Sun Piaoyang Returns To The First Show: Can Hengrui Pharmaceutical "Introduce" Punabilin With 1.4 Billion Yuan To Carry The Performance "Banner"?

"The development of enterprises should be orderly developed according to the rhythm of enterprises, not according to the rhythm of the secondary market, and it is impossible to operate according to the fluctuation of stocks every day." On August 20, sun piaoyang, 63, who is back in charge of Hengrui Pharmaceutical (600276. SH), firmly stated in a widely circulated exchange minutes of the interim shareholders' meeting.

Prior to this, Hengrui pharmaceutical, the "first brother of medicine", obtained a financial report with the lowest growth rate of net profit in 18 years: in the first half of 2021, the net profit returned to its parent company was 2.668 billion yuan, with a year-on-year increase of only 0.21%.

The stock price of Hengrui pharmaceutical once hit a new low in more than two years due to the dismal report of the central bank. On August 31, the total market value of Hengrui pharmaceutical was 288 billion yuan, which was a cut in the back compared with the total market value of 600 billion yuan half a year ago.

The average price of 18 varieties won the bidding of centralized purchasing decreased by 72.6%. The fifth batch of centralized purchase was lost due to the unexpected "failure" of the fist products of iodixanol and glulomonium bromide. The core product of carrilizumab is still in the initial stage of large volume, but it has been facing the "Involution" of PD-1... Due to the superposition of various factors, the market is full of worries about the future of Hengrui medicine.

"The problems that the company is facing now, that is, the precipitous decline of generic drugs and the gradual growth of innovative drugs are the problems that almost all Chinese generic pharmaceutical enterprises will encounter in the transformation and innovation of generic drugs." although sun piaoyang's response is indifferent, a big move has quietly begun.

On August 26, Hengrui pharmaceutical announced the introduction of "first in class" immune and anti-tumor drug purnablin from Dalian wanchunbrin Pharmaceutical Co., Ltd. (hereinafter referred to as "wanchunbrin"). In order to obtain the joint development rights and exclusive commercialization rights and interests of the drug in Greater China, Hengrui pharmaceutical will pay no more than 1.3 billion heads of state payment plus milestone payment, setting a new record of BD (Business Development) transactions between large local pharmaceutical enterprises and innovative pharmaceutical enterprises. At the same time, it plans to invest 100 million yuan in wanchunbrin to obtain no less than 2.5% shares of the company after this round of financing.

Why Hengrui pharmaceutical, which has always emphasized "independent research and development", chose "Introduction"?

"It's a good deal. As long as Hengrui pharmaceutical can sell 300 million yuan a year, it will be a profitable transaction. " There are pharmaceutical industry analysis.

People expect punabilin?

The drug plinabulin, which has been praised by sun, is a super variety with high hopes.

In short, punabilin is a new type of "leukopenia drug" with gef-h1 (guanine nucleotide exchange factor) activator. It can also prevent the damage of bone marrow neutrophils induced by chemotherapy drugs and achieve early protection. It is a potential drug in the field of CIN (chemotherapy induced neutropenia) treatment and immune anti-cancer.

Before being collected by sun Piao, Wanchun pharmaceutical, the parent company of wanchunbrin, had a surge in the capital market because the clinical research results of panabrin exceeded market expectations.

In September 2020, panabrin was recognized as a "breakthrough treatment variety" by China and the United States drug regulatory agencies in the field of CIN prevention. In 2021, pranablin's NDA application for CIN indications was accepted by the United States and China, and was awarded the "priority review" qualification.

In August 2021, punabilin announced the primary end point of overall survival in a global phase III clinical study of second and third line patients with non-small cell lung cancer (EGFR wild type).

The results at that time showed that, compared with the standard treatment of docetaxel, pranabarin combined with docetaxel had statistically significant differences in the primary and multiple secondary endpoints of OS, including orr, PFS, 24-month survival rate, 36 month survival rate, and the incidence of grade 4 neutropenia.

Driven by this news, Wanchun pharmaceutical's share price soared by more than 200% at one time.

Josh schimmer, an analyst at evercore, a world-renowned independent investment bank, previously publicly said that the clinical data was unexpected. He used to see purnablin as a potential new drug to treat the side effects of chemotherapy. But now it looks like it has the potential to treat cancer directly. This gives punabilin a chance to become a "blockbuster" with annual sales of more than $2 billion.

Punabilin plans to submit an NDA application for this indication in the first half of 2022.

In China, on May 12, this year, the official website of the State Food and Drug Administration announced that the concentrated solution of punabilin for injection of Wanchun medicine has been included in the public list of priority review, and the indication is neutropenia (CIN) caused by chemotherapy in adult patients with non myeloid malignant tumor. This is the first innovative drug to submit a new drug marketing application since the establishment of Wanchun pharmaceutical.

"The priority review will be accelerated to a certain extent. According to the current time schedule, punabilin is likely to be officially approved for listing in 2022-2023," said the reporter of 21st century economic news who called Hengrui pharmaceutical securities affairs department as an investor on September 1.

For Hengrui medicine, punabilin has the role of "wanjinyou", not only has the effect of treating tumor and "promoting white", but also can be matched with the existing tumor pipeline of Hengrui.

On August 31, a person from a pharmaceutical company in Hangzhou pointed out to the reporter of the 21st century economic report that "in the treatment of anti-cancer, traditional chemotherapy drugs will kill a large number of white blood cells, and white rising is an auxiliary drug, which can be used in combination with other drugs, so the market space is relatively large.".

In the external publicity of this cooperation, Dr. Huang Lan, co-founder and executive director of wanchunbrin, also mentioned that "in the Chinese market, the sales of PD-1 antibody and docetaxel of Hengrui Pharmaceutical Co., Ltd. ranked first, and the sales of G-CSF (granulocyte colony stimulating factor, which can promote the proliferation and differentiation of neutrophils) products, ranked the top three. The combination of pranabarin and these drugs is expected to achieve the effect of "enhancing efficiency and reducing toxicity"... We are actively exploring the potential combination of the innovative product line of Hengrui such as purnablin + PD-1 antibody. "

Hengrui pharmaceutical "introduced" external pipelines, which quite surprised the market. In fact, there are traces to follow.

"Hengrui pharmaceutical began to give up the line of independent research and development, and turned to actively merge and expand enrollment, which is also an active choice of the company after the failure of centralized purchase and bidding," a Shanghai pharmaceutical industry personage pointed out to the 21st century economic reporter on August 30.

"In this year's fifth round of centralized purchase, Hengrui's iodixanol injection and Gelong ammonium bromide injection were" lost ", especially the contrast agent failed to meet the company's expectation. For Hengrui, the research and development of new drugs is slow and full of variables. However, Hengrui has a lot of strength in the commercialization of anti-tumor drugs. The panabrin of wanchunbrin can not only complement the docetaxel of Hengrui, but also try to combine it with the main anticancer drug PD-1 of Hengrui, "he pointed out.

In his opinion, "this cooperation between the two sides is equivalent to a marketing team of Hengrui, which can promote three kinds of drugs, and can also partially offset the failure caused by the falling of contrast medium.".

The reporter of 21st century economic report found that in the field of G-CSF drugs for tumor chemotherapy patients, Hengrui pharmaceutical has been approved to market a long-acting G-CSF innovative drug tiopeifeiglistin (trade name: aido).

"The mechanism of thiopeifestine, a rising white drug of the company, is complementary to that of panabrin," said Hengrui pharmaceutical securities department.

In addition, the announcement on August 26 that "punabilin combined with docetaxel in the treatment of second-line and third-line patients with non-small cell lung cancer" mentioned in the announcement on August 26 was also regarded as possible for further cooperation between Hengrui medicine and punabilin.

From the perspective of market prospect, IMS database shows that the global market size of G-CSF drugs is about 5 billion US dollars, while in China, the market scale of G-CSF is expected to be about 7.5 billion yuan in 2021, of which the market scale of long-term G-CSF (used to prevent CIN) is more than 5 billion yuan.

High speed expansion period is far away

On September 1, a person from a large pharmaceutical company in Shanghai pointed out that "merging or introducing some mature pipelines to carry out commercialization projects is actually the logic of many large pharmaceutical companies, and relying on their own strong clinical team and sales team to achieve commercialization."

Prior to purnablin, in February 2021, Hengrui pharmaceutical invested US $20 million in Yingli pharmaceutical and obtained PI3K from its subsidiary Shanghai Yingli δ The joint development interests and exclusive commercial interests of inhibitor linperlisib (yy-20394) in Greater China.

As a leader of A-share medicine, Hengrui pharmaceutical has been engaged in the fields of anti-tumor drugs, surgical anesthetics, contrast agents, special infusion, cardiovascular drugs and so on for many years, and has been in the period of rapid expansion.

In the last five years, from 2016 to 2020, Hengrui pharmaceutical has achieved revenue of 11.094 billion yuan, 13.836 billion yuan, 17.418 billion yuan, 23.289 billion yuan and 27.735 billion yuan respectively, and the net profit attributable to the parent was 2.589 billion yuan, 3.217 billion yuan, 4.066 billion yuan, 5.328 billion yuan and 6.328 billion yuan respectively.

However, 2020 has become a turning point. The growth of both revenue and net profit of Hengrui Pharmaceutical Co., Ltd. slowed down to 19% and 18% respectively, reaching a new low since 2017.

In the first half of 2021, while the revenue maintained a year-on-year growth of 18%, the growth rate of net profit of Hengrui Pharmaceutical Co., Ltd. showed a cliff like decline, with a year-on-year growth of 0.21%, the lowest record in 18 years.

Hengrui pharmaceutical is facing multiple challenges.

The first shock comes from the shrinkage of generic drug performance caused by volume purchase.

From the perspective of revenue structure, although in the first half of 2021, the sales revenue of innovative drugs of Hengrui pharmaceutical reached 5.207 billion yuan, accounting for 39.15% of the total sales revenue. However, traditional generic drugs still accounted for the largest revenue of Hengrui pharmaceutical, accounting for more than 60%.

It is undeniable that the high gross profit rate of generic drugs: in 2020, Hengrui pharmaceutical contributed 55% of its revenue to anti-tumor drugs, with a gross profit margin of 93%; The gross profit margin of narcotic drugs, which accounted for 16% of the total revenue, also accounted for 90%.

How long will "jicaisha" affect the performance of Hengrui pharmaceutical? Can the high gross profit rate of generic drugs be sustained?

Hengrui pharmaceutical mentioned in the semi annual report of 2021 that "since 2018, Hengrui pharmaceutical has entered the national centralized procurement of generic drugs with a total of 28 varieties, and 18 varieties have been selected, with the average price reduction of 72.6%, causing great pressure on the company's performance".

Another group of data shows that Hengrui Pharmaceutical Co., Ltd. started to implement the third batch of centralized purchase of 6 drugs in November 2020, and the sales revenue in the first half of 2021 decreased by 57% month on month.

Another blow came from the unexpected "drop of the standard" of the company's large varieties of iodixanol and Gelong ammonium bromide injection in the fifth round of centralized purchase this year.

According to Hengrui pharmaceutical's announcement on June 23, the total sales volume of iodixanol injection and Gelong ammonium bromide injection that failed to win the bid will be 1.873 billion yuan in 2020, accounting for 6.75% of the company's revenue in the same period. In the first quarter of 2021, the total sales volume of the two products was 491 million yuan, accounting for 7.09% of the company's revenue in the same period.

Moreover, the gross profit rate of contrast agent plate is as high as 72%, which means that Hengrui pharmaceutical has lost an important "cash cow".

The third challenge comes from Hengrui pharmaceutical's innovative drug heavyweight product carrilezumab, which was launched in the second half of 2019, is still in the early stage of large-scale production, and the sales situation is not satisfactory.

In 2020, Hengrui pharmaceutical disclosed that a total of 306900 bottles of carrizumab for injection were sold, with a year-on-year increase of 326.42%, but the specific sales volume was not disclosed.

However, in the semi annual report of 2021, Hengrui pharmaceutical said that since March 1, 2021, starting to implement the negotiation price of medical insurance, the price of 200 mg / piece of carrilizumab for injection was reduced from 19800 yuan to 3000 yuan, a decrease of 85%. In addition, "the difficulty in entering the hospital, the small proportion of medical institutions' procurement, and the different implementation time of medical insurance in different regions" led to negative growth of its sales revenue.

The background of an industry is that the market competition of PD-1 is becoming increasingly fierce.

Among the similar domestic PD-1 products, the sales revenue of triprilimab (trade name: tuoyi), a PD-1 product of Junshi bio, will reach 1.003 billion yuan in 2020; The sales revenue of Xinda bio's sindilimab (trade name: dabashu) was 2.289 billion yuan; In the nine months after it was approved for listing in 2020, the sales revenue of tirelizumab (trade name: bazaar) of Baiji Shenzhou was $163.36 million (about 1.057 billion yuan).

Who can carry the banner of performance?

According to the research of the 21st century economic report, the key words of Hengrui medicine are "8 innovative drugs on the market, 43 new drugs under research and development".

In the online communication minutes, sun also mentioned that "in terms of innovative drugs, the most things will come out after the next year. Tumor and non-tumor are harvest time points. When they come out, they need to participate in the national health insurance negotiations, and then large-scale, so they can be recovered after 1-2 years of adjustment."

At this stage, who can carry the "banner" of Hengrui pharmaceutical performance?

"At present, eight innovative drugs of the company have been approved for listing. Through promotion, these innovative drugs will gradually form a climbing growth. However, it still takes time for large-scale sales. In the first half of the year, the company's innovative drugs accounted for 39.15% of the total sales revenue, which has been improved." On September 1, people from Hengrui pharmaceutical securities department mentioned.

According to the statistics of 21st century economic report reporters, with the approval of hitrapa ethanolamine tablets in June this year, the number of innovative drugs on the market of Hengrui medicine has increased to 8 (including hitrapapa ethanolamine, irexib, apatinib mesylate, thiopeferogesine, pyrrolidine maleate, carrerizumab, rimazolin toluene sulfonate and fluzopari), covering anti-tumor, anti-tumor and anti-tumor drugs Anesthesia, blood and other fields.

"What we can do is to continue to lay out innovative drugs. The company has basically formed a pattern that innovative drugs are applied for clinical application every year and innovative drugs are listed every 1-2 years," a person from Hengrui pharmaceutical securities affairs department pointed out, "fluzopari capsule and haitrabopa ethanolamine tablets are expected to enter this year's medical insurance negotiation. If they are included in the medical insurance list, the two drugs will be included in the medical insurance list, It can also speed up the volume

In addition, according to the semi annual report of 2021, Hengrui pharmaceutical is currently developing 43 new drugs, including 17 new drugs under development; Diabetes: 4 new drugs under development; Rheumatism immunity direction: 3 new drugs under research; Cardiovascular disease direction: 2 new drugs in research; Anti infection direction: 5 new drugs under development; Blood direction: 1 new drug under development; Pain management: 3 new drugs under development; Ophthalmology: 2 new drugs under development; Other directions: 6 new drugs under development.

Although Hengrui pharmaceutical has many research pipelines, me too and me better still occupy the majority, and there are still potential homogenization concerns.

Shi lichen, founder of Beijing Dingchen consulting management center, publicly mentioned, "many of Hengrui pharmaceutical are me too projects, and more than 100 clinical products currently belong to this type. In recent years, karelizumab (PD-1 inhibitor), rimazolom toluenesulfonate (GABAA receptor agonist) and fluzopari (PARP inhibitor) are typical representatives of "me too".

In this context, it is not surprising that punabilin, which has the potential to become the first in class, has been warmly watched by the market“ Punabilin is a very interesting drug. The mechanism of punabilin is not very clear, but the clinical trials are very effective, and other competitors can not be me too. " Some people in the pharmaceutical industry said.

There are also market views that "punabilin can protect bone marrow leukocytes in the early stage by reversing the blocking formation of neutrophils in bone marrow induced by chemotherapy drugs and maintaining the level of neutrophils in the normal range."