This year, Chinese corporations in the pharmaceutical and biotech sectors are exporting new drug technology to global pharmaceutical companies and obtaining drug approvals in the United States, achieving business results one after another. Despite the United States proposing the 'Biosecurity Act' to block Chinese companies' operations in the U.S. and imposing high tariffs, there are evaluations that China is making strides in the global market by leveraging its research and development capabilities.
According to a report released by the American financial services company Stifel earlier this year, last year, transactions between global pharmaceutical companies and Chinese corporations accounted for one-third of all licensing contracts. The proportion of contracts held by Chinese pharmaceutical and biotech corporations increased consecutively over the past three years, from 12% in 2022 to 29% in 2023, and 31% in 2024. China is transforming into a key market for global pharmaceutical companies in terms of new drug development.
◇Export of next-generation candidates by leading obesity drug developers
MSD, the U.S. affiliate of Merck, announced on the 25th (local time) that it had signed an exclusive licensing agreement for the cardiovascular disease treatment candidate 'HRS-5346 (development code)' from Chinese corporation Hansoh Pharmaceutical. The contract amount reaches a total of $1.97 billion (approximately 2.9 trillion won), including an upfront payment of $200 million (approximately 290 billion won). With this contract, MSD secured exclusive rights for the development, manufacturing, and commercialization of HRS-5346 in countries outside of China.
HRS-5346 is a new drug candidate that inhibits lipoprotein accumulation on blood vessel walls and is currently in Phase 2 clinical trials. If lipoproteins accumulate, blood flow can be blocked, leading to cardiovascular diseases such as myocardial infarction or stroke. Hansoh Pharmaceutical, established in 1970, is a leading pharmaceutical corporation in China for cancer drug sales. It is also a company that is jointly developing a new drug for liver cancer with the domestic corporation HLB. The MSD side stated, 'HRS-5346 is an essential candidate that will expand and complement the company’s portfolio in cardiovascular and metabolic disease candidates.'
The day before, Novo Nordisk from Denmark also announced that it had signed a contract to introduce the obesity treatment candidate 'UBT251' from Chinese corporation United Laboratories. With this contract, Novo Nordisk secured exclusive rights to develop, manufacture, and commercialize UBT251 in countries excluding China, Hong Kong, Macau, and Taiwan. The contract amount is up to $1.8 billion (approximately 2.6 trillion won), including an upfront payment of $200 million (approximately 300 billion won).
Novo Nordisk assessed that UBT251 has the potential to surpass existing obesity treatments. The company’s Wegovy, which sparked a trend in obesity drugs, mimics glucagon-like peptide (GLP)-1 to reduce appetite in the brain and slows digestion, helping individuals feel fuller for longer with smaller meals. UBT251 acts as a tri-peptide agonist that mimics GLP-1 along with glucose-dependent insulinotropic peptide (GIP) and glucagon. GIP breaks down fat cells and glucagon is involved in increasing the basal metabolic rate.
As of now, there are no tri-peptide obesity treatment drugs launched in the global market. The obesity drug from Eli Lilly, called Mounjaro, is a dual-agonist targeting both GLP-1 and GIP simultaneously. Industry experts believe that if a company succeeds in developing a tri-peptide treatment first, it can gain significant competitive advantage in the market. Eli Lilly and Hanmi Pharmaceutical are also entering the development of tri-peptide obesity treatments.
Last year, there were ongoing transactions between global pharmaceutical companies and Chinese corporations. Last year, the United Kingdom’s AstraZeneca signed a contract worth $1.92 billion with Chinese corporation CSPC Pharmaceutical Group for the development of a cardiovascular disease treatment, while MSD entered into a $2 billion contract with Hanmi Pharmaceutical for the development of an oral obesity treatment.
◇Clinical trial cost and time competitiveness based on a large population
Industry experts evaluate that the active overseas expansion of Chinese pharmaceutical and biotech corporations is evidence that their research and development capabilities are recognized in the global market. Recently, Chinese corporations have also been successful in obtaining drug approvals in the United States.
In January, the U.S. Food and Drug Administration (FDA) approved the immune-oncology drug 'Tebentafusp (tislelizumab)' from the Chinese corporation BeiGene as a first-line treatment for HER2-positive stomach cancer. This marks the third approval for a stomach cancer treatment that targets overexpression of the HER2 protein on cancer cell surfaces, following MSD's Keytruda and BMS/Ono's Opdivo.
In 2023, three new drugs developed in China, including the immune-oncology drug Rocktorzi (toripalimab) from Junshi Biosciences, received FDA approval. According to the research institution DealForma, if this trend continues, a significant number of new drugs entering the U.S. market in ten years will be those developed in China.
China's large population makes it easy to find patients who can participate in clinical trials. This leads to lower clinical trial costs and faster development times, making it advantageous for new drug development. According to market research firm Airfinity, the number of investigator-initiated trials (IIT) in China surged from 2,500 in 2018 to more than 8,000 in 2024, making patient recruitment for clinical trials easier and speeding up clinical research.
As clinical trials increase, the approval of innovative drugs within China is also on the rise. According to a report published by the National Medical Products Administration (NMPA) in China on the 18th, the country granted market approval for 48 first-in-class innovative drugs last year. This is the highest number of approvals in the last five years, following 21 approvals in 2022 and 40 in 2023, showing a clear upward trend.
Dutch venture capital firm Forbion noted, 'Chinese corporations have a competitive advantage in R&D productivity, time, and expense,' adding that 'especially the fast decision-making structure and efficient R&D systems are attractive factors to global investors.'