The rise of China’s pharmaceutical innovation in recent years is an indisputable fact, but it is the overall driving force of the industry that combines the right time and place , which makes the analysis of individual success factors confusing. It is precisely because of these changes that drive the leap-forward development of the industry that the magnitude is huge , short-term , or even transient , the Chinese pharmaceutical innovation industry in the past 10 years or so has actually been in a kind of “born outside the three realms, not in the five elements”. In the very special state of “China”, it is difficult to find benchmarks in time and space, and even the timeline of industry development seems to have several discontinuous breakpoints.
This kind of particularity and sense of rupture has created a huge illusion for practitioners and investors in the whole industry. We cannot see the whole and the part, the long-term and the temporary, the general and the special. Corresponding to individual success) and β (which can be superficially corresponding to the development of the industry) are analogous, that is, many people confuse the two upside down, the most typical two hallucinations are: 1) mistakenly regard industry β as their own α ; 2) wrong Think of the alpha of a few people as the beta of the industry . This is not surprising. After all, the instinctive psychological need shared by human beings is self-recognition. In layman’s terms, it is “ self-struggle if you are successful, and poor environment if you are poor ”.
Among the many factors that can easily cause the confusion and inversion of α/β, the reform of the drug approval system, the reform of medical insurance payment , the expansion of the capital market , and PD-1 are the most confusing because they are the most important in the process of the rise of the industry. The event is bound to have a great causal relationship (or at least correlation) with the development of the industry as a whole and each participant, so it has become the most common source of hallucinations .
1. Reform of the drug approval system
The drug review reform in 2015 brought innovative drugs to China, which is a watershed significance for China’s pharmaceutical industry.
Among the huge policy dividends, the beta of the entire pharmaceutical industry is visible to the naked eye. Every IND and NDA in the above picture is a trace of beta, and it goes without saying that there are both good and bad, and what is even worse is this short period of time. There is a huge β in the interior, one is that the judgment of α forms a huge background noise , and the other is that the sustainability of the increment is doubtful , and then there are two more representative hallucinations (often appearing at the same time):
1) In the past, the development of our enterprise was not fast enough, and the main problems depended on supervision, including but not limited to the speed of approval is too slow, the technology is too new, the supervision is too conservative to understand, and the one-size-fits-all approach was accidentally injured, without MAH, we had to build our own factory, etc. ;
2) In the future, the development of our company will be accelerated, mainly because the regulatory policies are in place and our value is realized, including but not limited to the speed of approval has been significantly accelerated, CDE is very supportive to us, we maintain close dynamic communication with regulatory agencies, and there is a large CDMO. Speed up R&D progress, etc.
Looking back, have you seen similar statements in many BPs or heard similar statements from many founders in recent years? Especially in the field of cell therapy in the past two years, do more than half of the BPs have to write about Wei Zexi or the Health and Family Planning Commission’s suspension?
It is undeniable that these factors have truly affected the development trajectories of many companies and even many sub-industries, and are naturally the top priority when analyzing and judging. However, after all, these influences are only the β in history and have nothing to do with the α of various companies. You are blocked by supervision and others are also blocked, but in fact, the progress difference of each company is visible to the naked eye; in addition, the drug review reform brought about Whether the policy dividends can still bring continuous increments requires at least rigorous argumentation, rather than taking it for granted.
2. Medical insurance payment reform
Right now is the time to talk about the discoloration of medical insurance. It seems that the medical insurance bureau is the biggest obstacle to the development of China’s pharmaceutical industry. The face below has become a lingering nightmare for many people. The ceiling of China’s pharmaceutical market has been lowered, the commercial logic of innovative drugs has come to an end, and the price will be reduced upon approval. All these are simply an illusion: if the commercialization of a product or company is not smooth, it must be the cauldron of medical insurance .
The problem is, we have to know where the road starts. Medical insurance negotiation is not a thing. Since ancient times, the 2017 edition of the catalogue adjustment was dubbed “a major benefit after the ‘eight-year war of resistance'” by many brokerage research reports. According to the medical insurance payment method before that, PD-1s are still there. Floating outside the medical insurance list.
Data source: “Blue Book on Progress and Effectiveness of China’s Medical Insurance Drug Administration Reform”
The irony is that, I remember when I first entered the industry, the image of medical insurance was not like this. At the beginning of a certain domestic me-too, it was widely believed that the province’s medical insurance took the lead in supporting local innovative enterprises, and it was possible to sell so many from retail in one fell swoop. This actually constitutes another form of “medical insurance illusion”: since there are If some companies rely on medical insurance “special care” to achieve commercialization, then we can do it. If not, it must be the overall suppression of Chinese innovative drugs by medical insurance, so it is not my problem .
3. Capital market expansion
Hong Kong 18A and the Science and Technology Innovation Board are undoubtedly the most direct boosters for innovative drugs, and probably the biggest driving factor for a large number of capital and talents to flow into this industry. After a group of corporate financing was greatly accelerated and a group of founders quickly became financially free, the capital market seems to have turned into the biggest negative factor in the past year or so. Come.
Regarding the role that the capital market should play, we might as well look back at Li Xiaojia’s speech “Li Xiaojia: The Start of Hong Kong’s Biotechnology Sector” after the release of 18A. After a while, the scene erupted in applause for a long time: “Will there be chicken feathers in one place? We think this is a high probability event, it will definitely happen. When will it appear? I don’t know. It must be because there is no normal market. It will escape the control of the laws of the market, there will always be times when the market is very crazy, as long as you let the market make a decision, this up and down is inevitable.” Web link
The madness and despair of capital are actually the projection of the illusion of Chinese innovative drug practitioners, and it is also the most intuitive manifestation of the confusion and inversion of α/β:
1) The first year or two at the beginning of the capital leap forward is a window for the concentrated capitalization of industry elements accumulated in the previous 5-10 years or even longer. Indeed, several companies with good asset quality have made full profits in the capital market. (Among the 18A companies in the table above, there are only a handful of 18A companies whose shareholders have not lost money before listing), so the idea of ”I can do it myself” became popular, and it appeared that no matter what the company was, it was a “$1 billion crossover round -> The fixed path of “10 billion RMB IPO” is a typical one that regards the α of a few people as the β of the industry ;
2) From the blooming flowers to the broken branches and leaves, the overall trend has also become a huge noise that drowns out individual information. When the rise is good, the PD-1 brothers are almost worth over 100 billion, and when the fall is bad, a few hold The potential BIC may also be less than 1 billion US dollars. Since they are all like this, then falling into a penny stock naturally does not mean that our company is losing competitiveness, and it is a typical mistake to regard the industry β as its own α.
4. PD-1
Different from the previous ones, this is not an endogenous element of China’s innovative drug industry, but an external driving force that is contingent to a certain extent, but does play an important role in shaping the logic of the industry. The core is this ” contingency ” feature. , after all, the rise of China’s innovative drugs does not necessarily coincide with PD-1, a phenomenon-level large variety of patented drugs, which means that the opportunities brought by PD-1 are likely to be transient and irreproducible .
Regardless of whether PD-1 can surpass TNF-α and become the new historical drug king, at least it can definitely play an important role in the history of human medicine development, and its siege strategy coincides with the time axis of the rise of China’s innovative drugs. Various favorable conditions such as patents have enabled the first batch of Chinese biotech pioneers to seize this historic opportunity keenly, and take advantage of the momentum to complete the feat of stepping into the pharmacy threshold from zero in less than ten years.
The problem is that the two time windows of PD-1 opportunity and the competition of Chinese innovative drug groups are once in decades , and both are indispensable for the leap-forward growth of biotech. In fact, even if you look at the other side of the developed ocean, there may be only a few AMGN/REGN/GILD who can truly rely on heavy-duty varieties to break through from biotech to pharma. Players in a corner of the market, without the boost of this super-heavy variety, it is almost difficult to achieve commercialization independently.
It doesn’t matter whether you are lucky or the right one, in short, if you miss this window, it will be hard to have it again. However, this kind of accidental factor has been ignored by many people, so there is a classic illusion of “fund managers/agriculture and forestry/CRO laymen can make such a big company, why can’t I do it”, especially when it comes to In the pre-judgment of the commercialization potential of varieties, PD-1 is often used as a benchmark, and even a slightly derogatory benchmark. However, we need to be soberly aware that this is not only the alpha of others, but also the beta of an industry and era .
Before I started writing, it was just a relatively vague and unpleasant feeling. During the writing process, I had to re-read quite a lot of previous project materials for the sake of accurate recall. In the instinct of all people, even when we look at it with a critical attitude, we will be involuntarily substituted into these illusions, making it difficult for us to truly grasp the core crux.
Times will always move forward, illusions will be shattered in the process of turning expectations into reality, and new illusions will arise. We just do our best to observe the laws of industry operation more closely, and walk on thin ice between reality and fantasy.
Aoyama is still there, How Many Suns. How many things in the past and the present are all in jokes.
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