Recently, semi-annual reports of domestic and foreign pharmaceutical companies have been disclosed one after another. From the data released by major companies, we put aside the highly anticipated revenue data and focus on the R&D investment of pharmaceutical companies. Leaving aside the huge gap of R&D investment amount between Chinese head pharmaceutical companies and the international leading pharmaceutical companies in the past, according to the annual report data of listed domestic pharmaceutical companies, the recent few years have seen a continuous increase of R&D expenses of domestic pharmaceutical companies, but most of the expenses are invested in the field of biopharmaceuticals and a few head chemical pharmaceuticals.
Recently, semi-annual reports of domestic and foreign pharmaceutical companies have been disclosed one after another. From the data released by major companies, we put aside the highly anticipated revenue data and focus on the R&D investment of pharmaceutical companies. Among multinational pharmaceutical companies, we can see that Roche ranks first in R&D expenditure with an investment of USD 7.75 billion (the R&D expenses account for 23.86%). According to Roche's annual report data in recent years and the list of R&D investment of global pharmaceutical companies published in recent years, we can see that in recent years, Roche's expenditure on R&D has been ranked first in the world: in 2017, it was 11.8 billion US dollars, ranking first in the world; in 2018, it was 10.8 billion US dollars, ranking first in the world; in 2019, it was as high as 12.31 billion US dollars, accounting for 19.0% of its total revenue. In 2020, R&D investment of Roche was 13 billion Swiss francs (about 13.85 billion US dollars), ranking first in the world and accounting for 22.2% of R&D investment. From the above data, it can be seen that Roche, as a representative company of multinational pharmaceutical companies, invests a lot in R&D, and its R&D expenditure ranks first for many years. The core idea of this business strategy is to attach importance to R&D, pursue the development of new products, and increase strength for the sustainable development of enterprises and strong control over the market.
The pharmaceutical industry is a knowledge-intensive industry, and R&D innovation is the core theme of pharmaceutical companies and the fundamental guarantee for sustainable vitality. R&D investment is not only an important factor to measure the strength and potential of R&D innovation, but also one of the main influencing factors of pharmaceutical R&D output, while the level of R&D fundamentally determines the international competitiveness of the whole industry. In recent years, the global R&D expenditure of the pharmaceutical industry has maintained steady growth, and the global drug R&D is increasingly popular. According to incomplete statistics, the global drug R&D expenditure reached USD182 billion in 2019. New molecular drugs are constantly appearing in the fields of the treatment of cancer, diabetes, cognitive impairment, rare diseases, inflammation and others. Biomedicine has entered a high-speed development stage. Diagnostic techniques and therapies are closely combined and complement each other. Monoclonal antibody, immunotherapy, cell therapy, gene therapy, stem cell therapy and other technologies and drugs are constantly emerging and gradually maturing. New progress has been made in the fundamental frontier disciplines of medicine. Especially in the severe situation of COVID-19 from 2020 to 2021, the fact that the advent of test kits, preventive drugs (vaccines) and therapeutic drugs has further proven the significance of strengthening the construction of fundamental frontier disciplines.
Looking back at the R&D investment of domestic medical surgical supply companies, people in the industry feel pressure. Leaving aside the huge gap of R&D investment amount between Chinese head pharmaceutical companies and the international leading pharmaceutical companies in the past, according to the annual report data of listed domestic pharmaceutical companies, the recent few years have seen a continuous increase of R&D expenses of domestic pharmaceutical companies, but most of the expenses are invested in the field of biopharmaceuticals and a few head chemical pharmaceuticals. For a long time, the major products in domestic pharmaceutical industry have always been generic drugs and traditional Chinese medicines, and biopharmaceuticals are in the ascendant. In recent ten years, domestic biopharmaceuticals have entered the fast lane of development. On the whole, although the R&D investment of pharmaceutical companies is on the rise with the popularity of biomedicine and collecting generic drugs and encouraging policies for innovative drugs, there is still a big gap between domestic and global R&D investment of drugs.
First of all, the Chinese medicine R&D orientation of domestic Chinese medicine enterprises, as a traditional Chinese medicine industry, is not very clear, and the innovation of Chinese medicine is still at the stage of dosage form improvement and process optimization with the product innovation lagging behind. From the recently published semi-annual report, we can see that in the first half of this year, the R&D investment of more than 70 listed traditional Chinese medicine enterprises accounted for less than 1% of the revenue, and only a dozen of them exceeded 5%. The best ones are Kanion Pharmaceutical (the R&D investment is about 217 million yuan, which accounts for 12.25% of the revenue), and Guilin Sanjin (the R&D investment is about 104 million yuan, which accounts for 11.87% of the revenue). Besides the lack of investment in R&D, the backwardness in the field of traditional Chinese medicine can also be reflected in pharmaceutical equipment and analytical resources, the quality and ability training of technicians, and the strategic layout of pharmaceutical enterprises, which are obviously insufficient compared with international famous pharmaceutical companies and the fierce competition pattern in the 21st century.
In the field of domestic chemical medicine and biopharmaceuticals, the top five domestic pharmaceutical companies with the most R&D investments in 2020 are: BeiGene (8.452 billion yuan), Hengrui Medicine (4.989 billion yuan), CSPC (2.89 billion yuan), Sino Biopharm (2.853 billion yuan) and Fosun Pharma (2.795 billion yuan). Next we will focus on analyzing the R&D investment of these pharmaceutical companies in the first half of 2021.
BeiGene
BeiGene is a bio pharmaceuticals company focusing on the research, commercialization and production of innovative cancer drugs. In the first half of 2021, BeiGene achieved a total product revenue of USD 245 million, a year-on-year increase of 107.95%. At the same time, in the first half of 2021, the R&D expenditure was USD 677 million, up by 14.66% year-on-year, which was mainly due to the expansion of the company's global development institutions and clinical and preclinical candidate drugs, and continued efforts to internalize research and clinical trials. It is reported that BeiGene currently has about 50 kinds of drugs and candidate drugs in commercial stage or clinical development stage, including 10 approved drugs, 2 drugs to be approved and more than 30 drugs in clinical development stage. From the above data, it can be predicted that the next 5-10 years will be the intensive harvest period of BeiGene.
Hengrui Medicine
The main businesses of Hengrui Medicine involve drug R&D, production and sales, and its main products cover many fields such as anti-tumor drugs, surgical anesthesia drugs, contrast media, special infusion, cardiovascular drugs, etc. In the first half of 2021, Hengrui Medicine achieved a revenue of 13.298 billion yuan, a year-on-year increase of 17.58%. At the same time, the R&D investment in the first half of the year was 2.581 billion yuan, up nearly 40% year-on-year. This amount accounted for 19.41% of sales revenue, hitting a new high.
Hengrui Medicine is a representative enterprise of medical innovation in China, and its medical innovation is in the harvest period. The number of innovative drugs being researched by Hengrui Medicine ranks among the top in China. At present, 8 innovative drugs such as Imrecoxib, Apatinib, Mecapegfilgrastim, Pyrotinib, Camrelizumab, Remimazolam Tosilate, Risperidone, and Herombopag have been approved for marketing. The company has dozens of innovative drugs undergoing clinical trials, and supports the development of post-marketing clinical research. It continues to innovate and develop in the fields of anti-tumor drugs, surgical drugs, endocrine therapy drugs, cardiovascular drugs, anti-infective drugs and rheumatism immunity drugs.
In addition, in the first half of the year, Jiangsu Hengrui Medicine obtained 5 production approvals for innovative pharmaceutical preparations, 9 production approvals for generic drugs preparations, 41 clinical approvals for drugs and consistency evaluation approvals for 10 varieties, completed the application for consistency evaluation of 2 products, and carried out more than 240 clinical projects at home and abroad. At the same time, 131 new domestic patent applications and 39 new international PCT applications were submitted. 64 domestic authorizations and 59 foreign authorizations were obtained. In the first half of 2021, Hengrui faced various pressures, and the market also gave feedback on layoffs and policy adjustments of Hengrui for many times. However, according to the comprehensive strength, the adjustment cycle of Hengrui will not be very long. It is estimated that Hengrui Medicine will once again become the leading enterprise in China's pharmaceutical industry in the second half of 2021 or the first half of 2022.
CSPC
In the first half of 2021, CSPC achieved a sales revenue of 13.82 billion yuan, up 9.8% year-on-year, and the net profit was 3.06 billion yuan, up 32.3% year-on-year. The R&D expenses reached a new high of 1.61 billion yuan, up 11.0% year-on-year.
CSPC is one of the largest production bases of antibiotics and vitamins in the world. For many years, it has been insisting on innovative development. The key to its sustainable development is the transformation of development focus from raw medicine to innovative drugs. Now, CSPC has transformed into one of the most innovative pharmaceutical companies. At present, the company has 300 projects under research, including over 40 small molecule innovative drugs, over 40 macromolecular innovative drugs and over 30 new preparations. It mainly covers anti-tumor, immunity and respiration, psychiatric nerve, metabolism, cardiovascular and cerebrovascular system and anti-infection treatment. 29 products are in the pending registration review approval stage, 40 products are undergoing clinical trials (including 33 innovative drugs and 7 new preparations), 5 products are undergoing bioequivalence trials, and 11 products and clinical trial indications are in the pending clinical approval.
In addition, CSPC has established eight innovative drug technology platforms, among which, the nanomedicine technology platform has a systematic product layout, including nano liposomes, albumin nano preparations, polymeric micelles and a number of core delivery technologies. The company has also established a platform for mRNA vaccines and small nucleic acid drugs. Great progress has been made in the mRNA vaccines for many major infectious diseases and small nucleic acid drugs for genetic diseases and metabolic diseases.
In the next five years, more than 30 innovative drugs and new preparations are expected to go on the market in CSPC, including multivalent mRNA vaccines against SARS-CoV-2 mutants and small nucleic acid drugs administered once every six months, all of which are significant drugs with global patents. As a local pharmaceutical group developed from Shijiazhuang, Hebei Province, it is not easy for CSPC to achieve the above achievements. If CSPC wants to stabilize the first position and continue to develop and expand internationally, invest flexibly and actively, and continuously strengthen R&D control, this is a field that shall be considered deeply.
Sino Biopharm
In the first half of 2021, Sino Biopharmaceutical Limited achieved a revenue of 14.354 billion yuan with a year-on-year increase of 13.5%, heating a record high. The net profit attributable to the parent company was 8.48 billion yuan, a year-on-year increase of 583.6%. In terms of R&D investment, the total amount of Sino Biopharmaceutical Limited in the first half of 2021 was about 1.88 billion yuan, up 15% year-on-year and accounting for 13.1% of the total revenue.
Sino Biopharmaceutical Limited is a pharmaceutical company specializing in R&D, production and sales of biopharmaceuticals and pharmaceutical chemicals. In the first half of 2021, it maintained double-digit growth in five core areas, namely, anti-tumor, parenteral nutrition, cardiovascular and cerebrovascular diseases, respiratory diseases and orthopedics. Antitumor drugs became the largest business segment of Sino Biopharmaceutical Limited, with the growth rate of seven varieties exceeding 50%. The company's existing pipelines have great market potential. In particular, the strong tumor and respiratory pipelines are the core track of global new drug R&D. In addition, in recent years, the R&D investment of Sino Biopharmaceutical Limited has continuously increased, and 50% of the projects entering the clinical stage are self-developed varieties. More than 60 new products listed after 2018 have contributed more than 80% to sales growth, and their share of sales revenue has exceeded 40% and is still growing rapidly.
Fosun Pharma
In the first half of 2021, Fosun Pharma achieved an operating income of 16.952 billion yuan, a year-on-year increase of 20.85%. At the same time, the R&D investment was 1.954 billion yuan, a year-on-year increase of 15.69% and accounting for 11.53% of business income. Among them, the R&D expenses were 1.562 billion yuan, a year-on-year increase of 29.73%.
Fosun Pharma is one of the leading biopharmaceuticals in China, and has made great achievements in monoclonal antibody, CART and vaccine. In recent years, Fosun Pharma has devoted itself to promoting innovative R&D, and accelerated the implementation of innovative technologies and launching of products to satisfy the unmet clinical needs and improve drug accessibility. At present, there are 240 projects under research, including innovative drugs, generic drugs, bio-similar drugs and consistency evaluation of generic drugs. There are 72 innovative drugs among them.
Fosun Pharma has a strong ability to integrate resources within the group. Internationalization and flexible investment ability are the other two strengths of Fosun Pharma. If Fosun Pharma wants to turn R&D projects into achievements and hold its head position in the fierce competition, it still needs to pay attention to the continuous control of internal R&D resources and the stable work of the R&D core team.
Summary
Normally, it should not be a new topic of attaching importance to market and R&D capability. However, facing such a topic repeatedly discussed by people in the industry, many pharmaceutical companies that have been engaged in the market for many years have not caught the opportunity.
We can summarize the following contents from the above data.
◆ Compared with international superior pharmaceutical companies, the leading enterprises of domestic pharmaceutical companies still need continuous efforts and development, and strengthen internal strength, so as to stabilize their position.
◆ Although the national drug administration agencies and local governments continue to issue policies to promote Chinese medicine, it is difficult to change the situation that the traditional Chinese medicine industry is difficult to expand due to product characteristics.
◆ The industry characteristics that the strong enterprises will be stronger is increasingly obvious. From the annual report of the first half of 2021, it is difficult to rank in the leading place in China without a profit of about 2 billion yuan.
◆ Due to strategic mistakes and management's disorientation for many years, many old state-owned enterprises that were once prosperous have basically no ability to affect the industry layout.
References:
1- Report of each pharmaceutical company in the first half year of 2021
2- Official website information of pharmaceutical companies
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