Introduction
In two years, Hansoh Pharma's revenue share of innovative drugs has increased from 18.9% to 52.3% in H1 this year. It seems that Hansoh Pharma has successfully transformed itself into a truly innovative drug company with innovative drug driven growth. How exactly did Hansoh Pharma achieve the successful transformation and survive the dark period of centralized procurement? What blockbuster products does it have? What is its future outlook?
From a focus on generic drugs to a combination of generic + innovative drugs and then to a focus on innovative drugs, Hansoh Pharma has spent seven years to complete the process.
Recently, Hansoh Pharma disclosed its semi-annual report for 2022, and one of the data highlights is that: in the first half of 2022, Hansoh Pharma's innovative drug revenue was about RMB 2.321 billion, up about 84.8% YoY, and the revenue share of innovative drugs increased significantly to a record high of about 52.3%, compared with 28.5% in the same period of the previous year.
This is a milestone figure for Hansoh Pharma, signifying its successful transformation into an innovative pharmaceutical company with innovative drug driven growth. Hansoh Pharma's successful transformation also provides the industry with a sample of innovation based transformation and instills confidence in traditional pharmaceutical companies in transition.
How exactly did Hansoh Pharma succeed in its transformation? What blockbuster products does it have? What is its future outlook? HealthCare Executive will try to answer these questions by analyzing its financial results in recent years.
01 Behind the successful shift: innovative drugs take over in time, and there is an obvious trend of concentration
If we review the results of Hansoh Pharma's successful shift to innovative drugs, we will see two significant changes: the first is the change in product mix, and the second is the trend of concentration in therapeutic areas.
The last three years have been a critical period for Hansoh Pharma's innovative drug explosion. According to the data, its innovative drug revenue grew from RMB 752 million in H1 2020 to RMB 2,321 million in H1 this year, with an annual compound growth rate of 75.68% during the period; the revenue share of innovative drugs also increased from 18.9% two years ago to 52.3% in H1 this year.
Behind the data is the product portfolio. In the four years since 2019, Hansoh Pharma has obtained approval for 5 innovative drugs (4 self-developed + 1 introduced): polyethylene glycol loxenatide (2019), flumatinib (2019), aumolertinib (2020), tenofovir amibufenamide (2021), and inebilizumab (2022). The four aforementioned self-developed innovative drugs and the new drug morinidazole sodium chloride launched in 2014 have become the drivers of Hansoh Pharma's performance growth at the present stage.
Aumolertinib, in particular, sold over RMB 100 million in its first year of commercial launch after first being approved for second-line treatment of non-small cell lung cancer in March 2020. Aumolertinib was further approved for first-line treatment at the end of last year, and sales have continued to gain momentum, making it the fastest growing variety at Hansoh Pharma. According to estimates, the variety has probably achieved two-fold growth.
According to the analysis, the key to the growth of aumolertinib is "product power". On the one hand, aumolertinib is the first original third-generation EGFR-TKI innovative drug in China, with a first-mover advantage; on the other hand, aumolertinib has recognized clinical efficacy and safety. Reportedly, aumolertinib is the world's first third-generation EGFR-TKI with a median progression-free survival (mPFS) of more than 1 year (second-line use), and has been included in the 2022 CSCO Guidelines for the Diagnosis and Treatment of Non-small Cell Lung Cancer for first-line and second-line indications, both of which are Class I recommendations.
The successful shift is also closely related to Hansoh Pharma's commercialization strategy. For innovative oncology drugs, the inclusion in the National Reimbursable Drug List is the most important access channel. Hansoh Pharma is well aware of the rules. After aumolertinib was approved, Hansoh Pharma has promoted its inclusion in the National Reimbursable Drug List as soon as possible to quickly capture the market. According to media reports, until March this year, aumolertinib has been used by about 150,000 people. After its approval for first-line treatment, aumolertinib will be available to a broader market.
Having benefited from the inclusion in the National Reimbursable Drug List, Hansoh Pharma managed to get its innovative drug for hepatitis B, tenofovir amibufenamide, into the National Reimbursable Drug List soon as well, making it one of the fastest drugs to enter the list. In June 2021, tenofovir amibufenamide was approved for the treatment of chronic hepatitis B in adults and was included in the National Reimbursable Drug List after successful negotiation in November of that year. Meanwhile, Hansoh Pharma launched intensive academic campaigns for the drug. Up to now, the drug has been included in the CSCO Guidelines for the Diagnosis and Treatment of Liver Cancer (2022) as a Class I recommendation.
While its blockbuster products take over one after another, the therapeutic areas covered by Hansoh Pharma also show a trend of concentration: focus on oncology, develop in CNS and anti-infection areas, and explore in metabolism and other areas. The data shows that in 2017, the total revenue share of the above three areas was only 51.12%, and the figure climbed to 87.8% in H1 2022; especially in the oncology area, the revenue share has already doubled from about 25% in 2017 to 55.3% now. This trend of concentration is actually a microcosm of the trend of large companies in the pharmaceutical industry.
02 The future of Hansoh Pharma: external BD collaboration and in-house R&D serve as two engines; external BD collaboration has delivered results and entered a fast lane
Hansoh Pharma's brilliant performance in innovative drugs today is the result of its investment in innovations over years, and the future depends on what is done now. In the past four years, Hansoh Pharma has launched five new Class 1 drugs through in-house R&D, and its next results will come from both in-house R&D and external BD collaboration.
Starting in 2019, Hansoh Pharma has begun to broaden its pipelines through external collaboration. After three years of efforts, BD results are initially showing up this year, reaching a milestone.
External BD collaboration consists of two parts: "bringing in" and "going out". In terms of "bringing in", in March this year, Hansoh Pharma's CD19 mAb inebilizumab was approved by the NMPA for marketing. This drug is the only product in the world for the treatment of NMOSD. It has been included in China's Guidelines for the Diagnosis and Treatment of Neuromyelitis Optica Spectrum Disorders (2021) as a Class A recommendation. According to Hansoh Pharma, inebilizumab will be formally marketed in the second half of the year. In addition, international multi-center pivotal registration clinical trials have been conducted worldwide, including in China, for the two indications of IgG4-related diseases and generalized myasthenia gravis.
Publicly available information shows that inebilizumab was introduced by Hansoh Pharma in May 2019 from Viela Bio (now acquired by Horizon) for its development and commercialization in mainland China, Hong Kong and Macau. Currently, inebilizumab is already approved in the U.S., EU, Japan, etc.
In terms of "going out", Hansoh Pharma's first license-out program, aumolertinib, has also made breakthrough progress. In June this year, the marketing authorization application of aumolertinib for first-line treatment of advanced or metastatic NSCLC with EGFR mutations was accepted in the U.K. (MHRA). It is expected to become the first innovative drug of its kind in China to be successfully marketed overseas.
This is just the beginning. Since 2021, Hansoh Pharma's external BD collaboration has entered the fast lane.
In the last two months alone, three blockbuster BD deals have been reached, including the recent agreement with GHDDI for up to RMB 1.692 billion to co-develop a new oral Covid drug (3-CL protease inhibitor), and the acquisition of a license for an oral non-peptide GnRH receptor antagonist (for endometriosis and uterine fibroids and other potential indications) from TiumBio in Korea for up to USD 170 million.
As far as we know, Hansoh Pharma's future BD strategy will consist of three main parts. First, Hansoh Pharma will strengthen the screening and introduction of mature innovative products, such as inebilizumab. In December 2021, Hansoh Pharma introduced ibrexafungerp, a broad-spectrum antifungal drug with a new mechanism of action from Synexis. Currently, the product has been approved for Phase III clinical trials in China for vulvovaginal candidiasis (VVC), and several other indications are in the late stage of clinical development.
Second, Hansoh Pharma will actively deploy early stage, highly differentiated representative projects. In May this year, Hansoh Pharma obtained an exclusive license for HIF-2α inhibitors in Greater China from NiKang Therapeutics Inc. for the treatment of multiple tumor types. HIF-2α is known as a "Nobel Prize target", but there are only a few companies in this field and they are all in the early stage. Only a few pioneer companies where it was discovered, including Peloton Therapeutics and Arrowhead, have a clinical presence.
Hansoh Pharma is also exploring the layout of early-stage innovations in the form of incubation investments. In June 2021, Hansoh Pharma and Cormorant Asset co-founded and incubated Blossom Biosciences, a contracted research laboratory that provides cell-based research.
Third, Hansoh Pharma will strengthen technology platform partnerships on a global scale. Under this strategy, Hansoh Pharma has established an intensive presence in the nucleic acid drug field last year. Some in the industry believe that "nucleic acid drugs will become the third largest technical field after small molecules and large molecules". In October 2021, Hansoh Pharma reached strategic cooperation with OliX Pharmaceuticals and Silence Therapeuticsplc, and obtained the right to develop small nucleic acid drug candidates using the GalNAc-asiRNA technology platform and mRNAi GOLD™ platform respectively. According to statistics, these two BD deals were ranked ninth and second among the "Top Ten License-in Deals for Innovative Drugs in China 2021", with a total value of USD 456 million and USD 1.316 billion respectively.
AI-enabled new drug development has also been the focus of various pharmaceutical companies' layout in recent years. Following its first deployment in July 2021, Hansoh Pharma further expanded its strategic partnership in AI-enabled early stage development in July this year.
In-house R&D has always been a strength and a continued investment for Hansoh Pharma. In recent years, Hansoh Pharma has been increasing its R&D investment, the share of which has grown from 9.31% in 2017 to 18.1% in 2021. According to its financial results, in the first half of this year, Hansoh Pharma has been granted a total of 46 patents in China (including 8 granted in Hong Kong, Macau and Taiwan) and 4 patents abroad. The company currently has more than 40 clinical trials covering more than 25 innovative drug programs in various clinical stages.
In its semi-annual report, Hansoh Pharma expects that its first domestic long-acting EPO (erythropoietin) drug, pegmolesatide injection, will be approved for marketing within the year. As far as we know, EPO products that have been previously marketed in China are mainly short-acting agents, and relatively speaking, long-acting agents are more stable and have better patient compliance. Therefore, some believe that long-acting agents will gradually replace short-acting agents in the future. In mature overseas EPO markets, the proportion of long-acting agents has already exceeded 50%.
To sum up, Hansoh Pharma has basically eliminated the impact of centralized procurement at the present stage and has successfully transformed into an innovative pharmaceutical company with innovative drug driven growth. With a number of innovative drugs in hand, Hansoh Pharma is expected to usher in a golden harvest period as it continues to build up commercialization experience. In addition, its diversified BD model is adapting to the current industry environment, which will bring more robust growth for itself and provide a reference path for the industry.
