be 3x the US patient population. The market for autoimmune disease drugs in China is experiencing rapid growth. The major drivers include the improvement of access to care, diseases awareness, diagnostic technology, and wide availability of advanced therapeutics.
In the last several years, Chinese pharmaceutical and biotechnology companies have transformed the ways patients access therapies and the way industry develops medicines. As their capabilities advance and they set their sights on larger markets, they face an inevitable question: do they focus on the increasing competition at home or the even bigger, global market for new and innovative drugs.
The National Medical Products Administration (NMPA) in China approved a wide variety of new drugs in 2021, while overcoming a number of challenges in responding to the COVID-19 pandemic. Of note, among the 64 new drugs approved, 28 are domestically developed drugs, and this is a clear sign that the home-grown innovation in China is rapidly advancing.
Western and Asia-Pacific companies have successfully struck a dozen major licensing deals with Chinese companies in the first two months of 2022. Due to the need for R&D and utilization licensing to fill unmet disease treatment gaps, we believe in-licensing is expected to dominate cross-border transactions in the next 3-5 years, as out-licensing from China continues as a secular growth trend as well. China’s leading biopharma is also delivering on successful partnered FDA approvals and global collaborations
Feb 28, 2022 is the 15th Rare Disease Day. Over 7,000 rare diseases affect more than 300 million people worldwide. China is estimated to have the largest number of rare disease patients in the world. However, the management of rare disease in China is far from satisfactory. The unmet needs of rare disease treatment in China create tremendous market potential. In recent years, policies spark new opportunities of rare disease market in China. Rare disease market in China is expected to grow faster in the near future.
On Feb. 10th, 2022, after a 5-hour live hearing, by a vote of 14-1, FDA’s Oncologic Drugs Advisory Committee (ODAC) recommended against approving Innovent (HK: 1801.HK; Mkt Cap US$6.04bn) and Eli Lilly’s (NYSE: LLY; Mkt Cap US$232.5bn) anti-PD-1 inhibitor Sintilimab.
With the booming of biopharma in China, most of the industry R&D and external collaboration efforts are concentrated in oncology, immuno-oncology in particular. As the intense competition heats up, for example among the PD-1 checkpoint inhibitors, we should keep in mind that no matter how big the cake is, there are only enough pieces, big or small, for a handful of players to share. Thus, as a drug developer, it is wise to be open-minded to embrace other novel and innovative opportunities, both within oncology and other therapeutic areas. Ophthalmic space is an excellent alternative.
Our MSQ’s viewpoint for China Biopharma 2022 deal outlook will likely see investments in high growth areas across all the subsectors. Pharma is expected to continue investing in oncology as well as cell and gene therapy, but also in other areas such as neurology and cardiology as developments there attract greater interest. Technologies such as mRNA /RNAi have already begun to gain more traction. Larger companies will look to further diversify their portfolios and into innovative technology platforms. As China Biopharma grows, more global deals, in addition to gaining regional rights, will be expected.
China biopharma kicked off 2021 by grabbing Nasdaq’s first biotech IPO listing (Ticker: GRCL) on January 8th, followed by strong funding influx both domestically and from ex-China. The cross-border licensing activities kept up with good momentum, opening a new era for China biopharma deals, transition from “China for China”, to “China for global”. Looking forward, we expect China biopharma industry in 2021 H2 to grow rapidly, and play a significant role at the global stage.
In 2020, the global biopharma industry was growing strong, especially the China biopharma industry which has made a breakthrough year with strong capital investment in the private and public market, and global transactions of license in/out driven by local innovation-focused policies. We expect that the China biopharma industry in 2021 will keep the steady growth and will play a more integrated role for global new drug development.
There are compelling opportunities to bring innovative drugs into China’s biopharmaceutical market from the perspectives of the regulatory landscape, market access, reimbursement system, and intellectual property protection.
In this Healthcare newsletter, we introduce COVID-19, Public Perception of Pandemic Infections, and Western Perspective of Other Prevalent Infectious Diseases in China.
In this month’s China Market Healthcare newsletter, we introduce China’s secondary market growth opportunities post our China’s Healthcare Equity Capital Market’s Commentary.
On Oct 15, 2018, to lighten the burden of national basic medical insurance, the General Office of the State Council, National Healthcare Security Administration, National Health Commission, and National Medical Products Administration together established the Joint Procurement Office – published the Paper on Centralized Drug Procurement in “4+7 Cities”.
As the living standard in China has been increasing steadily with a growing aging population, the nutraceutical market in China is expanding at an unprecedented speed. In China, nutraceutical products are regulated by the National Medical Products Administration (NMPA), governed by the State Administration for Market Regulation (SAMR). The registered nutraceutical products are eligible to use the “blue hat” icon on the packaging and allowed to claim the approved functions and benefits.