[Transfer] From Biotech to Biopharma, how far is the road?

[Transfer] From Biotech to Biopharma, how far is the road?

Source: Same freehand

Growing into BioPharma is the dream of most local Biotech. But for the developed US market, only a few Biotech companies have finally transformed successfully.

On May 22, Professor Zhu Xun, Honorary Chairman of the Honor of the New Medicine Club, as a guest freehand live broadcast room, discussed with Dr. Cheng Zengjiang, the sponsor of freehand, how to grow from Biotech to Biopharm, China and the United States Biotech, and traditional Chinese medicines. Topics such as transformation and upgrading of enterprises.

1

The difference between biotech and biopharm

From Biotech to Biopharma is a dream that most entrepreneurs have, but it is not easy to achieve this goal. Whether it is an entrepreneur or an investor, since you are in this field, you should think about self -positioning, reaching goals, and taking the path.

First clarify the definition of Biotech and Biopharma.

Biotech, based on life science, uses advanced scientific principles and engineering technology as a means, uses organisms (microorganisms, animal and plant tissues, etc.) or its components to process biomass materials. Technology of a certain purpose.

In China, BIOTECH generally refers to pharmaceutical and biotechnology companies, especially the establishment of newly established, with the main purpose of the development of innovative drugs, and has not yet completed a company with a specific stage of manufacturing and profit support from R & D enterprises. This covers both macromium and small molecules, and there are many emerging technologies. In short, we collect those medical companies that are basically not profitable and involved in the pharmaceutical industry chain, collectively referred to as BIOTECH.

Biopharma, also known as Pharmaceuticals, is also called BigPharma. However, no matter how, such pharmaceutical companies need to cover the complete pharmaceutical industry chain, both R & D and production and market sales. The most important thing is that there is a positive cash flow, that is, sales and sales profits.

Since it involves the industrial chain, its core competitiveness must be clear. For BIOTECH, the core competitiveness is basically technical development capabilities, including technology, platforms and products. For Biopharma, in addition to the core capabilities of Biotech, it also needs to have the ability to control the market.

In any field, there must be a big threshold from research and development to the market. This is especially true in the field of pharmaceuticals, because drugs are special products.

First of all, medicines need to be approved in front. The United States has FDAs. China has a special pharmaceutical institution and procedures. The pre -approval has set up unprecedented high thresholds for a certain extent for a certain extent. But even if the product is successfully approved to enter the market, it is far from successful. In addition to as a consumer patient, special groups such as hospitals and doctors are needed, and the participation of external institutions such as medical insurance and commercial newspapers is needed.

Most innovative drugs are prescription medicines, and the main sales terminals are hospitals. However, the hospital was not responsible for opening the prescription, and the prescription was prescribed by the doctor. There are more than 3,000 three -level hospitals across the country, but doctors may be millions, so the role of doctors is more core.

During the use of prescriptions, there will be a special participation of medical insurance. In other words, consumers and payers do not completely overlap to a certain extent. Consumers can partially pay or even do not pay.

The particularity of the medicine is particularly prominent under different legal framework. Different countries, even different periods of the same country, have different drug specifications.

2

The transformation is not easy, "leek" is easy to cut

New drugs in the regulatory market have formed a high -investment and high -profile business model. It relies on scientific, stable, standardized, and transparent regulatory systems, strict market access and intellectual property protection, and mature and reasonable medical insurance payment systems as basic guarantees.

my country has not had strict intellectual property protection before, and it is still incomplete now, so it has caused homogeneous competition. In some special circumstances, such as the landmark of the year's landmarks, no new batch is followed in the future; Chinese medicine protection varieties; administrative protection, etc., even if there is no patent, it can still form a market exclusive.

These protection policies are now gradually canceled. In the future, we must move towards a standardized market. We must have strict intellectual property protection policies. It is not only to protect IP, but also to protect data. At the same time, a certain patent extension and compensation mechanism must be formulated.

In addition, reasonable medical insurance payment is also needed, which is a related element of the entire country as the development of the endogenous market. Really entering the pharmaceutical industry chain, especially in the production and sales stage, is really under great pressure.

China's pharmaceutical market has fallen into a vicious circle of "low investment-low returns". And this wave of BIOTECH entrepreneurship has the opportunity to form a high-investment and high return profit model, but unfortunately, local pharmaceutical companies have fallen into a "high investment-low return" cycle to a certain extent.

In the past, the pharmaceutical industry was recognized as a relatively monopoly. Although there were thresholds, relatively low costs could enter, so a large number of pharmaceutical factories appeared. Now, the enterprise has high risk and high investment, facing fierce market competition, and has to cut prices. At the same time, a new group of players poured in. China ’s Biotech wants to become Biopharma.

The rapid development of 8-10 years is based on many dividends. The rapid development of local Biotech is not actually relying on the leadership of science and technology, but relying on the replication, imitation, and introduction of overseas gold varieties. The addition of capital makes it more intense. Among the local BIOTECH companies, the largest scale and the most product line, and the potential of one brother is Baiji Shenzhou. But we can also imagine that if Baiji Shenzhou does not have the opportunity to go public in the United States, Hong Kong, and the mainland, can it continue to develop? The wind mouth brings unprecedented opportunities to the development of BIOTECH, but unfortunately the window period is very short.

Therefore, whether it is the wind or the opposite wind, the breeze or the tornado, the most important thing is to be yourself, make yourself a bird, and become the strong in the bird.

Most of our Biotech has not yet completed a preliminary cycle, that is, to truly reach patients from basic research, making the product a gold standard for the medical industry, which will affect the entire patient community. The prosperity of the product line is mostly reflected in the early clinic, and it is not yet known whether the "Death Canyon" that can really go across clinical progress.

From Biotech to Biopharma, there are also "Death Canyon" and more cruel. In this wave of entrepreneurial BIOTECH team, most people have rich research and development experience, but once Biopharma is turned into large -scale production and sales, entrepreneurs enter unfamiliar fields.

At this time, we should consider carefully, what are the reasons for entrepreneurship? For starting a business, what paths can I find?

The path first depends on the position, that is, recognize yourself. Innovative medicine is a game of a few people. Don't take porcelain without diamond diamonds. Think about whether you are knowledge, capital, or resource owner. Only by deeply recognizing your company's genes can we determine the goals that meet their expertise, abilities and resources.

Why do you start a business? Do you make money, make reputation, make influence, or make feelings? I think that when I chose to start a business, I chose to suffer, and I left happiness after leaving my business.

Many of our core entrepreneurs are indeed trapped into this pain -no money, difficulty! Money projects do not go forward, it is difficult! The company does not enter the capital market (IPO), it is difficult! IPO, the market value shrinks sharply, it is difficult! The product is approved for listing (NDA) difficulty, and sales and profits cannot be formed after NDA. For many investors, the "leeks" are cut, but entrepreneurs cannot escape, so I say that entrepreneurs are the largest "leek".

There are many ways to start a business. For BIOTECH, from clinical clinical to NDA, 90%of companies will "die naturally" because innovative drugs are "black swan" incidents. For Chinese innovative pharmaceutical companies, it may face more deaths. For example, now highly homogeneous competition, everyone is "crowded". Some companies are limited by costs, they can't make products, and they "starve to death" in the end, while others have spread their pipelines and finally "die". The product was slow and the competition could not be competitive, which led to "slow death". Even after the announcement of the active results of the I and II periods, some companies suddenly declined, resulting in "accidental death". Some companies will "see the light", "exhaustion" ...

Thirty years of new drug research and development, the connotation of R & D has not changed, but R & D has become more difficult. The new drugs listed after 2010 are basically around 85 points. Generally speaking, the newly listed 90 -point innovation medicine does not play 85 points of generic drugs.

3

Different growth paths of BIOTECH in China and the United States

In the past, Biotech in China was basically the development of the V-I-C model, that is, entrepreneurs mastered certain resources. Whether it was ME-TOO, Biosimilar, License-in or independent research and development, there was IP. With the assistance of CRO enterprises, under the promotion of capital, through virtual innovation, this round of entrepreneurship is completed. Now I propose the V-I-C-P mode, P is Pharmaceuticals, which is combined with traditional pharmaceutical companies.

For companies that have been listed on the IPO, they face the challenge of "turning", that is, we must change from a cost center to a profit center. Many companies are now large companies with a market value and small companies with real value. In order to truly reach the market value of the capital market, companies need to develop smoothly for 8-10 years, so now it is actually an overdraft future.

In 2012, I have reviewed the development of new US new drugs for 60 years. In 60 years, the United States has approved a total of 1,222 new molecular entities. From 1950 to 2012, only 261 (6%) registered more than one new drug, 32 (12%) eventually survived, and the remaining 229 (88%) company companies went bankrupt. In China, 2,300 biomedical parks are now based on a new medicine for each park for ten years. On average, 230 new drugs are also required for a year. is it possible?

During this period, the US R & D model also changed significantly, which still has reference significance for the development of traditional Chinese pharmaceutical companies today.

Since the early 1980s, the share of new drug research and development of large companies has dropped from 75%to 35%, and the number of new drugs owned by small pharmaceutical companies has almost tripled, from 23%to 70%. But now looking at the TOP50 list of global drug sales, it is found that most of the products of large companies are found. Most of the products of small companies flow into large companies by acquisition and mergers.

From 2001 to 2022, the research products increased from less than 6,000 to more than 20,000, but the approval of new drugs did not increase in the same proportion. This means that the failure rate of drug development is higher. Judging from the global approval situation, I have to say that China's new drug research and development has become one of the many denominates. The United States has built a complete, high -investment, high -risk, high -return business model circle, but in the long run, only very few companies can cross the "death canyon", and finally become Biopharma, even BigPharma.

The situation in China is more special. Biotech's development is not driven by science and technology, but relying on overseas technology accumulation and driven by capital.

AMGEN is a successful case from Biotech to Biopharma. From the launch of the nine deaths in the 1980s, to the present state.

The most critical step is that AMGEN separates early scientific and technological entrepreneurs out of management, using the modern corporate system, and the method of professional managers, and officially opened a leap towards BioPharma.

Beginning in the 1990s, AMGEN opened the road of mergers and acquisitions. Among them, Eunisp and Abgenix established the position of AMGEN entering the field of antibody drugs in the future. In 2021, AMGEN's annual revenue was US $ 25.979 billion, and the acquisition of products contributed 15 billion yuan in revenue.

Although many success is difficult to imitate, we can learn from failure.

There is only one standard for measuring the success of innovative drugs, that is, the market share, sales, and profit of the product after the listing ... From the perspective of TOP20, the world's best -selling drugs in 2021, the world's best -selling products in China do not exceed the global The 5%of the market is that China ’s payment of innovative drugs is not enough to support such a high -priced new drug. In addition, it can be found that China's best-selling products and the world's best-selling products in the first 5-10 years are high, mainly because the patent of new drugs has expired and domestic imitation began.

The cost of innovative drugs not only has a huge lethality for traditional pharmaceutical companies. For example, Hengrui, although there are more than a dozen products sold and sold, and the proportion of innovative drugs has also increased year by year, but profits have been declining.

China's innovative medicines must not only cross the dead canyon, but also have to turn over two mountains and cross three large rivers. The two mountains are prices and medical insurance, and the three big rivers are bidding, admission, and prescriptions. Overseas pharmaceutical companies do not need to consider these difficulties, but Chinese pharmaceutical companies must consider.

The choice of entrepreneurial strategy is actually the process of judgment. Among them, the data is very important. How to abstract information from the miscellaneous data is more important.

Converting information and data into information requires professional teams and sufficient experience to support, so as to form judgment and decision -making. In terms of antibody target layout, most of China is concentrated in the top 12%, and the risk of patent medicine has decreased, but the risk of commercialization has increased.

4

Transformation and upgrading of traditional Chinese pharmaceutical companies

Although the capital market is not good in 2021, there is still a trend. In 2021, the three major terminals in my country -public hospitals, retail pharmacies and public primary medical care increased year -on -year, an increase of 8%. This shows that many companies still make money in the field of medicine. In addition, China's per capita medical expenses are low in GDP and have a lot of room for growth.

Compared with other countries, there is still a great chance of innovative drugs in my country. After this round of "steaming birds", the growth of the Chinese pharmaceutical market in the future will be driven by the development of new drugs, and the generic drug industry will enter the upgrade and integration.

In the next ten years, China will complete the comprehensive reconstruction of the pharmaceutical industry. The changes in the business model will make the reconstruction of the structure of the pharmaceutical company, the advantages of the all -round large company and the characteristic small company, and the variety pattern of the drug will also be reshaped from sales orientation to product orientation. The era of low thresholds for medicines has ended, and competition in various segments has intensified and showing a gathering trend. Niche areas that have not been met with clinical needs will develop rapidly.

We can see that Chinese manufacturing is all over the world, only the exception of medicine, behind it because we do not consume medical consumption with international standards. After the baptism of medical consumption, it will bring Chinese manufacturing and come to China to create. Of course, the trilogy may be staged at the same time.

Many of our Biotech companies now are building our own production bases whether they have entered the market or to enter the market. This has brought another risk, because this bios of China have entered the Generic stage. Now the product is highly homogeneous competition, and the cost dispute will be carried out in the future. If you do not achieve advanced technologies worldwide, today's investment will become a future sunk cost.

Hengrui is a typical case. On June 3, 2020, Hengrui's total market value was 426.5 billion yuan. By December 31, in less than 7 months, the total market value reached 594.2 billion yuan, an increase of nearly 170 billion yuan. In 2018, the largest number of clinical trials in China is Hengrui. In the field of major elements, although Hengrui entered late, he still led it with 15 clinical trials, and nearly 10 registered registered in the second place.

At that time, Hengrui's R & D product line and even the hottest BIOTECH pipeline at that time, and there were also products on sale, which could reach 20 billion yuan in sales each year, with nearly 5 billion yuan in profits. The market misunderstood Hengrui. I don't know if it is from the perspective of BIOTECH or standing from the perspective of traditional pharmaceutical companies to evaluate it. Hengrui has now changed. In the context of large global companies, Hengrui has rarely rely on financing, and only supports its own research and development by its own profit.

However, it never expected that innovative drugs could not make up for the loss of generic drugs, and did not expect to compete with a large amount of capital of Biotech. Homogeneous competition is the price of price. Hengrui's ideas and ideas are right, and only some problems have occurred in the choice of path.

Fortunately, we have seen that Hengrui is changing, whether it is internationalization or cooperation with capital, it is a very good start. So I think Hengrui will definitely be reborn.

5

Borrowing arrows in the grass boat, Chinese manufacturing abroad

Some people are saying that they will not make big products. They will rather make a few billion -dollar products, which will accumulate less and more, and can share the risk of decline in product revenue caused by the collection. The direction is right, but the actual operation is very difficult. It is not easy for products to be approved, especially for these small Biotech companies that rely on capital.

From a global perspective, there are not many examples of successful transformations from Biotech to Biopharma. The situation in China is special, but it has occurred. The first batch of pioneers in China was entrepreneurial in the 1990s, such as the Changchun Gold Championship, such as the Three Live Pharmaceuticals. But now the logic has changed. (Reference reading: Innovative drug research and development ｜ Break the logic of yesterday, grasp today's logic, and understand the logic of the future)

China's current external environment has undergone tremendous changes, but there are a few points that can be determined. First, the Biotech of China will have sprung up like a rain, because the money is excess, but the vast majority of BIOTECH is difficult to go on the market. Even if you are listed, you still have to face the test of commercialization.

Entrepreneurship is necessary, but the path of entrepreneurship must be considered. In the pharmaceutical industry, if you can't become outstanding, you will become a denominator. My suggestion is that if you look at the case more, success and failure can be enlightened.

Choosing is more important than hard work. China's market is not enough to support the development of innovative drugs. If you do it, you must consider the global market. Otherwise, you will cooperate with other companies with your own technical platform.

China wants to truly internationalization in the field of medicine, and it will not be innovative medicines in the short term. Our wave of Biotech is actually not internationally competitive, and has evolved into BIO GENERIC in the inside, and the space for subsequent survival has been greatly reduced. Only when it enters Chinese manufacturing, the production standards and quality are rapidly improved through Chinese consumption, and production costs will be greatly reduced to achieve the Chinese manufacturing of drugs. On the basis of achieving pharmaceutical China, it has gradually achieved the creation of Chinese new drugs.

If the first two steps are bypassed, because of the lack of strong scientific capabilities and innovative foundations now, if you want to enter China to create large -scale directly, it will be difficult. But I believe that with the tide of Chinese consumption and Chinese manufacturing, Chinese manufacturing will definitely come.

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