21st Century Business Herald reporter Ji Yuanyuan Shanghai Report On January 20, the Geneva Medicines Patent Pool (MPP) announced that it has signed agreements with 27 companies around the world, including Fosun Pharma (600196), 688166, Diesel Pharma, Langhua Pharmaceutical, Longze Pharmaceutical, which will produce and supply high-quality, Affordable generic version of Merck's oral anti-coronavirus drug Molnupiravir.
Affected by this news, today (January 21) A shares opened, Fosun Pharma, Brilliant Pharma are up and down.
At noon on January 21, Brilliant Pharma issued an announcement that under the agreement, in addition to the patent royalties, the parties to the product licensing do not enjoy the share of product sales, and depending on the nature of the buyer, the company should pay a patent royalty to Merck at 5% or 10% of the annual net sales of the product (defined under the agreement), but based on the MSD-MPP agreement, the aforementioned patent royalties will be declared from the WHO that COVID-19 is no longer classified as a "public health emergency of international concern" Charging starts the following month.
In addition, the production of cooperative drugs under this license needs to complete the relevant technical handover, and the production facilities need to be approved by SRA (strict regulatory agencies, including members of the International Coordinating Council on Technical Requirements for the Use of Drugs for Humans (ICH), or ICH observers and regulatory agencies related to ICH members, etc.) or pre-qualified by the World Health Organization. The production and sales of cooperative drugs in the region under this license shall be subject to the approval of the relevant competent authorities (including but not limited to marketing approval) before they can be implemented. There is uncertainty as to whether the cooperative drugs produced by the Company under this license will be approved by the local drug regulatory authorities in the region and the time of marketing in the region.
At present, the new crown virus is still a global pandemic, and the new variant, Aomi Kerong, has spread in more than 150 countries and regions around the world, and has become a major epidemic strain in many countries. Among them, 14 provinces in China have reported imported cases of Aumechjon, while Tianjin, Henan, Shenzhen and other places have also had local Opmi kerong epidemics.
Although 5 Chinese companies have obtained imitation licenses, as the world's largest developing country, merck oral generic drugs produced by these companies will not be listed in the Chinese market, so why is China not on the list of beneficiary countries?
Why can't generic drugs be sold in the Chinese market?
The 21st Century Business Herald reporter learned by inquiring about the relevant paper information that the MedicinesPatent Pool (MPP) was established in Geneva, Switzerland in 2010. MPP negotiates with the original pharmaceutical company on the voluntary licensing of drug patents, the original pharmaceutical company puts its drug patents into the patent pool, and the generic drug enterprise applies to the MPP to obtain the patent implementation license in the patent pool, and produces and supplies generic drugs to low- and middle-income countries.
Generic drug companies (mainly for pharmaceutical companies in developing countries) voluntarily include their relevant drug patents in MPP; second, voluntarily submit their license intentions to MPP, and after the license intention is approved by MPP experts, MPP signs a licensing agreement with the generic drug company, pays the license fee to the original research company and pays the intermediary fee to MPP. Generic drug companies that are sublicensed may be allowed to produce patented drugs from original research companies in developing countries and to sell the patented drugs produced to low- and lower-middle-income countries in accordance with the provisions of the licensing agreement. MPP licensing is a non-exclusive license, and often through the licensing of multiple generic drug companies to increase market competition and reduce drug prices. In summary, MPP balances the interests of the original research company and the generic drug manufacturer, and effectively solves the problem of patient access to drugs and the conflict between it and the right to life and health.
In addition, there are market restrictions on MPP licensing. Re-licensing is mainly for 131 low- and middle-income countries, but does not include important markets such as China, Europe and the United States, and is intended to share the market "abandoned" by the original research company with generic drug companies. And different countries and regions where different drugs are sold are different. Large markets like Brazil and China are usually not included in the geographic scope of licensed sales. For example, according to the information published from the MPP website, three Chinese pharmaceutical companies have previously obtained MPP licenses for tenofovir disoproxil fumarate (TDF), and according to the license agreement, TDF generic drugs (including preparations containing TDF combinations) produced by Chinese pharmaceutical companies can be sold to 112 countries, but China is not among them. In September 2017, Gilead and MPP amended their license agreement on tenofovir ellafenolamine (TAF). Compared to the original agreement, the scope of license sales countries has been expanded to 116 countries. But 36 middle-income countries were excluded from the geographic scope of the licensing agreement.
Existing MPP licenses cover a total of 131 countries, covering all low-income countries and 50%-80% of middle-income countries under World Bank standards.
According to the latest standards released by the World Bank in July 2021, high-income countries have a per capita GNI of more than $12,695; upper-middle-income countries have a per capita GNI of more than $4,096 but less than $12,695; low-income middle-income countries have a per capita GNI of between $1,046 and $4,096; and per capita GNI of less than $1,046 are low-income countries. According to the 2021 China Economic Annual Report, the per capita GDP of the mainland will reach 80,976 yuan in 2021, which has exceeded 12,000 US dollars according to the average annual exchange rate, and the gap between GDP and GNI is very small, so China should be among the upper-middle countries.
When will Chinese patients be able to use COVID-19 oral drugs?
Merck said it had produced 10 million sessions by the end of 2021 and expects to produce at least 20 million sessions in 2022. To date, Merck has shipped Moldupiravir to more than 20 countries with marketing approval or authorization, and already patients have begun to receive the drug for treatment. To increase the supply of licensed generic drug manufacturers, Merck has reached an agreement with UNICEF to deploy a total of 3 million courses of Moldupiravir to low- and middle-income countries in the first half of 2022.
But in fact, the supply of oral covid-19 therapeutic drugs is far from meeting the demand. It is reported that Pfizer's Paxlovid takes 6 to 8 months to produce. The first 10 million doses of Pfizer's agreement with the U.S. government will not be delivered until June. Merck said 3 million doses of Mornaupiravir will be delivered by the end of January; However, the need for merck is reduced due to the lower efficacy of merck.
According to zhongtai securities report, data from the U.S. Department of Health and Human Services shows that since September 2021, nearly 3 million anti-coronavirus drugs have been distributed in the United States so far, including 2.57 million doses of antibody injection drugs and 360,000 oral courses of treatment. Among them, Merck oral medicines accounted for 83% of the total number of oral drugs distributed, with a total distribution of 300,000 courses of treatment, but the recent daily average of about 1.5 million new confirmed cases in the United States is far in short supply.
In addition, some sources revealed to the 21st Century Business Herald reporter that it is expected that Pfizer will announce the authorized cooperation enterprises in early February to produce and supply high-quality and affordable oral anti-coronavirus drugs Paxlovid generic drugs for low- and middle-income countries or regions around the world.
Previously, Pfizer has entered into a voluntary licensing agreement with MMP, a NONPROfit supported by the United Nations. Qualified generic manufacturers authorized by MPP will be able to offer the drug at lower prices to 95 low- and middle-income countries.
Guosheng Securities also analyzed that the current company's application for Pfizer's MPP license 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.
As for the companies that missed the opportunity to license Merck's Moldupiravir generic drugs, who else can win Pfizer's Paxlovid generic drug license.
Although MPP licensed msding and subsequent Pfizer ORAL generic drugs cannot be sold in the Chinese market, it has little impact on Chinese patients. In this regard, some securities analysts pointed out to the 21st Century Business Herald reporter that first, China's epidemic control is relatively good, and the number of patients is small and the demand itself is small; second, the domestic new crown oral drug is also making rapid progress, and it is expected to submit a listing application this year.
Previously, the domestic new crown oral drug VV116 has been authorized for emergency use in Uzbekistan. Some market sources believe that after passing the clinical trial, Junshi Bio is expected to apply for VV116 listing in the second half of 2022. In this regard, Junshi Bio said in an interview with the 21st Century Business Herald reporter that the company is currently actively promoting the clinical trial of VV116 and is preparing for the international multi-center phase II and III clinical trials of the drug.
In addition to Junshi Biologics, domestically produced new crown oral drugs under research also include pioneering pharmaceutical AR antagonist pukrutamine, which is currently in the global phase III clinical trial, which has previously been approved in Paraguay EUA; real bio Azvedine is currently carrying out phase III clinical trials in China, Brazil, and Russia, with good preliminary data; Frontier Biologics' Phase I clinical trials in the United States are underway; Simcere Pharmaceuticals' 3CL, a key protease necessary for SARS-CoV-2 virus replication. Demonstrated good antiviral activity and safety in preclinical animal models; Genting Shin Yao announced a partnership agreement with a public R&D facility in Singapore to introduce its COVID-19 oral drug EDDC-2214.
Which companies will the MPP supply agreement be beneficial to?
This supply agreement, in addition to Fosun Pharma, also makes Brilliant Pharma a big winner.
According to the third quarter report of Brilliant Pharmaceutical in 2021, the company's main revenue was 748 million yuan, up 46.62% year-on-year; net profit was 177 million yuan, up 45.3% year-on-year. In early January, Brilliant Pharmaceutical disclosed that the company intends to subscribe for the new registered capital of Jiangsu Baoyi Pharmaceutical Co., Ltd. of RMB 1,166,700 for 10 million yuan. After the completion of the capital increase, the company directly holds 3.92% of the equity of Poly Pharmaceutical, and Poly Pharmaceutical is not included in the scope of the company's consolidated statements. Brilliant Pharmaceutical intends to cooperate with Poly Pharmaceutical in order production and product research and development to enhance the company's comprehensive pharmaceutical technology capabilities as a whole, and improve the whole industry chain layout of "starting material → difficult intermediates - → characteristic APIs → preparations".
In addition, Brilliant Pharmaceutical disclosed that in terms of production capacity, as of the end of the third quarter of 2021, the progress of Taixing base was 81.5%, the Suzhou project had completed pile foundation and support works, and the civil engineering completion rate of the Indonesian project was 95%.
According to Minsheng Securities, Pfizer Paxlovid's domestic cooperative suppliers are Boteng shares, Gloria Ying, etc.; MERCK's domestic cooperative suppliers are Tianyu shares, Boten shares, etc. The US government has ordered 10 million courses of Pfizer drugs and 3 million treatments of Merck drugs, and it is expected that the global order volume will further grow.
A chief analyst in the pharmaceutical industry told the 21st Century Business Herald reporter that it is also driven by the MMP agreement, and the suppliers of APIs and CDMO will also usher in many benefits. After five local pharmaceutical companies have obtained MERCK oral drug imitation licenses to produce and supply the new crown oral drug Moldupiravir generic drug for 105 low- and middle-income countries or regions around the world, this means that subsequent APIs and CDMO suppliers will continue to increase their quantities.
Previously, Zhu Renzong, secretary general of the branch of the China Chamber of Commerce for Import and Export of Pharmaceutical and Health Products, said in an interview with the 21st Century Business Herald reporter that starting from Gilead's "remdesivir" in 2020, China's APIs and CXO companies have more or less joined the research and development chain of new crown pneumonia therapeutic drugs, undertaking the API and intermediate service list of new crown pneumonia related treatment drugs. In addition to the drug research and development stage, these companies will also get oem processing orders, and then, after the new crown pneumonia treatment drugs move to the stage of approval and listing, they will also achieve huge commercial additional benefits, after all, the number of new crown pneumonia patients in the world is relatively large.
Wu Xiaoying, co-managing partner of EY's life sciences and healthcare industry in Greater China, also pointed out in an interview with the 21st Century Business Herald reporter that in the context of the new crown global pandemic, the market hopes that the combination of new crown vaccine + new crown virus treatment drugs can make the new crown "flu". This will also make in the short term due to the status of China's API in the global supply chain and good domestic epidemic control, some and multinational pharmaceutical companies in-depth cooperation with API manufacturers have harvested the first wave of business opportunities, and in the long run, as the market tends to be normal, more and more small molecule drugs listed to make the price return to a reasonable range, assuming that the new crown oral small molecule market in the scale of tens of billions of DOLLARs, 5% -6% of the API market, bringing new market space of about 500-600 million US dollars per year.
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