In 2023, the news of multiple heavyweight transactions and acquisitions came to an end. In 2024, with the arrival of the JPM conference, authorization and cooperation among major enterprises still flooded their social media circles. Undoubtedly, with the adjustment of industry structure, 2024 will still be a year with more frequent transactions and mergers and acquisitions among pharmaceutical companies.

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In 2023, a total of 156 drugs, including innovative drugs and micro innovations, were authorized for external use by Chinese pharmaceutical companies, including domestic to domestic and domestic to foreign transfers. The number of domestic to foreign and domestic to domestic projects remained the same, both at 78. Overall, whether it is authorizing overseas companies or collaborating with domestic enterprises, the overall number and sum of transactions have significantly increased compared to previous years.

The "big winners" of Chinese pharmaceutical companies' license outs for innovative drugs over the past year

 

• Top 5 Enterprises in External Authorization Quantity

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In terms of the number of transactions completed, the top 5 companies include Hengrui Pharmaceuticals, Beiaosaitu, Yingen Biotechnology, Yaoming Biotechnology, and Minhai Biotechnology.

Although there is not much difference in the number of projects authorized to external parties, the types of projects, recipients, and transaction amounts vary. Hengrui Pharmaceuticals and Beiaosaitu ranked first and second in terms of the number of 5 transactions completed in a year.

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However, due to the fact that all Hengrui License Out projects have entered the clinical development stage, the total transaction amount and down payment reached are also relatively high. Compared to other CDMO companies, the project collaborations reached by Biotech and Pharmaceuticals are both in the preclinical or planned development stage, resulting in relatively low transaction amounts. The specific amounts for some projects have not yet been disclosed.

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Yingen Biotechnology seized the opportunity of the ADC fire and authorized several new ADC drugs to BioNTech, BeiGene, and Adcendo companies. For Biotech, struggling in the cold winter of capital, this is a pleasant surprise.

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Minhai Biotechnology has entered the list due to vaccine authorization cooperation with multiple Middle Eastern countries. In the stage where innovative drugs in China are moving towards internationalization, although the European and American markets are competitive highlands, there is also a large amount of unmet pharmaceutical demand in countries in the Middle East and North Africa. These regions will also become another path for Chinese pharmaceutical companies to go global.

 

• Top 10 Enterprises with Total Transaction Amount of External Authorization

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From the total transaction amounts disclosed by various companies, the top 10 companies are Baili Tianheng, Hengrui Pharmaceutical, Haosen Pharmaceutical, Yingen Biotechnology, Chengyi Biotechnology, Kewang Pharmaceuticals, Heping Pharmaceuticals, Yaoming Biotechnology, Henley Pharmaceuticals, and Konoya.

 

Baili Tianheng pioneered the EGFR/HER3 dual antibody ADC lenconazole monoclonal antibody (BL-B01D1) and authorized BMS with a total transaction amount of up to $8.4 billion, setting a new record for single Chinese innovative drug overseas transactions. The total amount of this transaction also far exceeds the total transaction amount of Hengrui's five projects.

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Hengrui Pharmaceutical's frequent official announcements of external authorization in 2023 have also greatly improved the industry's perception of its BD department. The total transaction volume of 5 transactions is as high as 3.582 billion US dollars, which is not a small number.

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However, when its TSLP inhibitor SHR-1905, which was authorized to Aiolos for a total transaction amount of $1.05 billion, was recently acquired by GSK at a high price along with the company for $1.4 billion, industry insiders also took advantage of this incident. After all, the down payment amount for the transaction at that time and the recent milestone payment were only 25 million US dollars, and the buy sell time interval was less than 5 months. I have to admire the trading ability of foreign companies.

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Haosen Pharmaceutical has authorized GSK with the development and commercialization rights of two ADC new drugs outside of Greater China, which also demonstrates its strategy of "borrowing ships to go abroad" in internationalization. The total amount of these two transactions is as high as 3.28 billion US dollars, which should be the highest transaction amount reached by Haosen.

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The above table also clearly reflects that authorizing the project to MNC is a very cost-effective transaction. MNC is not only generous in its approach, but also has richer resources at its disposal, which will provide greater assurance for the subsequent progress of the project.

 

• Top 10 Enterprises in External Authorization Down Payment

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We also know that most of the total transaction amount of the project will be dispersed into the subsequent development process and gradually realized through milestone payments. From this perspective, the down payment also seems to better illustrate the transferee's current valuation of the project.

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According to the amount data disclosed by enterprises, the companies that received the highest down payment in 2023 are Baili Tianheng, Hehuang Pharmaceutical, Liantuo Biology, Haosen Pharmaceutical, Xibiman Biology, Hengrui Pharmaceutical, Chengyi Biology, Yingen Biology, Legendary Biology, and Yingsi Intelligence.

BMS not only has high expectations for Baili Tianheng's ADC new drug, Lenconazole Longitumumab (BL-B01D1), with a total transaction amount of $8.4 billion. Meanwhile, the $800 million down payment also demonstrates its high recognition of the clinical data currently available for this drug.

 

From the perspective of research and development progress, since the drug was approved for the first time in China in October 2021, a total of 16 studies have been registered, involving a wide range of tumor types such as nasopharyngeal carcinoma, breast cancer, gastric cancer, cervical cancer, lung cancer, urothelial cancer, etc.

 

All 9 Phase I studies published have achieved positive results. Based on existing data, BL-B01D1 has the most prominent therapeutic effect in patients with advanced non-small cell lung cancer (NSCLC) and nasopharyngeal carcinoma. Among them, the ORR for EGFR mutations and EGFR wild-type NSCLC patients was 63.2% and 44%, respectively, and the disease control rate (DCR) was 89.5% and 94%. At the recommended dose of 2.5mg/kg in Phase II, the ORR of advanced nasopharyngeal carcinoma patients reached 58.8% and the DCR reached 100%. Based on good preliminary data, Baili Tianheng also chose nasopharyngeal carcinoma as the first indication to be promoted to Phase III clinical practice.

 

The authorization of rights outside the Greater China region to Takeda for Fukitinib by Hehuang Pharmaceutical has resulted in a down payment of $400 million, with a potential total transaction amount of $1.13 billion, ranking second in the down payment amount. After all, fipronil has been successfully approved for marketing in China and the United States, and its clinical efficacy has also been rigorously tested by NMPA and FDA. In 2022, the sales revenue of this product in the Chinese market also reached nearly 100 million US dollars.

 

Similarly, considering the Hengrui TSLP inhibitor export incident and the increasing trend of Chinese innovative drugs being favored by foreign companies at high prices, we may also have some thoughts: Chinese pharmaceutical companies have indeed greatly improved their innovative drug research and development capabilities, and should also see the strength of their own products, so that we can be more confident in negotiating cooperation terms with partners and offer negotiation prices that match the value of their products.