Shanghai’s innovative drugs speed up ＂going to Southeast Asia＂, not only winning the European and American drug certification, but also accelerating the layout in emerging countries’ markets 2024-04-0

    Reporter Liu Huiyu Wu Danlu

    In another year’s earnings season, there are many highlights in the "transcripts" of Shanghai pharmaceutical companies this year. Before that, Fuhong Hanlin and Hutchison turned losses into profits, and after that, the losses of Junshi Bio narrowed, and the capital flow of pharmaceutical companies improved greatly.

    Behind the gratifying performance, the increase in profits of pharmaceutical companies has its commonality. Looking closely at the financial report, we can find that many enterprises accelerated the process of going to sea in 2023, not only won the drug certification in Europe and America, but also accelerated the marketing layout in emerging markets such as Southeast Asia.

    This is also not just the choice of Shanghai pharmaceutical companies. PricewaterhouseCoopers 2015— The report Review and Prospect of China Enterprises’ Investment in Medical Industry in Southeast Asia in 2023 shows that there were 13 direct investment events of China enterprises in the medical market in Southeast Asia last year, double the previous year. After a round of "certification fever in Europe and America", the domestic biomedical industry is putting on a new version of "Going to South Asia", and gradually expanding the brand influence of China pharmaceutical companies in emerging countries by authorizing them to go to sea and building their own channels, so as to truly realize the transformation from "OEM" to "multinational pharmaceutical companies".

    "Lower Nanyang" aims at considerable potential demand

    Since last year, many domestic head pharmaceutical companies have stormed the European and American drug certification, and even the phenomenon of PD-1 innovative drugs landing in the European and American markets has appeared. The main reason is that the domestic innovative drug track is too crowded and the development space is limited. Pharmaceutical companies can quickly realize the commercialization of their products by "going out to sea".

    With the passage of time, after completing the drug certification in Europe and America, domestic pharmaceutical companies gradually began to deploy a number of emerging markets around the world, and Southeast Asia is one of them.

    In this wave, many Shanghai pharmaceutical companies are taking action. Just in early March this year, Fuhong Hanlin announced that Hanquyou was approved for listing in Thailand and the Philippines. This product was the first Sino-European double-batch monoclonal antibody drug independently developed by China, and then it was successfully approved for listing in 40 countries and regions such as Singapore, Cambodia, Argentina and Saudi Arabia.

    In addition, Shanghai’s largest pharmaceutical company, Shanghai Pharmaceutical Group, also has many layouts in Southeast Asia. On March 29th, Shanghai Pharmaceutical Co., Ltd. stated in its 2023 annual report that at present, Shanghai Pharmaceutical Co., Ltd. has completed the listing of its own products, completed the introduction of related product lines and achieved sales revenue; Shanghai Pharmaceutical Singapore Company completed the introduction of two products to achieve stable operation; In the Philippine market, access to medicines has also made a breakthrough, and some products are planned to be listed in the near future.

    Why is the Southeast Asian market so popular? China enterprises have advantages in geography and culture, but more importantly, the potential demand in the Southeast Asian market is considerable.

    Southeast Asia has a dense population and a rapid economic growth, and there are still many unmet medical needs in the regional market. Although the total volume of the pharmaceutical market in Southeast Asia is far less than that in Europe and America, the data shows that from 2022 to — In 2026, the average five-year compound growth rate of the pharmaceutical market in emerging market countries is 5%— 8%, the five-year compound growth rate of developed market countries is only 2%— 5%。 "If we turn a blind eye to it because its current market is small, we will lose this market because of its high growth in the next three or five years." Li Ning, vice chairman of Junshi Bio, said.

    In fierce competition, opportunities are still innovative.

    Shanghai pharmaceutical companies "go to Southeast Asia" to find opportunities, but they actually face many challenges.

    There is still a big gap between the comprehensive strength of biomedical enterprises in China and the international first-class level. Even in the Southeast Asian market dominated by developing countries, it is not easy for China pharmaceutical companies to gain market share. According to the analysis of PricewaterhouseCoopers, the United States and Japan have always been the main participants in medical investment in the Southeast Asian market. In the field of generic drugs, the price advantages of Indian and Pakistani products are also very obvious. These countries are more influential in the Southeast Asian market than China.

    In order to gain market share from fierce competition, the opportunities of domestic pharmaceutical companies are still innovative. By improving technical strength and manufacturing capacity, domestic pharmaceutical companies have more advantages in "first imitation drugs" and can get rid of the homogenization competition of generic drugs to a certain extent. Yan Jun, general manager of Shanghai Pharmaceutical International Business Department, said that in many emerging markets, the competition for "the first imitation drug" is not so fierce. When the patent protection period of the original drug expires, the market will need some time to precipitate before it can produce imitation products, which gives domestic pharmaceutical companies a chance. "With the gradual expansion of investment in the biomedical industry and the improvement of technical strength, it is now possible to achieve a faster market response." Yan Jun introduced that many domestic pharmaceutical companies are now doing "first imitation drugs" in developed markets, and then quickly promoted to Southeast Asia, the Middle East, North Africa and other markets to better achieve market entry.

    In addition to high-end generic drugs, more and more domestic pharmaceutical companies are beginning to consider expanding the innovative drug market in Southeast Asia. For example, Junshi Bio plans to export its trepril monoclonal antibody exported to the United States and a number of clinical candidate products to Southeast Asia. "The innovation ability of domestic pharmaceutical companies is stronger than that of Indian or Southeast Asian companies, which is our advantage." Li Ning said that patented products such as bio-similar drugs or innovative drugs have greater market space in Southeast Asia. At the same time, from the commercial point of view, the marginal profit of innovative drugs is also higher and the investment effect is better. This is why many domestic pharmaceutical companies choose to go to Europe and the United States to complete high-standard registration first, and then go public in Southeast Asia and other regions.

    Upstream of the downstream value chain of the industrial chain

    The smell of wine is afraid of the depth of the alley. How to make China’s good drugs really make an impact?

    At present, there are two mainstream modes of going to sea, borrowing a boat and building a boat. "Ship" is the marketing network. In layman’s terms, the former authorizes other companies to conduct commercial marketing overseas, while the latter relies on its own marketing network to conduct overseas direct marketing.

    Junshi Pharmaceutical is trying both strategies. In Singapore, due to the similar cultural environment and promotion environment, Junshi Bio plans to carry out independent commercial operation and use the brand registered in the United States for direct sales. In nine other countries in Southeast Asia, cooperative sales are chosen. In March last year, Junshi Bio and Kanglian Dashengji held a signing ceremony in Singapore. The two sides announced that they will set up a joint venture company to jointly develop and commercialize PD-1 trepril monoclonal antibody in nine countries in Southeast Asia.

    Borrowing a boat to go to sea is also the way that most China pharmaceutical companies will choose to go to sea. Compared with consumer goods, drug export has its particularity, and non-uniform standards are the core difficulty, which is more obvious in the fragmented Southeast Asian market.

    In more than ten years’ practice of borrowing ships from Shanghai Pharmaceutical Group, Yan Jun realized that if it is only a simple production enterprise, it is impossible to directly perceive the market and it is difficult to establish brand value. Even if high-quality products are developed, only the initial commercial rights can be obtained.

    In 2022, Shanghai Pharmaceutical Thailand Co., Ltd. and Shanghai Pharmaceutical Singapore Joint Venture Company were formally established, and in 2023, Shanghai Pharmaceutical United Arab Emirates Company was established. These three overseas companies will unite with the local entity companies with the original layout in Southeast Asia and Africa, and rely on the Shanghai pharmaceutical product pipeline to lay out the local marketing network and expand the company’s overseas business.

    "Now, we hope to go downstream of the industrial chain and upstream of the value chain." Yan Jun said that Shanghai Pharmaceutical Group is actively exploring clinical trials and registration in overseas markets, and hopes to become the chain owner of the biomedical industry and bring more and better China pharmaceutical products to a wider market. In the next three years, it is estimated that more than 50 products from other China pharmaceutical companies will be listed in the Southeast Asian market through drug distribution channels.