Joining Forces with Zai Lab: What is the Remaining Market Potential for Opdivo in China?

Bristol Myers Squibb (BMS) recently announced the transfer of sales rights for one of its core products, the PD-1 monoclonal antibody Opdivo (nivolumab), in select provinces within China to the local biotechnology firm Zai Lab Limited (ZLAB). This expansive market agreement encompasses 10 Chinese provinces, including Yunnan, Guizhou, Guangxi, Inner Mongolia, Xinjiang, Gansu, Ningxia, Qinghai, Hebei, and Shanxi.

This collaboration also extends to BMS's CTLA-4 monoclonal antibody, Ipilimumab (Yervoy). In 2020, the combined therapy of Opdivo and Yervoy received approval for first-line treatment of non-small cell lung cancer (NSCLC), heralding the advent of dual immunotherapy.

In response to this partnership, BMS stated that: the company would continue to concentrate on its core markets, enhancing the reach of both Opdivo and Yervoy. BMS retains responsibility for developing and implementing the comprehensive immunooncology strategy across both existing and future indications, advancing efforts in market penetration, medical affairs, access, and registration.

Opdivo: A Pioneer's Late Realization

Opdivo, the world's first PD-1 inhibitor, was approved in Japan and the United States in 2014. It entered the Chinese market in June 2018 as the first PD-1 product approved in the country.

Initially, Opdivo's sales volume achieved RMB 190 million within just 2 months of its launch, marking a commendable performance. However, this advantage was quickly surpassed by the new "king of medicine", Keytruda (Pembrolizumab).

According to BMS's 2023 financial report, global sales volume of Opdivo reached approximately USD 10 billion, significantly trailing behind Keytruda's USD 25 billion. The competitive landscape, intensified by made in China PD-1 inhibitors, has made Opdivo's position increasingly precarious. Per PDB sample hospital data, Opdivo's market share in hospitals once declined to 3%, while Keytruda maintained around a 20% market share.

Opdivo's failure to capitalize on its first-mover advantage in China can be attributed to its domestic promotional strategy. Despite neither Opdivo nor Keytruda being included in the national medical insurance list, Keytruda swiftly adjusted its drug donation policy in 2021 in response to competition from domestic PD-1 products, improving from a "2+2" scheme to "2+3" and finally "2+lifetime." Opdivo's pricing strategy was not updated until November 2023. Compared to other PD-1 products, Opdivo lacks significant price and brand advantages, missing the early opportunity to dominate the market.

Can Opdivo Reverse Its Fortunes?

Despite facing challenges in the Chinese market, Opdivo's global sales volume remained robust, with USD 4.43 billion in sales in the first half of the last year.

In the Chinese market, Opdivo was approved for two esophageal cancer indications in June 2022, making Opdivo combination chemotherapy the only PD-1 drug that covers both adjuvant and first-line advanced treatment of esophageal cancer in China. Going forward, early strategic positioning in adjuvant/neoadjuvant therapy may offer significant potential for Opdivo in the Chinese market.

The decision by BMS to grant Zai Lab the sales rights for Opdivo in certain Chinese provinces is a prudent move. Zai Lab's commercialization prowess is evident, with financial reports indicating that in 2022, the workforce dedicated to Zai Lab's commercialization endeavors numbered 965 employees, achieving Grade "B" within the year.

For instance, the PARP inhibitor "Zejula," despite its narrower indications focusing on ovarian and fallopian tube cancers, boasts substantial promotional hospital coverage. In Guizhou, Zejula is available in 32 designated hospitals; Yunnan has 64; Gansu, 22; and Inner Mongolia, 41.

Further exemplifying this capability is the notable autoimmune medication, the FcRn antagonist Efgartigimod-alfa subutaneous injection (VYVGART), which was approved for marketing in China in June of the preceding year. Utilized in conjunction with standard therapeutic drugs, it serves the treatment of adult patients with generalized myasthenia (gMG) gravis positive for acetylcholine receptor (AChR) antibodies. The transition from domestic approval to commercial availability spanned merely 67 days, setting a precedent for the swiftest introduction of an imported biological preparation to the Chinese market. Moreover, within six months post-approval, it was successfully incorporated into the medical insurance drug list, securing coverage across the majority of premier hospitals prior to the implementation of medical insurance.

Zai Lab's distinguished commercialization capabilities may well support Opdivo in achieving a turnaround.

Multinational Corporations Opting for a "Hands-Off" Approach After Extensive Engagement in China

In response to shifts within the domestic market, Multinational Corporations (MNCs) have commenced adjusting their commercial strategies in China. Over the past year, MNCs have progressively reduced their direct sales initiatives, adopting a "hands-off" managerial stance.

In December 2023, Pfizer China and SPH Kyuan Trade, Shanghai Pharma's medical import and distribution subsidiary, finalized a collaborative agreement regarding vaccine products: SPH Kyuan Trade is to exclusively import, distribute, and promote Pfizer's 13-valent pneumococcal conjugate vaccine (PCV13 vaccine, brand name: Prevenar 13) in Chinese Mainland, coinciding with the dissolution of Pfizer China's vaccine division.

In October 2023, GSK assigned the exclusive Chinese sales rights of its leading vaccine product, the herpes zoster vaccine Shingrix, to Zhifei Biological.

On December 15, 2023, Sanofi China and SPH announced the formalization of a strategic cooperation agreement. This collaboration is set to encompass extensive and in-depth national engagement across all channels within key therapeutic areas, including cardiovascular diseases, central nervous system disorders, and tumor, surrounding Sanofi's portfolio of high-quality products.

It is apparent that multinational giants are advancing their expansion into the Chinese market through broader and more profound collaborations with local enterprises. Amid escalating market competition, a new phase of differentiation battles among transnational pharmaceutical companies in China is underway.

References:

1. Zai Lab official press releases and announcements

2. The Economic Observer: Why Have Giants Like Pfizer China Opted Out of Direct Vaccine Sales? 

About the Author:

Yefenghong

Ye Fenghong, a medical editor specializing in oncology at a healthcare internet company, has conducted in-depth research on the pathogenesis and clinical treatment of lung cancer and breast cancer. She has previously been involved in the design and synthesis of anti-tumor drugs and has some experience in computer-aided drug design. She is currently devoted to introducing cutting-edge cancer treatment drugs to a wide range of readers, aiming to help more people avoid cancer pain and embrace good health.