300,000 shareholders boiling! 5 Chinese companies are allowed to imitate the new crown oral drug for free, and two stocks are scheduled to rise and fall? This listed company has also benefited, and the benefits are much greater.

Medicine is out again!

On 20 January, the Geneva Medicines Patent Pool (MPP) group announced that it had signed agreements with 27 generic drug companies to produce Merck's oral COVID-19 antiviral drug moldupiravir for supply to 105 low- and middle-income countries.

A total of 5 Chinese pharmaceutical companies were shortlisted for the agreement, With Fosun Pharma, Brilliant Pharma, Shijiazhuang Longze Pharmaceutical and Shanghai Disano licensed to produce both MORNUPIRAVIR APIs and finished drugs, while Langhua Pharmaceutical, a subsidiary of Via Biotech, was allowed to produce Mornupiravir APIs. Neither Merck nor its partner Ridgeback Biotherapeutics, nor Emory University in the United States, which invented the drug, receive royalties from the Mmolupiravir sale of MPP sublicensors.

Previously, the intermediate concept stocks continued to soar without a real hammer, and now fosun pharma and Bo Rui Pharma, two listed companies, have been licensed, which is undoubtedly a heavy positive for their stock prices. In addition, Aidi Pharmaceutical, which has a stake in Longze Pharmaceutical, may also benefit from this. However, for vaccines, masks and testing stocks, this may be a small shock.

New crown oral drugs opened large-scale imitation

According to Reuters, the Medicines Patent Pool (MPP) announced that it has signed agreements with 27 generic drug manufacturing companies to produce and supply high-quality and affordable Merck oral anti-coronavirus drug Moldupiravir generic drugs for 105 low- and middle-income countries or regions around the world to promote the affordability and accessibility of oral anti-coronavirus drugs in low- and middle-income countries and help local epidemic prevention and control.

Based on clinical trial results, the antiviral pill received emergency approval in the U.S. in December, reducing hospitalizations and deaths in high-risk patients by approximately 30 percent. The deal, negotiated with Merck in the U.N.-backed Patent Pool for Medicines (MPP), will expand production by increasing the number of companies producing the drug after Merck signed licensing agreements with eight Indian drugmakers last October.

The MPP said the agreement stipulates that the pill will be distributed to 105 less developed countries. A spokesperson later said some of the companies covered in the deal could start deliveries as early as February.

Citing preliminary estimates from drugmakers, an MPP official involved in negotiations with drugmakers is expected to cost about $20 for a five-day 40-pill molnupiravir course in poorer countries. That's well below the $700 per course the U.S. agreed to pay. But it's double what the World Health Organization (WHO)-backed project to procure COVID-19 drugs and vaccines worldwide initially estimated.

Charles Gore, executive director of MPP, said: "We are encouraged by the swift action of many new and existing partners to obtain sub-licensing of molnupiravir through MPP. This is a critical step in ensuring global access to much-needed treatment for COVID-19. We believe that as manufacturers work closely with regulators, low- and middle-income countries will soon have access to the drug. ”

Five Chinese enterprises were allowed to imitate

According to the agreement, a total of five Chinese pharmaceutical companies were shortlisted for the agreement, Fosun Pharma, Bo Rui Pharma, Shijiazhuang Longze Pharmaceutical and Shanghai Disano were licensed to produce MONUUPIRAVIR APIs and finished drugs at the same time, and Langhua Pharmaceutical, a subsidiary of Via Bio, was allowed to produce MORNUPIRAVIR APIs. Neither Merck nor its partner Ridgeback Biotherapeutics, nor Emory University in the United States, which invented the drug, receive royalties from the Mmolupiravir sale of MPP sublicensors.

So, how big is the upside? Guosheng Securities made a unified interpretation of several issues with relatively high market attention:

1. What is the MPP application process?  

If pharmaceutical companies are willing to apply for MPP licenses, they can fill in the EOI online, providing specific information on production records, research and development capabilities and regulatory compliance of drugs with guaranteed production capacity, quality assurance, MPP through the information in the EOI to select qualified generic drug companies to authorize the implementation of licenses, and the licensed generic drug companies to the licensing agreement to the middle and low income countries to produce and sell generic drugs. That is, the MPP organization is screened according to some qualifications and experience of past enterprises, and is authorized (it is considered to be pre-certification).

2. What are the steps after obtaining the qualification?  

Following the current agreement, Merck will make a technology handover with the authorized enterprise and provide the company with a technical package. The enterprise then conducts the research and development of APIs and preparations according to the technical package, and submits a PQ application to the WHO after research and development. After filing a PQ application, the WHO may or may not conduct an on-site audit, but we understand that pharmaceuticals can sell the corresponding products to 105 countries by filing a PQ application. (The specific follow-up time depends on the company's research and development capabilities, it is not yet certain, you can refer to the timeline of Coron's answer on the investor platform).

3. What countries are the quantity, price and supply?  

Low- and middle-income countries. The volume and price are negotiated by the business team with governments or large drug distributors. Neither Merck nor Pfizer includes China in the countries that authorize MPP.

4. What companies may be in Pfizer's MPP?  

The current MPP application for Pfizer should have also been submitted. According to the Q&A of investors on the Coron platform, Kolun submitted an application, and the circumstances submitted by other companies cannot be determined for the time being.

According to Reuters, the MPP is committed to increasing access to life-saving medicines in poorer countries. It also struck an agreement with Pfizer to sublicense its COVID-19 tablet paxlovid to generic drugmakers.

Eddy Pharmaceuticals also benefits? What other potential stocks are there

Two of the five companies are listed companies, Fosun Pharma and Brilliant Pharma, which have a total of about 305,000 shareholders. Judging from this favorable level, many netizens believe that shareholders can start counting boards. However, some analysts believe that since Merck does not charge money, generic drugs are estimated to be embarrassed to sell too high, and it is estimated that they will eventually rely on small profits and sell them.

At the same time, Eddy Pharmaceuticals may also benefit. According to the company's response on the investor interaction platform, the company's investment project in Shijiazhuang Longze Pharmaceutical Co., Ltd. was completed on January 18, 2021, and the relevant industrial and commercial change procedures were completed on February 19, 2021. As of now, the company holds 4.76% of the equity of Longze Pharmaceutical.

According to the analysis of the aforementioned Guosheng Securities, the current application for Pfizer's MPP should have also been submitted. According to the Q&A of investors on the Kelun Pharmaceutical platform, Kelun submitted an application, and the situation submitted by other companies cannot be determined for the time being. Prior to this, Yaben Chemical continued to rise sharply due to rumors of "supplying carolong anhydride to Pfizer", but it was later denied by the company, and the company is still suspended. Jincheng Pharmaceutical also rose sharply due to intermediates.

However, it is worth mentioning that when Merck's new crown oral drug was introduced, vaccine stocks have fallen sharply, and it remains to be seen whether this time will also have an impact on stocks such as vaccines and in vitro testing.

Editor-in-charge: Wang Yunpeng