No other era has so many difficulties and hopes. Rooted in this changing era, facing all the bloody tests, the more difficult it is, the more we move forward. For all medical people, winter will eventually pass. In 2023, we will trot towards spring as fast as possible, as before, without looking back, because this is the mission of all medical people.
The COVID-19 epidemic has lasted three full years. It has been three years of great waves washing away the sand, three years of washing away impetuosity, and three years of reform and innovation. By the third year, both Big Pharma and Biotech, as well as investors, had a profound feeling.
Liu Gexin said that 2022 is a breakthrough year for Kelun. In the research and development of innovative drug , "Kelen's attitude is not to block the road and not to follow. does not block the road because he does not want to be trampled to death by the rebel army, and he does not follow because the mob often runs in the wrong direction."
Yang Dajun said that if I could sum up 2022 in one word, I think it would be "survive". This year, Ascent, which "adhered to global innovation and did not chase popular tracks", became China's ideal Biotech and provided a model for the industry.
For investors, the common feeling in 2022 is that of coldness, so they have adjusted their strategies. On the one hand, they favor mining projects with high certainty, and on the other hand, they turn to early investment and new investment.
In the new year, there are no obstacles that cannot be overcome. Will the "spring" of medicine come in 2023?
Most entrepreneurs and investors are relatively optimistic. Liu Gexin said, "Domestic pharmaceutical companies have now entered a foundation-building period. Companies that have laid a good foundation at this stage will surely be able to seize opportunities and have a bright future." Cui Jisong said, "There is no doubt that the development prospects of the pharmaceutical industry are good." Yu Wenxin said, "The bottom has appeared, and the worst situation has been experienced."
There are also a small number of entrepreneurs and investors who maintain a cautiously optimistic or neutral to pessimistic attitude. Yang Dajun believes that 2023 will be better than 2022, but it is difficult to say whether the market adjustment will be in place. Qiu Jiwan believes that has not yet been adjusted in place. 2023 will be neutral to pessimistic, and there will be some phased rebounds, but overall it is still a bottoming out stage. Ma Zhenkun said, "It may take some time (estimated to be about a year) for the entire industry to get out of this trough period."
No matter what, what the industry needs most in 2023 is confidence . 2023 is undoubtedly a process of rebuilding confidence. What should we grasp, and what certainties will last? What new changes will there be?
Liu Gexin said that what is certain is the continued advancement of centralized procurement and medical insurance negotiations, the upgrade of medical insurance cost control, and the centralization of the pharmaceutical industry. Innovative research and development will continue to develop unstoppably in the next few years. Internationalization is what everyone is working towards.
Guo Jia said that "true innovation" must be certain among certainties. At the same time, the "supply-side reform" of innovative drugs is also relatively certain, which will lead to polarization. Excellent companies will take advantage of the situation to stand out, while others will withdraw from the stage of history due to various reasons.
Yang Yunxia said that in 2023, the investment of leading funds in medical care will continue to increase, and the investment and financing behavior itself will accelerate. The overseas export of products of innovative companies may be accelerated, on the one hand, to developed countries, and on the other hand, to countries along the Belt and Road.
Zhang Xiaodong said that 2023 is a crucial year for China's pharmaceutical industry. In the future, medical and health care will pay more attention to the concept of medical and health care based on the family.
The following are Liu Gexin, chairman of Kelun Pharmaceutical , Yang Dajun, chairman and CEO of Ascentage Pharmaceuticals, Cui Jisong, co-founder of InnoCare, co-founder and CEO, Ma Zhenkun, founder and CEO of Danno Pharmaceuticals, Qiu Jiwan, founder and CEO of Quanxin Biotech, Yang Jie, president of Dyne Pharmaceuticals, Chen Zhisheng, CEO of WuXi Biologics, Yu Lihua, general manager of Situofan China, and partners of Sequoia China Yang Yunxia, Managing Director of Shaanxi Investment Growth Fund Guo Jia, General Manager of CCB International Medical Growth Fund Lin Lei, China Renaissance co-founder Xie Yijing, Haitong Securities chief pharmaceutical industry analyst Yu Wenxin, Soochow Securities chief pharmaceutical industry analyst Zhu Guoguang, and Meixin Health founder and CEO Zhang Xiaodong, (in no particular order), has sent a long New Year's letter about "spring" to all us pharmaceutical people, please read it! E Pharmacy Manager would like to wish all pharmaceutical professionals a Happy New Year!
Q: What are the keywords of 2022? Or what is the most memorable event for you? What changes have occurred this year?
Liu Gexin: For big pharmaceutical companies, 2022 is a year of breakthrough. On the one hand, price reductions for drugs and consumables have become a trend. After a strong reshuffle of the market, generic drugs will become a game for the strong. On the other hand, in the "large, fast and chaotic" new drug research and development, homogeneous competition is still serious, and the market has a serious panic about the pharmaceutical industry. Column's attitude is not to block the road and not to follow. He doesn't block the road because he doesn't want to be trampled to death by the rebels. He doesn't follow because the rabble often runs in the wrong direction. In 2022, we and Merck reached a total of US$11.5 billion in cooperation including multiple transactions and multiple projects, opening up a new situation in the research and development of new drugs. At present, domestic pharmaceutical companies have entered a foundation-building period. Companies that have laid a good foundation at this stage will surely be able to seize opportunities and have a bright future.
Yang Dajun: If I could sum up 2022 in one word, I think it would be "survive", because in 2022 we will encounter all the "natural and man-made disasters" that we Chinese often call, including epidemics, wars, capital winter, etc.
Guo Jia: When I write this, I am on the second day of being positive for the new crown. To talk about the most impressive event, my personal experience is the lack of "medical treatment" and "drugs" after the epidemic control was relaxed. This is a real problem that everyone has to face. The reason is that on the one hand, there is still a shortage of domestic innovative drug R&D companies. I am not talking about the quantity, but the advanced underlying technology and the ability to quickly respond to new things that need to be strengthened. On the other hand, the "new medical infrastructure" needs to be improved to a higher level. This is a systemic problem of supply chain and resource allocation from upstream to downstream.
Xie Yijing: The key word for 2022 is the change of the entire general pattern. The world once again stands at the crossroads of history, facing "big changes unseen in a century." In the year of great changes, we have noticed that investors’ strategies and behaviors have also been adjusted and transformed. On the one hand, they prefer to look for project opportunities with higher certainty. On the other hand, they are also investing in early and new projects, and actively exploring opportunities for early-stage innovative projects to adapt to the changing trends of the times. Taking the pharmaceutical and biotechnology track as an example, the proportion of transactions in the primary market in Series B and before will increase to 91% in 2022.
Yang Jie: The most profound thing for me in 2022 is the recent wave of drug hoarding, especially the shortage of children's drugs. This incident gave me two inspirations. First, children’s health-related education needs to be intensified; second, continuous innovation and focus on clinical value are needed to provide children with more specialized drugs to choose from.
Q: From your observation, has the market adjustment been in place so far? Are you optimistic or pessimistic about the pharmaceutical industry in 2023? Why?
Yu Wenxin: The downward cycle of the industry is a good opportunity for high-quality companies to expand their share. The market will eventually give opportunities to those who make medicine seriously and sincerely.Now we think the bottom has been reached and the worst situation has been experienced. The next thing to compete is what kind of products and data each company can produce and what kind of sales results it can achieve. The overall environment in 2023 will be better than that in 2022, because after experiencing a major correction in the stock market, we are relatively optimistic about both the external environment and the progress of the innovative drug industry itself.
Cui Jisong: The development prospects of the pharmaceutical industry are good, there is no doubt about this. As the aging of the population intensifies and people's health needs continue to rise, the overall scale of the pharmaceutical industry is growing steadily, and the core competitiveness of driven by innovation is also gradually improving. I believe that as we continue to increase our research and development efforts and further improve our innovation capabilities, innovations with real clinical value will definitely be recognized by capital and the market.
Yang Dajun: 2023 will be better than 2022. As for whether the market has truly adjusted in place, it is difficult to say. However, from the recent large-scale license out transactions, it can be seen that good products will be recognized by international peers at any time and at any stage. From the perspective of the company itself, needs products with differentiated clinical advantages to survive in the waves.
Yang Jie: In 2023, I am still optimistic overall. There are three reasons: First, with the implementation of the "Class B and Pipe B" policy, patients' medical treatment will return to normal growth, which is the basis for the recovery of the pharmaceutical industry; second, due to the immune escape characteristics of the new coronavirus infection, most people will have multiple infections. Related antipyretics, cough relieving, phlegm reduction, anti- virus , antibiotics, etc. are expected to grow rapidly and usher in fierce competition. Third, due to the three-year epidemic, people's health awareness has increased, and their consumption of health-protecting products such as vitamin minerals has increased, driving the continued growth of this type of track.
Yu Lihua: I am generally cautiously optimistic. It can be expected that the impact of the epidemic on us will gradually fade in 2023, but the biomedicine industry does not develop independently of China's overall economic environment. It will take some time for both the general environment and a certain industry to recover.
Qiu Jiwan: I think the adjustment has not been in place. In 2023, it will be neutral to pessimistic. There will be some periodic rebounds (such as the recent recovery of Hong Kong stocks pharmaceutical sector), but overall it is still a bottoming stage. The money raised by many companies from 2020 to the first half of 2021 may only be able to support it until the end of 2023. I believe that more equity transactions or asset transactions will take place by then, and the bottom of the entire industry will be built more solidly.
Guo Jia: market adjustment may continue for some time. After all, "conduction" and "response" take a certain amount of time. The historical market adjustment time span of U.S. biotechnology ranges from 15 to 34 months, and it has been 22 months since February 2021, so 2023 may be a dynamic repair process. My attitude in 2023 is cautiously optimistic. The industry is slowly getting better during the adjustment process. However, we have also seen that the bubble of some startups in the primary market has not been completely cleared or the "crisis awareness" and "trade-off awareness" are not strong enough. still needs to be cleaned up. Building a healthy pharmaceutical ecosystem is the responsibility of every pharmaceutical person. The high growth in the past five years will definitely slow down, and we should follow the trend.
Ma Zhenkun: Under the cold capital winter, the valuations of many projects have been affected to varying degrees; however, the current valuations of most Biotech (including listed companies) are still at relatively high levels. I think the adjustment has not been in place yet, and it may take some time (estimated to be about a year) for the entire industry to get out of this trough period.
But from the perspective of the long-term development of the industry, I still maintain a relatively optimistic attitude. After all, China's pharmaceutical innovation has just started. Compared with the mature markets of Europe, the United States and Japan, our development space is huge.I believe that after this round of adjustments and reshuffles, the Biotech companies that can survive are companies that are good enough, companies that can focus on technological breakthroughs, and companies that can truly do source innovation and global new innovative pharmaceutical companies.
Zhang Xiaodong: We believe that with the continuous improvement of our country's national health awareness, the pharmaceutical industry will usher in a new period of development opportunities. In 2023, multi-level medical security will also be more deeply rooted in the hearts of the people. As long as we are down-to-earth and move forward hard, we will definitely see more brilliant sunshine in 2023.
Q: If you stand at the current node and look forward to the medical industry in 2023, what things are more certain? Which trends are here to stay? What new changes will there be?
Liu Gexin: determines the continued advancement of centralized procurement and medical insurance negotiations, the upgrade of medical insurance cost control, and the centralization of the pharmaceutical industry. Innovative research and development will continue to develop unstoppably in the next few years. Internationalization is what everyone is working towards. The quality of China's innovative drugs has also been recognized by more and more MNC due to the painstaking development in recent years. The differentiation of technical products, differentiation of clinical indications and treatment methods, rapid research and development speed, and standardized research and development processes have begun to align with international standards in all aspects. In the next few years or more than ten years, some large pharmaceutical companies that can rival MNC will surely emerge in China.
Yang Yunxia: There are several trends: First, in 2023, top funds’ investment in medical care will continue to increase. Second, investment and financing activities themselves will accelerate because some investors feel that the market price has corrected to a certain stage and are considering whether it is time to take action. Third, the liquidation of and in the entire market will continue. After a round of adjustments, many companies will realize that speculation in the medical market is unsustainable and solid basic skills are still needed. Fourth, the company's products may be exported overseas at an accelerated pace, on the one hand to developed countries and on the other hand to countries along the Belt and Road.
Ma Zhenkun: The industrial division of labor in China’s innovative drugs will definitely be further refined: Biotech companies will focus more on and deepen their expertise in the fields they are best at, focusing on technological breakthroughs and differentiated innovation; at the same time, Biotech will further strengthen external cooperation, especially with Big Pharma With the commercialization and international cooperation, transactions related to various technologies and products will become more active; finally, the way out for Biotech will not only be to develop into Biopharma and IPO listing, but also to be strategically invested or acquired by industrial parties, especially Big Pharma, which may become a new exit path for Biotech in the future.
Guo Jia: "True innovation" must be certain among certainties. At the same time, the "supply-side reform" of innovative drugs is also relatively certain, which will lead to polarization. Excellent companies will take advantage of the situation to stand out, while others will withdraw from the stage of history due to various reasons. There will be several trends in the future. For example, we recently saw that Kelun Pharmaceutical licensed 7 pre-clinical stage ADC drugs to Merck for US$9.5 billion. The "international cooperation" and "License" of this blockbuster product "out" will continue to increase, which is a new starting point for excellent companies to go international; after the accumulation of time in the past few years, the commercialization of new drugs will gradually be implemented, and several varieties have emerged with sales exceeding 1 billion yuan a year after being launched. The second growth curve of innovative drugs is emerging and will gradually surpass traditional products. Innovative companies with fast layout or obvious differentiation are more concerned; with the continuous progress of polarization, the return of valuations to rationality is the general trend, and there may be a wave of mergers and acquisitions.
Xie Yijing: For the medical industry, it is imperative to realize the transformation and upgrading of independent controllable and self-reliance in the field of medical technology. The trend of medical innovation will continue, but after the changes in 2022, the potential for high-quality innovation will be stronger in the future. Our domestic medical innovation environment will gradually change from bigger to stronger, changing the current situation of the industry's "puffiness".For enterprises, after 22 years of market adjustment, it is even more necessary for enterprises to return to their roots and escape from the fierce competition of homogeneous involution such as me-too and me-better. On the one hand, they must improve their hard power and expand their capabilities. On the other hand, they must look for their own scarcity and uniqueness, think about whether products can return to the essential needs of clinical treatment, and produce high-quality innovative products with real clinical application value.
lin lei: Medical investment is gradually improving, I firmly believe this. In specific directions, such as brain-computer interface , or the field of neurointervention/brain neuromodulation, we will increase our layout, because brain science is a field that is far from being fully developed. There are also small nucleic acid drugs, which have the advantages of simple chemical synthesis and the precision of targeted therapy. and other cutting-edge technical fields.
Qiu Jiwan: From our point of view, I think the certainty of the self-freedom track in China will continue to strengthen. It can be seen that new and old products in the field such as Kecenting, Dabitux and Humira have been rapidly increasing in volume in the past two years. This trend is believed to last for a long time; the new change is that domestic companies are catching up, and domestic products challenge the existing competitive landscape.
Yu Lihua: The certainty of China’s pharmaceutical industry comes from our pursuit of continuous innovation. I predict that CRO will continue to be active in 2023, and the development of new molecular designs and synthetic biology will further promote innovative development. In addition, the vaccine industry will also enter an era of innovation with the technological breakthroughs in the development of new crown vaccine in recent years. Gene and cell therapies are developing steadily amidst the benefits of being launched on the market. The integrity and localization of the biotechnology industry's supply chain will continue to deepen, and the application of digitalization from R&D to production will be further strengthened. As for changes, I think the general environment will generate new demands in the market, pharmaceutical terminal demand will rise, and the market will be warmer than in 2022. At the same time, CDMO's production capacity and will be released more, and competition will intensify slightly and expand to some emerging fields such as gene therapy and nucleic acid drugs.
Zhang Xiaodong: 2023 is a crucial year for China's pharmaceutical industry. In the future, medical and health care will pay more attention to the concept of medical and health care based on the family. Secondly, in the post-epidemic era, Chinese people have shifted from treating existing illnesses to treating pre-existing illnesses. For example, how to improve immunity , how to do a good job in health management .
Chen Zhisheng: is “innovation model upgrade”. In the past, Chinese companies’ R&D strategies focused on “me-too” and “fast follow”. After this cold winter, the future innovation model must be first-in-class, best-in-class. After the big waves wash away the sand, what remains are companies that are truly innovative and can truly create value. The second is that "the market is picking up and transactions are increasing." The international market has begun to pick up recently, and we have seen industry giants frequently introducing innovative pipelines at high prices. In 2023, this buy, buy, buy trend will continue.
Zhu Guoguang: "Anti-epidemic" and "post-epidemic" are the two key words for pharmaceutical investment in 2023. Judging from overseas experience, after the relaxation of prevention and control, the number of infections increased in the short term, hospital beds were tight, and consumption shrank. Later, as group immunity improved, daily activities such as consumption resumed. We are optimistic about the following four main lines: First, during the "anti-epidemic" period, new crown anti-epidemic products and anti-cold drugs and their industry chain will be the first to benefit. Second, the "post-epidemic" period will usher in a surge in demand. Consumer medical services, scientific research services, clinical CRO companies, and export-oriented companies represented by medical services and medical aesthetics are expected to achieve high performance growth. Third, the "post-epidemic" outpatient and inpatient volume will replenish the volume, and the in-hospital pharmaceutical and equipment, IVD, and medical sectors just need to increase their volume. Fourth, the certainty of recovery in investment, financing and monetary policy has increased, and opportunities in the innovative drug sector have become more prominent.
Q: The epidemic seems to be coming to an end.Could you please summarize from the perspective of your own role, what has changed in the past three years due to the epidemic? What remains unchanged? What inspiration does it have for you?
Qiu Jiwan: What has changed is that the epidemic has accelerated the cyclical fluctuations in the pharmaceutical industry. What remains unchanged is that most companies and capital have not been able to avoid the impact of industry cycles, resulting in another "capital winter". As a business operator, we need to be steady and steady. "Targeting unmet clinical needs" cannot be just a slogan, but must be realized through solid work; in addition, the clinical trial promotion strategy under the influence of the epidemic is also a key point that deserves our deep thinking and optimization and adjustment in the future.
Ma Zhenkun: The three-year epidemic has had a huge impact on medical innovation: patient recruitment has become very difficult; some subjects passively left the trial, forming dropout cases; clinical trials internal inspection and audit tasks are often delayed; many clinical trials even have to be suspended... Affected by the epidemic, coupled with the capital winter, it has become increasingly difficult for innovative drug companies to raise funds, especially for some late-stage projects with high valuations. Determined to delve deeply into the track in which I specialize, explore differentiated innovation, and strive for excellence; I firmly believe that this core focus can lead the company and team through industry cycles and achieve substantial development.
Yang Yunxia: Generally speaking, I think there are three positive changes in . First of all, from the consumer side, people's health awareness and willingness to consume medical care are increasing. For example, the self-pay part of medical insurance and medical commercial insurance are growing rapidly. Second, everyone is aware of the changes in life brought about by new technologies, such as antigen testing, which only a few people knew about before. Third, the concept of telemedicine is not just telemedicine.
In the post-epidemic era, what everyone may need to think about is how to better integrate it into the process of investment and enterprise development to make the development of enterprises and technology more efficient. Many things now are obtained at a heavy price. How to turn these resources into value is crucial. Smart entrepreneurs and investors will have this awareness.
Guo Jia: From an investor’s perspective, I think the three-year epidemic and the downward trend in pharmaceutical valuations have actually changed more in “awareness” and “confidence.” makes us realize that the pharmaceutical industry is no longer a "win-win" field. It requires not only a high-level understanding of the industry and technology, but more importantly, an understanding of people. In the face of valuation reductions in the past two years, we still have to distinguish authenticity from falsehoods and regain confidence. Gold will always shine. No matter whether malignant events or benign events occur, what remains unchanged is always " technology innovation " and "meeting needs", which is the source of promoting industrial revolution and wealth revolution again and again.
Xie Yijing: What remains unchanged is that the development of the medical industry is still spiraling upward, with new technologies, new treatments, and new models emerging one after another. Even if the market environment has been affected by the epidemic, looking at the long time axis, medical innovation is actually still in an era of bursting vitality. Amid market adjustments, the financing environment and investors' criteria for judging projects are indeed changing. Everyone's expectations for valuations are becoming more conservative and they pay more attention to the nature of the company. Therefore, medical companies must pay more attention to improving their comprehensive strength in order to achieve longer-term development.
First, when it comes to building product strength, should not only pursue the ultimate perfection of technology, but also pay attention to the industrialization capabilities and commercial value of the product. should avoid detours and start with the end in mind. Second, in terms of the operational capabilities of the company, attention should be paid to improving the efficiency of capital use, pipeline planning, focusing on key points, and enhancing the endurance of one's own survival. In addition, we must also pay more attention to the cohesion of the team. A team with centripetal force and execution ability is particularly important in a changing environment. Finally, financing capabilities are also a very important driving force and guarantee for enterprise development. Only by making reasonable financing plans can we be able to advance and attack and retreat and defend.
Yu Lihua: Under the influence of the epidemic, our emphasis on supply chain security and production capacity flexibility has been greatly enhanced. Faced with this change, biotechnology companies, especially foreign capital, must pay attention to the integrity of the supply chain and the layout of global production capacity. At the same time, we will strengthen investment in building regional localization capabilities.
Cui Jisong: The three-year epidemic has changed many of our work and communication methods, but everyone's high concern for health has not changed. Our country is gradually improving its health system. Biomedicine is an important guarantee for building a health and medical system. We are based on our main business and continue to contribute to public health.
Q: Biotech has been selling factories, laying off employees, cutting pipelines in the past two years, and has frequent cash flow problems. What do you think of this phenomenon? Have big pharmaceutical companies encountered the problem of cash flow ? Facing the current external environment, what should entrepreneurs do?
Liu Gexin: With the advent of the capital winter in the past two years, it is not uncommon for Biotech to "cut off its wrists" to reduce expenditures. Shrinking pipelines, licensing external parties, and selling factories. It can be seen that in the face of life and death issues, survival has become the first priority for every Biotech company. Although the cold winter of will not make people comfortable, challenges and opportunities always coexist. Biotech's recent business adjustments and responses can effectively promote resource allocation and value creation in the long run. This is a normal and positive phenomenon in the industry cycle.
Faced with the current challenging market environment and the clustering of popular targets, crowded tracks, and serious chaos of involution into , we should "boost confidence and move forward with determination", understand the rules of the industry more rationally and calmly, find the real direction, and think carefully about the development trend of the industry and the development path of the enterprise. "Making gold from the waves" focuses on improving overall competitiveness, paying attention to unmet clinical needs, creating a scientific product matrix and differentiated pipelines, mastering core technologies with independent intellectual property rights and inhouse independent research and development capabilities, and having a strong commercialization team, production capacity, production capacity planning, , etc. are the keys to supporting the company's long-term development.
Yang Yunxia: This is very realistic, and we don’t need to avoid it. A market downturn like this is, to some extent, a process of market liquidation. For enterprises, it is the natural law of the entire business society - survival of the fittest. If you have a good product line, you will have strong vitality and you will naturally live well. Nowadays, some companies do have some challenges at the product level. For example, homogeneous products and weak company management capabilities will naturally encounter crises. Such enterprises need to think about how to streamline their operations and improve efficiency.
Q: From your observation, how confident are investment institutions and innovative drug companies this year? How will the local market evolve accordingly? Will the trend continue?
lei: Confidence is generally insufficient this year. Previously, domestic investors did not fully understand the cycle of the industry, which led to a large proportion of following trends, which also resulted in the fear of taking action under the current high-risk situation. For those more professional investors, it is often the opposite operation.
There is an advantage to the capital winter - it will speed up the reshuffle process, allowing those who really do things to work deeply in the industry, professional institutions will continue to survive and develop, and speculative institutions will fade out of the medical industry.
The mentality of start-up companies is changing. In the past, they expected high valuations and selected the best from investment institutions. Now they have become very rational, especially in terms of valuation, which is even more accepting, even the same as in the previous round. Overall, they have a sense of crisis. Many companies are now unable to raise funds and may only have half a year's cash flow. Therefore, what is doing is to increase revenue and reduce expenditure, make preparations, spend more time raising funds, and reduce valuation.
