中国药企出海报告 NAVIGATING GLOBAL MARKETS -A deep dive into the Chinese pharmaceutical industry global expansion

2

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Thisplatformseamlesslyintegratesandstandardizesawealthofinformation,includingpatents,literature,clinicaltrials,news,deals,andmarketingdata,providingacomprehensiveoverviewofeverynovelmoleculeworldwide.

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iDealsVDREmpowers75%

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iDeals8

6

CONTENTS

PART

ONE

PART

TWO

PART

THREE

Followthetrendofthetimes

FactorscompellingChinese

pharmaceuticalcompaniestogoglobal 7

Insightsontransactions

ScenariosanddataofChinesepharmaceuticalcompaniesgoingoverseas

Earlymovers

In-depthanalysisoftypicalcases

18

24

PART

FOUR

Data-baseddecision-making

Applicationofdatainscreeningoverseas

opportunities

4

1

iDeals8

PARTONE

FactorsCompellingChinesePharmaceuticalCompaniestoGoGlobal

Inrecentyears, Chinese pharmaceutical companieshave beentakingthe initiativetotapintotheglobalmarketasaresultofanumberoffactors.

Source:Researchand analysisbyPharmcube

IntensecompetitionwithintheChinesemarketisdrivingcompaniestoseekoutopportunitiesforsurvivalspacein

overseasmarkets.

Themedicalinsurancepaymentreformandrestrictedhospitalaccesshavesqueezedtheprofitmarginsofinnovativedrugs.Additionally,somesectorswithintheindustryhavewitnessedfiercecompetitionsurroundinghomogeneousproducts.Consequently,someChinesecompaniesareturningtotheglobalmarketfornewgrowthspaceandstrongerprofitability.

Facedwithfinancialchallenges,manycompaniesarechoosingtoseekinvestmentandcollaboratewithothersinordertostay

inbusiness.

Thepharmaceuticalindustryisexperiencingdownwardpressure,withmostcompanieshavingdifficultyinfundingandcashflows.Inlightofthis,relinquishingaportionoftheirinterestsintheoverseasmarketinreturnforcashandsubsequentfundingpresentsanadvantageoussurvivalstrategyformostcompanies.

WithgrowingstrengthinR&Dofnewdrugs,Chinese

companiesshowstrongerglobalcompetitiveness.

AsmoretalentsreturntotheChinesemarketandinnovationfactorsaccumulate,China-originatedbiotechsaresteppingintotheglobalspotlight,whichisattributedtogreatlyimprovedcapabilitiesinnewdrugsR&Dandoutstandingpotentialinrapidtargettranslationandbest-in-class(BIC)/first-in-class(FIC)R&D.

GovernmentpoliciesencourageChinesecompaniesto

acceleratetheirquestforinternationaldevelopment.

China'spharmaceuticalindustryhasenteredanewstageofdevelopment.Inrecentyears,nationalregulatorypolicieshavealignedwithinternationalstandardsandencouragedChinesecompaniestoexploreoverseasmarkets,inordertospeedupinnovation-drivendevelopmentandallowforbetterintegrationintotheglobalindustrialsystem.

iDeals8

8

9

Thenumberof InvestigationalNew DrugApplicationversusinternationalexpansioneventsby Chinese pharmaceuticalcompaniesinrecent

years

Thehistoricalnumber ofbreakthroughtranslationalmedicalresearchesinChina,Japan,andEurope

Note:Breakthroughtranslationalmedicalresearch referstomilestonepapersinthefield.

Numberofpivotal clinicaltrials conductedby pharmaceuticalcompaniesinChina andtheU.S.inthelastdecade

Source:Researchandanalysis byPharmcube;

NextBiopharm™database;dataasofJuly25,2023.

Inrecentyears,Chinesepharmaceuticalcompanieshavebeentakingtheinitiativetotapintotheglobalmarketasaresultofnumerousfactors.

Inrecentyears,ChinesecompanieshaveexhibitedagreatercapabilityinR&Dofinnovativedrugs.Thenumberofinvestigationalnewdrugs(IND)hasnoticeablyrisen,resultinginanincreasednumberofnewdrugsbeingexportedoverseas.

NumberofnewdrugsgooverseasbyChinese

pharmaceuticalcompanies

NumberofINDfornewdrugsbyChinesepharmaceutical

companies

NumberofINDfornewdrugsNumberofoverseasexplorationevents

500

400

300

200

100

0

347

40

391

438

_____

44

266

-1414

26

108

8

130

102

5

0

9

14

201520162017201820192020202120222023

45

30

15

0

Chinaranksthesecondintheworld,aftertheU.S.,intermsofthenumberofmilestonepublications,surpassingGermany,theUK,andJapan.

-ChinaUKJapanGermany

181717

______________

13

11

8

4

5

3

2

0

2015

2

2018

5

2021

2

2016

4

2019

88

12

6

108

2020

2022

2017

9

5

6

5

6

5

20

7

Inthisrespect,ChinesepharmaceuticalcompaniesareclosingthegapwiththeircounterpartsintheU.S.,showingannuallyenhancedcapabilityinR&Dofinnovativedrugs.

China

249238244

164

130

90

192532

0

2014201520162017201820192020202120222023

227

176

132

114

243

215

52

300

200

296

261

204

216

100

U.S.

iDeals8

10

1

2

3

Beginning:Initialexplorationoftheglobalmarket

NumberofMRCTconductedbyChinese pharmaceuticalcompaniesbeforeandafterChinajoinedICH overafive-yearperiod.

GovernmentpoliciessupportChinesepharmaceuticalcompaniesinaccessingoverseasmarketsandexpandingintointernationallyrecognizedbrands.

In1990,regulatoryauthoritiesandinternationalassociationsin

theEU,U.S.,andJapancreatedtheInternationalCouncilforHarmonisationofTechnicalRequirementsforPharmaceuticalsforHumanUse(ICH)toenhancethetechnicalrequirementsfordrugsregistrationviaharmonization.

InJune2017,theformerChinaFoodanddrugsAdministration(CFDA)joinedICH,markingtheofficialstartofChina'sinternationaljourneyinpharmaceuticalregulationanddevelopment.

GuidingChinesecompaniestoalignwith

internationalstandardsinthedesignofclinicalresearchandthedevelopmentofnewdrugs

AdoptingthetowidelyrecognizedCTDformattodiminishrepetitiveworkandlowercostfor

companiesandenhancetheirsuccessin

internationalregistration

Acceptingoverseasclinicaltrialdata,thuspushingChinesecompaniestobolstertheirR&Dcapacityandqualityofdrugproductsremaincompetitive

NumberofMRCTclinicaltrialsconductedbyChinesecompanies

536

+464%

95

2017-2021

2012-2016

iDeals8

11

Developing:Proactivedevelopmenttowards internationallyrecognizedbrands

Central

Local

InDecember,2021,sixgovernment

departmentsjointlyreleasedtheNoticeontheDevelopmentofthePharmaceuticalIndustry

duringthe14thFive-YearPeriod

Duringthe13thFive-YearPlan(FYP)period,China'spharmaceuticalindustryunderwentagradualshifttowardshigheraddedvalue.Duringthe14thFYPperiod,aprimaryobjectiveforChinesecompaniesistoemergeasworld-classpharmaceuticalcompanies.Moreover,the14thFYPhashighlightedthesignificanceofupholdingopennessandcooperation,strivingtoexploretheglobalmarket,participatingininternationalindustrialdistributionandcollaborationatahigherlevel.

Since2019,eightbiomedicineindustrialbases

haveissuedpoliciestobolsterindustry

progress.

ExpandingtheglobalpresencehasbeenakeyfocusofChina'spoliciesinsupportingthedevelopmentofthepharmaceuticalindustry.

iDeals8

12

Coverage

Content

Examples

Awarding

successfulapplications

Eightcitiesoffera

proportionalgranttoproductsapprovedbygloballyrecognized

institutionsforthefirsttime.

Shenzhenofferedagrantofupto

RMB5millionforproductsverifiedbytheUnitedStatesFoodanddrugs

Administration(FDA)ortheEuropeandrugsAgency(EMA)(theexact

amountwasdeterminedbyinvolvingprofessionalauditingcompanies).

Facilitating

custom

clearance

Fourcitiesoffer

advantageous

conditionsandsupportforcontrolleditemstoenhanceR&Dand

improvesupplychain.

Shanghaifacilitatedthecustoms

clearanceofR&Dmaterialsand

specificspecialitems.Italso

strengthenedsecurityregulations

throughapilotedjointregulationfortheexitandentryofspecialitemsattheborder.

Supporting

cooperation

Twocitiesfacilitate

Chinesecompaniesin

engaginginbusiness

partnershipswith

multinationalcompanies.

BeijingsupportedChinesecompaniesspecializingininnovativedrugsto

authorizemultinationalcompaniesfortechnologicalresearchandestablish

commercialpartnershipsforproduct

development.Itprovidedagrantto

Chinesecompanies,amountingto20%oftheupfrontpaymentforeach

product,withamaximumcapofRMB5million.

1.TheeightmajorbiomedicineindustrialbasesinChinaincludeBeijing,Shanghai,Suzhou,Hangzhou,Chengdu,Wuhan,Guangzhou,andShenzhen.

Source:ResearchandanalysisbyPharmcube;Governmentwebsites.

iDeals8

13

1%

1%

28%

18%

26%

28%

88%

18%

31%

19%

14%

59%

13%

57%

39%

3%

43%

71%

70%

61%

62%

60%

54%

44%

10%

6%

Medicalinsurance

Ittakesyearsfora newlylaunched drugstobe includedinmedicalinsurance throughnegotiation.

Pricereductionasa resultofmedicalinsurancenegotiation.

Source:Researchand analysisby Pharmcube;PharmaGodatabase;dataasofJuly2023.

PharmaceuticalcompaniesencounterdevelopmentobstaclesintheChinesemarket,primarilyconsistingofacaponmedicalinsurancepricingandlimitedhospitalaccessibility.

Theaveragetimeforanewlyapproveddrugstobecoveredbyhealthinsuranceisdecreasingeachyear.

>10yrs

6-10yrs3-5yrs

0-2yrs

70

36

67

17

96

20172018201920202021

Medicalinsurancenegotiationshaveappliedsignificantpressureonthereductionofprices.

Maximumreduction

Averagereduction

94%

90%

85%

97%

57%

201720182019202020212022

iDeals8

14

46%

18%

23%

Hospitalaccessibility

Newdrugsallowedforuseinpublicmedical institutionsinBeijingwithinthepastfive

years

Numberofnew drugsallowedinto gradedhospitalsinBeijingfrom2019to

2023

Source:Researchand analysisby Pharmcube;PharmaGodatabase;dataasofJuly2023.

Numberofhospitals

2019

2021

2022

2023

2020

194

50

51

68

21

4

39

347626

501327

142

34/

/3

96

292010

Tier3hospitalsTier2hospitalsTier1hospitalsOthers

Hospitalcoveragerate

Coveragerate

Others

33%

Tier3hospitals

Tier1hospitals

Others

Tier2hospitals

Numberofgradedhospitals

Numberofgradedhospitals

2018201920202021202220232024

Yearoflaunch

120

100

80

60

40

20

0

iDeals8

15

PricingontheChinesemarket

Annualtreatmentexpenditure(10,000USD)

9.6

7.6

5.3

2.9

4.2

5.7

7.4

BMSMSDAZBMSMSDAZBeiGeneHengruiInnoventTopAlliance

Annualexpenditure fortreatmentwith PD1productsinChinaandtheU.S1

Differentproceduresfor accessing hospitalsinChinaandthe

U.S.

1AvailabilityandAffordabilityofOncology drugsin2012-2021inChinaandtheUnited

StatesSource:Researchandanalysisby

Pharmcube;Companyannualreports;Deskresearchmaterials.

Underthedualpressureofproductpricinganddomesticcompetition,Chinesepharmaceuticalcompaniesareseekingtoexpandtheirgrowthhorizonsandtomakebreakthroughsbyturningtooverseasmarkets.

UnlikeintheU.S.wheredrugsarepricedbasedontheirvalue,drugsinChinaaregenerallypricedbasedontheircost,resultinginlowerpricesandsignificantlysqueezedprofitforpharmaceuticalcompanies.

PricingontheUSmarket

19.2

17.3

9.6

ChinaandtheU.S.havecontrastingproceduresforauthorizingaccessofnewdrugstohospitals.TheChineseproceduresarecomplexandtime-consuming,whilethethree-partymodelintheU.S.makesiteasierforcompanies.

China

Thedepartmentof

hospitalsubmitsclinical

trialapplication

DrugManagement

Committee

reviewstheapplication

Selectionofsuppliers

Procurementofdrugs

U.S.

Medical

institutions

Commercial

insurance

companies

Third-party

institutions

iDeals8

16

Global pharmaceutical marketsizeandpopulationstructurein2021-2025E

Source:ResearchandanalysisbyPharmcube;companyannualreports;deskresearchmaterials.

SalesofBeiGene'sZanubrutinibin

recentyears

Theglobalmarkettakesprecedenceoverallothermarkets.Thus,itisimperativeforChinesepharmaceuticalcompaniestoproactivelyexploretheoverseasmarketinordertomakeanameforthemselvesintheworld.

China

U.S.

Others

Pharmaceuticalmarket

size(in100millionUSD)

14,04412%40%49%

14,88611%39%50%

15,63111%38%51%

16,41211%37%52%

17,23311%37%53%

202120222023E2024E

2025E

Population(100millionpeople)

78%4%18%78 78%4%18%80 78%4%17%81 79%4%17%81 79%4%17%82

Theoverseasmarkethasbecomethemainsourceofsalesforzanubrutinib,withasignificantlyhighergrowthratethantheChinesemarket.

China

U.S.in100millionUSD

+2,041%

3.90

3.53

+540%

1.50

0.94

1.011.16

0.240.18

2020

2021

20222023H1

iDeals8

17

400

900

3

00

600

2

00

300

00

0

0

1%~68%

Proportionofupfront

payment

FundinginChinesemarketinthepastdecade

Source:Researchand analysisbyPharmcube; NextPharmadatabase;MedAlphadatabase;dataasofAugust15,2023.

UpfrontpaymentsreceivedbyChinese pharmaceuticalcompaniesin20201

to2022

Tosomeextent, transactionshave assistedthe lincensorsinsecuringadditionalfunding.

Fundinghasbecomeincreasinglytoughinrecentyears,somostpharmaceuticalcompaniesarelookingtoimprove

cashflowandsecurefundingthroughtransactionsandcollaborations.

In2020,thepharmaceuticalindustrybegantoexperiencefundingchallenge.Chinesecompaniesfounditincreasinglydifficulttofinancingandmaintainhealthycashflow.

Numberof

fundingcases

Amountoffunding,in100millionUSD

No.offundingcases

Amountoffunding/in100millionUSD

277

249

108

192

83

108

129

38

Asthecapitaldriesup,

theamountfinanced334

613

bypharmaceutical

companiesis

412

decreasing

significantly.

395

184

53

864

316

154

274

608

57

1

2014201520162017201820192020202120222023

ThesetransactionshavebroughtsomecashflowtoChinesecompanies.

0.25~650mUSD

Amountof

upfront

payment

Incertaintransactions,thelicenseehasmadeinvestmentsbeforeorafterthetransaction(non-exhaustivelist).

Transactiondate

Licensor

Licensee

Investment

Dec10,2021

June1,2022

Therapeutics

DAC

Biotechnology

EliLilly

Johnson

&

Johnson

InJune2021,LillyAsian

VenturesledtheseriesB

financinginRegorTherapeutics.

InJune2022,Johnson&

JohnsonInnovationleda

strategicinvestmentinDAC

Biotechnology

Regor

Successfultransactionsenhancetheconfidenceofother

investors.

iDeals8

PART

TWO

ScenariosandDataofChinese

PharmaceuticalCompanies

GoingOverseas

19

Note:Onetransactionmaycontainoneormoreprojects.

DataasofJuly14,2023.

Source:Researchandanalysisby Pharmcube;NextBioharm™database.

Innovativedrugsarethemaindriverofout-licensinggrowthintermsofbothnumberandvalue.Chinaexperienceditsfirstsurgeinout-licensingofChineseinnovativedrugproductsin2020,resultinginanoteworthyincreaseinbothtransactionvolumeandtransactionvalue.

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

InmillionUSD

4

12,47514,49113,332

9897551,6901,4571,140

Numbersandamountsofout-licensinginChinabetween2018and2023NumberUpfrontpaymentTotalamount

201820192020202120222023YTD

27,705

1,163

32

64

54

21

21

10

74

6

Typesandpercentagesofout-licensinginChinabetween2018and2023

TechnologyplatformsIncrementallymodifieddrugsMatureproductsBiosimilarsInnovativedrugs

20182019202020212022

2023YTD

3%

36%6%

6%

27%6%

36%4%8%52%

47%

8%

7%

65%

23%5%

49%

11%

2%

4%

15%

56%

23%

71%

21%8%

25

36

82

63

81

52

Oncologyremainsthetopfieldwithtransactionnumbersin2023year-to-datehavingalreadymatchedthoseofthe

previousyears.Regardingdrugstechnology,themaindriversofout-licensinginChinaaresmallmoleculesandmonoclonalantibodies,whicharerelativelymature.

iDeals8

20

4%

4%

4%

2%2%

Indicationdistributionofout-licensingdrugsinChina

OncologyNeurology/Psychiatry

InfectiousdiseaseImmunology

244279

Dermatology

Gastroenterology

RespirologyOthers

516546

33%

19%

30%

2%

51%

37%

54%

7%

14%

19%

13%

12%

14%

10%

3%

3%

12%

8%

6%

15%

10%

2%10%4%

5%

6%

33%

7%

3%2%

28%

26%

9%

4%

7%

2%2%24%

20%

16%

201820192020202120222023YTD

Note:Exclusionsapplyto leukemiainthecontextof blooddiseases,andduplicatedrugsentriesare possibleacrossdisease categories.drugsand technologicalplatformsthatfailtospecifyrelevant diseaseareasarenotincluded.

DataasofJuly14,2023.

Source:Researchand analysisbyPharmcube;NextBiopharm™database.

Percentagesofdifferentdrugstypesforout-licensinginChina

Others

4.2%

Antibody-drugsconjugates

38.5%

BsAbs/MsAbs

6.1%

7.3%

9.2%

Vaccines

5.7%

Celltherapy

29.0%

mAbs/fusionproteins

Smallmolecules

ConventionalChinesepharmaceuticalcompaniesfocusonthedomesticmarketwithinsufficientinternationallayout,whilebiopharmaandbiotechcompaniesinChinaareactivelypersuingout-licensingtransactions.Inaddition,biopharmaentitieshavemorestablecashflows,andthestagesofout-licensingdrugsaregraduallymovingbackward.

21

14%66%

Note:Thetypesoflicensor arebasedonthenumber oftransactions.Thetypes ofprojectsarebasedon thenumberofprojects.A singletransactionmay consistofoneormoreprojects.Incaseswherea transactioninvolves multiplelicensors,alllicensorsarecounted.Out- licensingprojectsexclude thosetransactionswhereuniversitiesorhospitalsactasthelicensors.

Source:ResearchandanalysisbyPharmcube; NextBiopharm™database.

TypesofChinesecompaniesengagedinout-licensingbetween2018and2023

ConventionalpharmaceuticalcompaniesBigpharma

74

Biotech

Laboratory

11%65

23%5414%

17%20%46

13%

9%

2113%65%

3228%13%

24%75%54%74%

52%

10%3%1%2%

201820192020202120222023YTD

Timeof

establishment

Independent

commercialized

products

Conventional

pharmaceutical

companies

before2000

√

Biopharma

after2000

√

Biotech

after2000

×

Clinicalstagesofprojectsanddrugsinvolvedinout-licensingbetween2018and2023

ApprovedNotdisclosed

Technologicalplatform

11

827%9

88%36%44%67%

20222023YTD

22%

2021

47

31

133%%13%

55%

2021

iDeals8

25%425%313%11%6

82%

15%8%4%37%

2%

2020

4%

40%

8%

2022

Conventional

pharmaceuticalcompanies

21

29%

5%10%

2%50%

2019

41%

2019

27

33%4%171%

2023YTD

38

24%

33%

2020

PreclinicalPhaseI

13%4%

11%2%

36%

20222023YTD

PhaseIIPhaseIII

20192020

16%8%

Bigpharma

13%

29%

Biotech

1118%

2018

2021

2018

2018

34%

34%

88%

13%

25%

20%

63%

13%

16%

2%

25

8

8

22

BioPharma

Biotech

Laboratoriesandothers

Note:Thetypesoflicensees arebasedonthenumberof transactions.Thephasesofclinicaltrialsarebasedonthe numberofprojects.Asingle transactionmayconsistofoneormoreprojects.DataasofJuly14,2023.

Source:ResearchandanalysisbyPharmcube; NextBiopharm™database.

Currently,Chinesepharmaceuticalcompaniesprimarilylicenseouttheirproductstobiotechsforcollaboration.Foreignbiotechcompaniesandtopmultinationalcorporations(MNCs)engagemoreintransactionsinvolvingearly-stageproducts,whileinternatinalbiopharmacompaniestendtofocusmoreonlate-stageclinicalproducts.

Licenseesofout-licensingproductsinChinafrom2018to2023

5%

26%

41%

29%

TopMNC:Companieswithover20productsthathavereceivedmarketapproval.

Biopharma:Companieswithsomeproductsthathavereceivedmarketapprovalorcapableofcross-countrycommercializationincertainregions,e.g.inSouthAmericaorSoutheastAsia,orthosewithnoproductthathasreceivedmarketapprovalbut

arecapableofcross-countrysalesincertainregions.

Biotech:Companieswithoutapprovedproductsoronlywith1-2productsonthemarket,whichhaverelativelyweak

commercializationcapabilities.

PreclinicalIND

PhasePhase

PhaseIIIFiled

Approved

III

Technology

Undisclosed

TopMNC

Biopharma

Biotech

Labsandothers

2%

4%

1%

3%

2%

4%

4%

7%

26%

40%

11%

9%

15%17%9%6%15%8%26%

29%

33%

14%7%

%

37%5%21%5%32%

1%

106

121

167

19

iDeals8

40%

3616%

23%

20%2528%2%4%3%19%1

16%43%3%42%1%2%11%1%15%2%

24%25%13%9%

Productdevelopmentandcommercializationauthorizationaretheprimaryapproachesinout-licensing.Additional

termssuchasoptions,investments,andjointventuresareincreasinglyincludedintransactions.Thecooperationinout-licensingandauthorizationisbecomingmorediverse.

Approachesinout-licensingprojectsbetween2018and2023

Developmentauthorization+commercializationauthorization

Commercializationauthorization8281

Developmentauthorization

Jointdevelopment

Strategiccooperation

uthorization44%