Successive introduction of Chinese candidate substances by global big pharma... Advance payment more than doubled
Overlapping with ADC and double antibody K Bio… 25% target for world's first new drugs by 2030
Chinese biotech is shedding the ‘chaser’ tag. Last year, the size of technology export contracts for bio companies in the Greater China region, including China, reached a record high of $137.7 billion. Global pharmaceutical companies such as Novartis, Novo Nordisk, and Pfizer are paying hundreds of millions of dollars in advance payments to secure Chinese new drug candidates.
The Chinese government's goals are higher. They announced that they will increase the global proportion of first-in-class (FIC) domestically developed new drugs, that is, the world's first new drugs with new targets or mechanisms of action, to more than 25% by 2030. The innovative new drug industry grows at an average annual rate of more than 20%.
What the domestic bio industry should pay attention to is the growing technology exports from China. It largely overlaps with technologies that RigaChem Bio and ABL Bio have achieved overseas, such as antibody drug conjugates (ADC) and dual/multiple antibodies. China is rapidly increasing its presence in the technology export competition against global big pharma.
Technology exports amount to $137.7 billion... 10 times that of 2021
The ‘Pharmaceutical Industry Development Plan for 2026-2030’ released by 10 ministries, including China’s Ministry of Industry and Information Technology, on the 18th of last month includes a plan to increase the global share of FIC new drugs to more than 25% by 2030.
The goal is aggressive. The innovative new drug industry presented an average annual growth rate of more than 20%, 50 pharmaceutical companies with annual sales of more than 10 billion yuan, and 5 drugs with global sales of more than $1 billion.
The technology trading market has already grown rapidly. According to Reuters, the size of technology export contracts signed by bio companies in the Greater China region, including China, last year amounted to $137.7 billion, approximately 10 times the amount in 2021.
This year, not only the contract size but also the advance payment increased. The average contract size per case was $1.3 billion, an increase of 76% from the previous year, and the average advance payment more than doubled to $77.7 million.
The contract Novartis signed with China's Avogen Bioscience on the 2nd of this month is worth up to $7.8 billion. An upfront payment of $575 million will be made in exchange for the mRNA-based CD3×CD19 T cell engager ABO2203 and additional candidate material options.
On the 29th of last month, Novo Nordisk selected Jiangsu Hengrui's once-weekly oral GLP-1/GIP dual agonist HRS-1596. This is a global right excluding mainland China, Hong Kong, Macau, and Taiwan. If you add the development and sales milestones to the $300 million advance payment, the total is up to $2.6 billion.
Pfizer previously signed a contract worth up to $10.5 billion with Innovent Biologics in May. 12 programs, including ADC and multi-specific antibodies, were bundled together. The advance payment also amounted to $650 million.
Just a few years ago, rapid development speed and low costs were cited as the strengths of Chinese biotechnology. In recent contracts, the advance payment is changing.
ADC and double antibody overlap… Markets like K-Bio
The fields in which Chinese companies win large contracts also overlap with the main technologies of domestic bio companies. Representative examples include ADC and dual/multiple antibodies.
RigaChem Bio has continued to export technology to global pharmaceutical companies based on its ADC platform and candidate materials. Recently, an increasing number of global pharmaceutical companies are purchasing ADC candidates in China.
For double and multiple antibodies, there is ABL Bio. ABL Bio has signed technology export contracts with Sanofi, GSK, etc. based on the double antibody platform. The multi-specific antibody program was also included in the $10.5 billion contract Pfizer signed with Innovent last May.
Alteogen's focus is different from ADCs and bispecific antibodies, where there is significant competition from Chinese companies. We have the ALT-B4 platform, which converts intravenous (IV) drugs into subcutaneous (SC) injections. The Keytruda subcutaneous injection formulation using this technology is being commercialized in major markets, starting with the United States. Last month, an option and licensing contract worth up to $3.223 billion was signed with Novartis.
Domestic companies' strengths include the experience and data they have accumulated during global clinical trials and technology transfer. Officials from Daiichi Sankyo, Johnson & Johnson, and Boehringer Ingelheim, who attended the Hankyung Bioinsight Forum last February, also highly evaluated the technological capabilities and data completeness of domestic bio companies.
As the number of large contracts from Chinese companies increases, the number of candidates for Big Pharma to review has also increased. In particular, ADC and dual/multiple antibodies are areas in which domestic companies have achieved early results in technology exports. As Chinese companies rapidly increase contract size and advance payments in the same field, competition is becoming more intense. Domestic companies are also competing with Chinese companies not only on technology but also on clinical data, development speed, and contract terms.
