Three Key Updates: Hemorrhoid Drug 'Erbro' Discontinued with Price Surge, Semaglutide Shows Heart Failure Benefits in Diabetics, and MicroPort Secures Conditional Bailout

A total of 3 briefs | Reading time approximately 3 minutes ◆ ◆ ◆

01

After the Discontinuation of "Er Ge" Hemorrhoid Medicine, Its Price Skyrocketed 10 Times! "Yi Ge" Mayinglong's Stock Price Soared Overnight……

Out of Stock, Production Halted, Crazy Price Hikes... Recently, the "Internet-famous" hemorrhoid medicine, Titanoreine (Compound Carraghenates Suppositories), which had stopped supply for half a year, saw its price skyrocket several times over, drawing significant attention. E Pharm Manager discovered that on some internet e-commerce platforms, the price of Titanoreine (3.4gx6 pieces) ranged between 200 to 300 yuan, marking an increase of more than tenfold compared to its price before production ceased in November 2023.

After Tai Ning Suppositories were launched into the market by Xian Janssen in 2001, they quickly broke into the top five in China's hemorrhoid market, thanks to the powerful sales capabilities of Xian Janssen’s OTC sales team and their typical advertising campaigns. However, due to their higher price compared to other Chinese-produced brands like Mayinglong Hemorrhoid Ointment and the lack of a significant treatment advantage, they eventually "lost out" amidst fierce competition.

A communication letter from Xian Janssen, circulated online and dated October 2023, revealed that due to the main active ingredient of Titan suppositories—compound carrageenan ester—being naturally extracted and non-renewable, there is no longer a sustainable global supply of the raw material for production. As a result, Xian Janssen began halting the supply of Titan suppositories in November 2023 and submitted a market withdrawal application to the National Medical Products Administration on October 19, 2023.

Not long before announcing the withdrawal of Procto-G from the Chinese market, on September 14 of the same year, Johnson & Johnson announced a brand update. Its two major businesses, medical technology and pharmaceuticals, would be integrated under the Johnson & Johnson name. The pharmaceutical division, Janssen, was renamed as Johnson & Johnson Innovative Medicine. This means that the well-known pharmaceutical brand Xian Janssen, which had been in China for nearly 40 years, had "disappeared."

The recent incident involving the brand "Tai Ning Suppository" has briefly revived this once "disappeared" well-known brand. Xian Janssen once dominated the OTC market, with its brand recognition being a household name in China and often considered synonymous with common medicines. Its OTC division, which accounted for over 60% of its sales revenue, achieved annual sales exceeding 3 billion yuan very early on. However, starting from frequent personnel changes around 2008 and 2009, Xian Janssen began to decline. By 2013, its annual sales had dropped to less than 1 billion yuan. Subsequently, it experienced the downturn of prescription drugs, a lack of overlapping products during transitions, talent drain, weakened training and management capabilities, product recalls of prescription drugs, and the impact of the full implementation of centralized procurement.

Notably, perhaps also influenced by the production halt and price hike of Tai Ning suppositories, the share price of Mayinglong — known as "China's No. 1 hemorrhoid treatment brand" or the "top dog in hemorrhoid treatments" — has risen for several consecutive days. As of the closing on April 9, Mayinglong's share price surged over 6%, with a total market value of approximately 10.7 billion yuan.

E Pharm Exec noticed that not long ago, an investor asked on an interactive platform: "Does Mayinglong have any plans to produce compound carrageenan suppositories and creams to capture the hemorrhoid medication market previously held by Xian Janssen's Taning compound carrageenan suppositories and creams?" In response, Mayinglong stated: "There are currently no such plans."

As a time-honored brand with over 400 years of history, Mayinglong has achieved significant success in the field of proctology. Consumers, in particular, highly recognize Mayinglong's Musk Hemorrhoid Cream. This product once even achieved "word-of-mouth re-import," becoming popular in overseas markets and serving as a typical example of a time-honored brand "going global."

Interestingly, two days after the 2024 Chinese New Year, a topic titled “Hemorrhoid Cream Sales Triple After Two Days of Work Resumption” trended on social media, with the product behind it being Mayinglong Musk Hemorrhoid Cream. Currently, the product's sales on Taobao's official flagship store have exceeded 300,000 units.

However, it is reported that the invention patent for Mayinglong Musk Hemorrhoid Ointment expired in October 2022. Although this brand is deeply rooted in people's minds, it faces increasingly fierce market competition, and its market share has gradually declined over the past five years.

To diversify risks, Mayinglong early on implemented a diversified product layout. In addition to the anorectal sector, it has also ventured into ophthalmology, dermatology, and the broader health field. In terms of traditional Chinese medicine transformation, Mayinglong is considered one of the representative enterprises exploring diversified development, having launched products such as Mayinglong Babao Eye Cream, lipstick, diapers, and digestive biscuits. However, compared to its classic hemorrhoid ointment, the sales and influence of its other products still lag far behind.

Source: E Pharm Manager

02

Minimally Invasive System Receives "Conditional" Bailout from Hillhouse: Must Turn Profit Within Three Years

Minimally Invasive Medical (0853.HK)’s Debt Crisis Sees New Developments.

Recently, MicroPort Medical announced that some investment institutions have agreed to provide it with a convertible term loan financing of US$150 million at an annual interest rate of 5.75%. Meanwhile, Company A (HFTY I Holdings Pte. Ltd.) will additionally provide MicroPort Medical with a loan of up to US$50 million. In other words, the investment institutions may provide a total loan of up to US$200 million with a repayment period of 5 years.

The annual interest rate of the loan is not considered high. Public data shows that as of April 7, the yield on U.S. 5-year Treasury bonds was 4.39%, with the loan interest rate being only 1.36 percentage points higher.

At the same time, MicroPort Medical also has the right to prepayment. According to the financing agreement, starting from three years after MicroPort Medical first uses the initial loan, if the stock market price reaches 130% or more of the conversion price, it has the right to repay the loan in advance.

It is worth mentioning that the investment institutions providing this financing are A, B (HFTY II Holdings Pte. Ltd.), C (HFTY III Holdings Pte. Ltd.), and Jumbo Glorious.

Among them, A, B, and C are all controlled by Hillhouse Investment, which held 8.38% of MicroPort Medical's shares as of the end of June 2023; while Jumbo Glorious is controlled by Chang Zhaohua, the chairman of MicroPort Medical.

After deducting related expenses and expenditures, MicroPort Medical is expected to secure a loan of $145 million or up to $196 million.

This indeed solved the urgent problem for MicroPort Medical.

On the evening of March 28, the financial report of MicroPort Medical showed that as of the end of 2023, the outstanding balance of its convertible bonds that need to be redeemed by June 2024 still reached 4.48 billion US dollars.

However, due to the fact that MicroPort Scientific remains in a state of continuous losses and has significant capital needs, auditing firm KPMG directly pointed out in the financial report that there are major uncertainties regarding MicroPort Scientific's ability to sustain operations.

As a result, Minimally Invasive Medical's debt repayment pressure has not been small since 2024.

The financing provided by the relevant parties this time is precisely being used to repay the convertible bonds. Based on rough calculations, the balance of bonds that MicroPort Medical needs to repay could be reduced to between 2.52 billion US dollars and 3.03 billion US dollars.

Not only that, but MicroPort also stated that it is in communication with multiple financial institutions and expects to secure a credit loan of up to 300 million US dollars.

Thus, the short-term repurchase pressure of MicroPort's convertible US dollar bonds has been reduced to a certain extent.

But there is no free lunch in the world.

Although this financing has relieved the pressure of repurchase of convertible bonds for MicroPort Medical, the financing provided by Hillhouse Investment and Chang Zhaohua contains implicit conditions.

On the one hand, the financing agreement stipulates that both Hillhouse Investment and Chang Zhaohua have the right to convert the loan into shares of MicroPort Medical at a price of HKD 7.46 per share after the loan is utilized, with the total maximum convertible share ratio reaching 10.27%.

This means that if the majority of the loan balance this time is provided by Hillhouse Investment, once converted into equity, its shareholding in MicroPort Medical could exceed 18%, which would be less than 1% away from the 18.73% stake held by the largest shareholder, Otsuka Medical Devices Co., Ltd. (post-conversion share percentage).

Currently, the relevant parties may not be in a hurry to exchange shares.

As of the close on April 5, 2024 (the date of the financing agreement signing), the share price of MicroPort Medical was HK$6.77, and the conversion price still represented a premium of 10.19% over the current price.

On the other hand, the $0.50 billion financing provided by Hillhouse Investment to MicroPort Medical is tied to the latter's performance. Both parties agreed that MicroPort Medical's net profit targets for 2024 to 2026 would be -$2.75 billion, $0.55 billion, and $0.90 billion, respectively.

If MicroPort fails to achieve this performance target, Hillhouse Investment has the right to demand early repayment of the $50 million loan due in 5 years along with related interest.

This adds significant pressure to MicroPort Scientific, which has been incurring losses year after year. In 2023, its net loss attributable to shareholders was $478 million, meaning that in 2024, the reduction in losses needs to reach at least 42.47%.

Overall, if the relevant parties do not convert the bonds, this financing deal, which could reach a maximum of $200 million, will essentially just be a deferral, and MicroPort Medical will still need to repay the loan in 5 years.

Whether Minimally Invasive Medical can overcome the difficulties, the market is waiting to see.

Source: Wall Street News

03

Novo Nordisk: "Weight-loss Miracle Drug" Semaglutide Relieves Heart Failure in DiabeticsNovo Nordisk's popular weight-loss drug Wegovy (semaglutide) showed in the latest large-scale clinical trial that it can effectively alleviate related symptoms in heart failure patients with diabetes. This further supports Wegovy's potential for treating obesity-related diseases.

The study, published Saturday in The New England Journal of Medicine, found that patients using Wegovy reported significantly reduced fatigue, less leg swelling, easier breathing, and greater distance covered in the six-minute walk test compared to those in the placebo control group. Additionally, this group reported fewer serious health issues.

The study is one of the latest results in a series of large trials advanced by Novo Nordisk, aiming to verify the effectiveness of Wegovy in treating various obesity-related health issues, including knee osteoarthritis and cardiovascular diseases. Novo Nordisk hopes to use these research findings to encourage cost-conscious insurance companies to cover the costs of this drug, which is about $1,350 per month.

This week's heart failure research focuses on "heart failure with preserved ejection fraction" – a condition where the lower chambers of the heart fail to pump enough blood to the body. In the United States, approximately 3 million people are affected by this condition, while globally, the number of patients may reach up to 32 million. According to a review published last year in the JAMA medical journal, the annual mortality rate for this disease is about 15%.

Novo Nordisk released the preliminary results of its heart failure study for the first time in January when it announced its fourth-quarter earnings report. This trial targeted obese heart failure patients without diabetes. The results of the two trials were submitted to U.S. and European regulatory authorities for review in January.

Source: Wall Street News

Editor: Xing Zhipeng

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