David Now Goliath? Made In China PD-1s Sought After By Multinationals
Eager For New Products As Market Evolves
Executive Summary
From relatively little-known to high-flying, hotly pursued targets by global pharma players, Chinese domestically developed immuno-oncology drugs are ascending in both value and attractiveness, both inside China and far beyond.
Being the originator of the first domestically developed PD-1 inhibitor to compete head on with global heavyweights such as Bristol Myers Squibb Company and Merck & Co., Inc., Chinese firm Shanghai Junshi Biosciences Co., Ltd. is now setting its sights on launching its immuno-oncology drug in both the US and China, aided partially by new multinational partner AstraZeneca PLC.
A deal signed on 1 March allows the Shanghai-based drug maker to license part of the marketing rights in China to the UK giant, in a move that leverages its well-developed sales network in China, including within the vast but diffuse county-level hospital market.
Junshi will grant AstraZeneca the exclusive promotion right to Tuoyi (toripalimab) in mainland China for the urothelial carcinoma indication and for all indications in non-core areas, while the Shanghai firm retains rights in core areas.
The two companies also said they would continue to look at other partnership opportunities, including in emerging markets, and at "expanding the depth and breadth" of future collaborations.
The deal aims to accelerate a global entry for the drug, Junshi chief scientific officer Gang Wang told Scrip. “Without a large sales team for a smaller player like Junshi, the tie-up with a large, established player can quickly launch products in more market segments in a cost-effective way.”
Unlike Jiangsu Hengrui Medicine Co., Ltd., a domestic innovative drug developer with a large product portfolio, Junshi has a more specialized product lineup. Leveraging an existing sales network will be more cost-efficient and competitive than establishing an in-house salesforce from scratch, Wang added.
The deal comes hot on the heels of Junshi’s alliance with US company Coherus BioSciences, Inc., which agreed to co-develop and market the PD-1 drug in the US market. (Also see "As China Prices Drop, Junshi Looks To Coherus To Take PD-1 Global" - Scrip, 4 Feb, 2021.)
With toripalimab now also being covered by China's National Drug Reimbursement List, joining other domestic PD-1s from Innovent Biologics, Inc., BeiGene, Ltd. and Hengrui Therapeutics, Inc., Junshi is poised to maximize market potential and promote its product in more market segments, including the county-level sector, the so-called "broad market".
“Leveraging AZ’s extensive networks from many years in China and particularly in the county market segment, we believe the drug…will achieve more success,” Junshi CEO Li Ning said. Toripalimab was the first domestically developed PD-1 to be approved in China, back in 2018 for melanoma, a less prevalent cancer type in China.
Junshi joins other Chinese oncology specialists BeiGene, Innovent and CStone Pharmaceuticals Co. Ltd. to have signed large deals with major multinationals including Novartis AG and Eli Lilly and Company, and EQRx, Inc. in CStone's case, to market China-originated PD-1 drugs in the US and European markets.
'Broad Market' Fades
There has been a roller coaster ride in the pharma sector's push to reach hundreds of millions of potential patients in the lower-tier, broad market market in China.
During the heyday, many multinationals invested heavily in building out extensive sales networks, with companies such as AZ, Pfizer Inc. and Sanofi all rapidly expanded their reach.
But this trend has cooled down significantly and in late 2018, when the Chinese government first implemented a volume-based procurement scheme, many drug makers scrambled to cope with a new commercial reality in which a centralized bulk purchasing mechanism increasingly took center stage.
Soon after the pilot "4+7" program in major cities initiated in 2018, the government expanded volume-based purchasing to as many as 25 provinces and covering many widely prescribed drugs.
The procurement system has drastically reduced the need for the thousands-strong salesforces that pharma companies had built up over the years in China, meaning many are now actively looking for more new products, including partnering to market these in China.
More Global Entries?
One investor told Scrip that the entry of China-originated PD-1s in the US market will create openings for more made in China innovative oncology products.
“[Due to their low costs and efficacy] PD-1s from China to the US will be somehow felt like generics to brand drugs,” predicted He Xinlin, a partner at Indaco Capital, a Beijing-based healthcare early-stage investment firm.
As the US public and private health insurers are looking ways to cut medical costs, and the new Biden administration is expected to renew calls to address ballooning drug prices, Chinese-made PD-1s are expected to grow in the world’s largest single pharma market.
Not only immuno-oncology therapies but more drugs from China, including best-in-class, me-toos and me-betters, will follow a similar path to global market entry, He predicted.