Nuclear Medicine Emerges as the Next Golden Investment Frontier: Multinational Pharma Giants Pour Billions into Radiopharmaceuticals

Source丨Original Work by 21st Century Health (Healthnews21)

Author/Ji Yuanyuan Intern Tian Jiayi

As global investors focus most of their attention on ADC and GLP-1 drugs, the radiopharmaceuticals market has emerged as a hotspot this year, potentially becoming another "golden" track.

Recently, the multinational pharmaceutical giant Bristol-Myers Squibb (BMS) announced that it has reached a definitive merger agreement with biotechnology company RayzeBio, Inc. The agreement shows,BMS to Acquire RayzeBio at $62.50 Per Share in a Deal Valued at Approximately $4.1 BillionAs of press time, the share price of RayzeBio, listed on Nasdaq, has doubled to $61.35 per share, surging over 100% from last Friday's closing price.

This year, BMS is not the only multinational pharmaceutical company to increase its investment in the radiopharmaceuticals field. In October, Eli Lilly announced a $1.4 billion acquisition of Point Biopharma at a 68% premium to enter the competition for the radiopharmaceuticals market. However, the deal recently fell out of favor in the market. This is because Point Biopharma released the results of the Phase III clinical study of 177Lu-PNT2002, which met the primary endpoint. While the results generally met Eli Lilly’s expectations, they failed to meet market expectations.

In addition to BMS and Eli Lilly, giants such as Novartis and Bayer are also increasingly investing in nuclear medicine.In the eyes of many analysts, the results of PNT2002 are disappointing compared to Novartis' Pluvicto. Currently, Novartis' two star products, Lutathera and Pluvicto, have sparked a wave of research and development in the radiopharmaceutical conjugates (RDC) industry.

Looking at the domestic market in China, the nuclear medicine market is also fiercely competitive. Currently, Euviac® Fluorine [18F] Betaben Injection, a product of Beijing Xiantong International Technology Co., Ltd., has been approved for marketing by the National Medical Products Administration (NMPA), becoming the first Aβ-PET imaging agent in China approved for Alzheimer's disease (AD) diagnosis. This is the company’s first approved nuclear medicine product. Meanwhile, 99mTc-3PRGD2 (Technetium [99mTc] Hydrazinonicotinamide Polyethylene Glycol Cyclic RGD Peptide Injection), a novel specific SPECT/CT tumor imaging agent independently developed by RayzeBio, is the first Class 1 innovative drug in China’s nuclear medicine field and also the world’s first broad-spectrum tumor imaging agent for SPECT imaging diagnosis. It is accelerating its entry into the Chinese market. Hengrui Medicine's nuclear medicine product has also achieved key progress, with Lutetium Oxodotreotide Injection receiving clinical approval.

According to data from Deutsche Bank Medicine: The scale of China's nuclear medicine market was approximately US$1.3 billion in 2020, with a compound annual growth rate of 9.9% from 2017 to 2020. It is expected to grow steadily at a rate of 10.7% between 2022 and 2026, and the market is expected to approach US$2.4 billion by 2026.

The application prospects of radiopharmaceuticals are receiving increasing attention, attracting capital from multiple parties, and the radiopharmaceuticals market is showing vigorous vitality. Why is the radiopharmaceuticals track so hot? What challenges are still faced beneath this trend?

Mentioning "nuclear" often brings to mind war and environmental pollution. However, nuclear medicine, as an innovative approach in medical diagnosis and treatment, has brought significant hope to cancer patients.

Nuclear medicine, also known as radiopharmaceuticals, refers to drugs made using radionuclides. The exploration of nuclear medicine began with Marie Curie's research on radium. In 1946, biophysicist John Lawrence and his team successfully injected radioactive substances into a patient for tumor treatment for the first time. Five years later, Abbott launched the first commercial radiopharmaceutical, I131 Human Serum Albumin (RISA), marking a significant event in the application of nuclear medicine in the healthcare market.To date, nuclear medicine has become an indispensable helper in the diagnosis and treatment of human diseases.

According to the clinical application of drugs, radiopharmaceuticals can be divided into diagnostic and therapeutic categories. Diagnostic radiopharmaceuticals refer to a class of in vivo radioactive drugs used to obtain images or functional parameters of target organs or diseased tissues within the body for diagnostic purposes; therapeutic radiopharmaceuticals selectively deliver radionuclides with cytotoxic levels to the affected areas, utilizing the radiation emitted by radioisotopes to generate localized biological effects of ionizing radiation, thereby exerting a destructive effect on diseased tissues or cells.

Nuclear medicine has multiple advantages, including precise quantitative dosing, a combination of internal and external radiation, and the unique feature and advantage of "theranostics integration."That is, diagnostic radiopharmaceutical molecular imaging can display lesions, which are also able to specifically uptake labeled therapeutic radiopharmaceuticals. Through radionuclide internal irradiation, the identified lesions can be treated, achieving personalized diagnosis and treatment.

Global Data report shows,Venture capital investment in the nuclear medicine sector reached $408 million this year, a 550% increase from $63 million in 2017.The Rise of the Nuclear Medicine Sector Is No Accident, Closely Tied to Its Irreplaceability in Cancer Diagnosis and Treatment. In recent years, the demand and usage of both diagnostic and therapeutic nuclear medicines have been on the rise. According to the Global Cancer Observatory 2020 database, nearly 10 million people die from cancer globally each year.

It can be seen that behind the radiopharmaceuticals market lies a huge unmet therapeutic need. Besides patient demand, what drives the continuous heating up of drug development in the radiopharmaceuticals track is also the most attention-grabbing innovation today: targeted radiopharmaceuticals, namely, Radioligand Drug Conjugates (RDC).

A pharmaceuticals industry analyst from a securities firm introduced to the 21st Century Business Herald that RDC, similar to the recently "overcrowded" Antibody-Drug Conjugates (ADC), also belongs to the category of conjugated drugs. It is composed of targeting ligands, linkers, chelators, and radionuclides. By utilizing antibodies, antibody fragments, small molecules, or peptides to mediate specific targeting effects, radionuclides are delivered to the target site. This concentrates the radiation generated by radioisotopes on the tumor site, damaging single or double strands of cancer cell DNA, halting cell growth, and thereby eliminating cancer cells. While providing highly efficient and precise treatment, it reduces damage to other tissues. For patients with advanced-stage tumors, especially those with multiple metastases, RDC drugs offer a new treatment option.

"In the past, nuclear medicine was mainly used for imaging diagnosis. Therapeutic nuclear medicine accounted for a relatively low share of the entire nuclear medicine market due to limitations in upstream isotope production capacity, as well as stringent approval processes and usage conditions," the aforementioned analyst said.

According to BBC Research data, as of 2020, the global nuclear medicine market size was approximately USD 9.3 billion, with diagnostic drugs accounting for 83.4% of the share, exceeding USD 7.7 billion in scale. The biggest advantage of RDC lies in the ability to achieve integrated diagnosis and treatment by only changing the radionuclide component, which is also the current market trend.

In recent years, with the continuous development of technology, the advantages of RDC drugs in the field of cancer treatment have become increasingly prominent. From 2016 to present, the U.S. Food and Drug Administration (FDA) has approved nine RDC drugs, involving six new molecular entities. Additionally, Novartis' two major radiopharmaceuticals, Lutathera and Pluvicto, have performed the most outstandingly. The sales of these two drugs in 2022 reached $471 million and $271 million, respectively, demonstrating the enormous market potential and development prospects of RDC drugs.

The radioactivity and half-life of radionuclides determine that the development and market layout of radiopharmaceuticals are different from those of general drugs. The field of radiopharmaceuticals is characterized by high entry barriers and a high degree of industry concentration.

On the one hand, due to the special nature of the raw materials, the production, research and development, and operation of radiopharmaceuticals are all subject to different regulatory policies in China, with complexity and strictness far exceeding those of ordinary drugs. On the other hand, radionuclides not only possess radioactivity but also have specific characteristics such as unique half-lives, radiation self-decomposition, and instability, which set them apart from other drugs and impose extremely high requirements for logistics and distribution.

Recently, Frost & Sullivan released the "Blue Paper on the Current Status and Future Development of China's Radiopharmaceutical Industry" (hereinafter referred to as the "Blue Paper"),Pain Points Remain Unsolved in China's Nuclear Medicine Industry Chain.Specifically includes three aspects:

First, the supply of radionuclide raw materials relies on imports. China produces fewer radionuclides independently, and its production is relatively limited. The most commonly used radionuclides in clinical settings, including [99mTc], depend on imports. The independently produced [131I] and [177Lu] can only meet a small portion of clinical needs. Once the international market experiences a tight supply situation, China's radiopharmaceuticals will face a shortage dilemma.

Secondly, there is a shortage of nuclear medicine professionals in China. In China, medical institutions need to obtain the "Radiological Diagnosis and Treatment Permit," "Radioactive Pharmaceutical Use Permit," and "Radiation Safety Permit" to carry out radionuclide therapy. Relevant staff must acquire professional qualifications, practice permits, and complete relevant training in nuclear medicine before they can start work. Data shows that as of 2019, there were a total of 12,500 people engaged in nuclear medicine-related work in China, including 5,400 doctors, 3,700 technicians, and 2,600 nurses, while there were only 210 radiochemists. The number of nuclear medicine professionals is seriously insufficient. There are 1,148 departments in China capable of carrying out nuclear medicine diagnosis and treatment, about 340 hospitals with radionuclide therapy wards, and 736 hospitals conducting radionuclide therapy, far from meeting the medical needs of patients.

Thirdly, there is a lack of awareness regarding nuclear medicine diagnosis and treatment. In some regions, overly stringent regulatory standards imposed by local management authorities on radiation protection in nuclear medicine workplaces have led to high construction costs for nuclear medicine departments and excessive use of protective materials. This has caused both medical staff and the public to develop an irrational fear of anything "nuclear." There is an urgent need for scientifically accurate publicity to reduce this fear and promote diagnosis and treatment.

China's nuclear medicine industry started relatively late. According to Sullivan's data, the annual compound growth rate of China's radiopharmaceuticals is second only to that of biologics.It is estimated that the compound annual growth rate of China's radiopharmaceuticals industry market size will reach 21.4% in the next five years, hitting 7.81 billion yuan by 2023, which is 2.63 times that of 2018.However, in the global market, China's market share accounts for only 6%, while the North American market reaches 40%. Compared with developed countries, the utilization rate of radiopharmaceuticals in China is still relatively low, indicating a highly promising market potential.

The Blue Book also pointed out that the current development of nuclear medicine in China lacks independent originality, progresses slowly, and suffers from severe target homogenization. In recent years, most of the approved radiopharmaceuticals have been generic drugs, such as Bayer's Radium [223Ra] Chloride and the Yttrium [90Y] resin microspheres introduced by Grand Pharmaceutical, both of which are imported drugs. In September this year, Beijing Xiantong International Technology Co., Ltd.'s Fluorine [18F] Betaben injection was approved for marketing in China. Although it is the first Aβ-PET imaging agent approved in China for AD diagnosis, it has been widely used in Europe, America, and other regions for many years.

Among a group of generic drugs, Radiolite, one of the key nuclear medicine companies introduced in this blue book, stands out. The novel specific SPECT/CT tumor imaging agent 99mTc-3PRGD2 (Technetium [99mTc] hydrazinonicotinamide polyethylene glycol bicyclic RGD peptide injection) independently developed by Radiolite is the first domestically developed Class 1 innovative drug in China’s nuclear medicine field and also the world’s first broad-spectrum tumor imaging agent for SPECT imaging diagnosis. It has changed the technological status quo where nuclear medicine SPECT/CT imaging could not be used for tumor diagnosis, staging, and efficacy evaluation.

A senior executive of a pharmaceutical company pointed out to the 21st Century Economic Report reporter when analyzing the dilemma of China's original nuclear medicine.Currently, China faces "bottleneck" challenges such as dependence on imported radionuclides and weak capabilities in the discovery and validation of targets."As the industry enters a stage of rapid development, a certain degree of pipeline homogenization has inevitably emerged. 'The innovation breakthrough in China's nuclear medicine sector requires not only the improvement of infrastructure but also the strengthening of talent cultivation and collaborative basic research to avoid the homogenized competition and patent risks brought by an overheated track.' For this reason, independent innovations like those from RayzeBio are all the more precious."

The introduction of the policy may have accelerated the development of nuclear medicine in China.

In 2021, the "Medium- and Long-Term Development Plan for Medical Isotopes (2021–2035)" jointly released by the National Atomic Energy Agency, the Ministry of Science and Technology, the Ministry of Public Security, the Ministry of Ecology and Environment, the National Medical Products Administration, and other departments proposed the establishment of a stable and independent supply and security system for medical isotopes. These policies and measures have greatly promoted the development of nuclear medicine, effectively accelerating the research and development of radiopharmaceuticals. The continuous optimization of the nuclear medicine approval process in the context of intensively introduced policies will improve the policy environment, promoting the market entry of nuclear medicine-related diagnostic and therapeutic products and further expanding the market scale of radiopharmaceuticals.

As of October 6, 2023, 45 radiopharmaceuticals have been approved for marketing in China, with 68 new radiopharmaceutical products launched globally. The global pipeline for innovative radiopharmaceuticals has reached 340 candidates.According to Sullivan data, there are currently 75 pipelines under research and development in China, and nearly 7,000 pipelines overseas entering clinical trials. The development of innovative radiopharmaceuticals has begun to enter a high-yield period.Not only used for cancer treatment, the clinical application scope of radiopharmaceuticals is also expanding, including diseases related to cardiovascular, leukemia, endocrine system, and thyroid.

Beyond products, the financing front is also making simultaneous efforts. The past two years have undoubtedly been a harsh winter for the biopharmaceutical industry. Data from PharmaCube shows that in 2022, the amount of financing in the primary market for innovative drugs was 39.3 billion yuan, a year-on-year decrease of 36%. In the secondary market, the total fundraising scale of pharmaceutical IPOs in Hong Kong and China's A-share markets plummeted from 78.9 billion Hong Kong dollars and 89.3 billion yuan in 2021 to 9.3 billion Hong Kong dollars and 78.3 billion yuan, respectively. Meanwhile, the market value of listed biopharmaceutical companies has continued to decline, with frequent occurrences of new stock prices falling below the issue price after listing.

However, for the nuclear medicine market, recent years have witnessed unprecedented activity in investment and financing, new product development, and commercial cooperation. According to data from Arterial Orange, the total global financing for nuclear medicine companies in the first half of this year amounted to 3.047 billion yuan. In the third quarter of this year, nuclear medicine companies continued to shine in terms of financing in the primary market, with the total global financing reaching 4.448 billion yuan. Additionally, according to Frost & Sullivan data, the scale of China's nuclear medicine market has grown from 2.2 billion yuan in 2017 to 3 billion yuan in 2021, and it is expected to reach 26 billion yuan by 2030, with a compound annual growth rate (CAGR) of 22.7% from 2025 to 2030.

According to research institution data, the total global financing for nuclear medicine enterprises in the first half of this year was 3.047 billion yuan. In the third quarter, the financing performance of nuclear medicine enterprises in the primary market remained impressive, with the total global financing reaching 4.448 billion yuan. According to Frost & Sullivan data, the market size of China's nuclear medicine has increased from 2.2 billion yuan in 2017 to 3 billion yuan in 2021, and it is expected to reach 26 billion yuan by 2030, with a compound annual growth rate of 22.7% from 2025 to 2030.

It is not difficult to see from the data that, compounded by the downward global economic cycle, geopolitical factors, US dollar interest rate hikes, and China's medical insurance policies, the number of financings and the amount of financing in the innovative drug sector have shown a declining trend in recent years. However, investment, financing, and mergers and acquisitions in the radiopharmaceuticals field are in full swing. Many multinational companies are engaging in market mergers and acquisitions. The successful listing of Novartis' Lutathera and Pluvicto, along with their outstanding clinical data, has been regarded as an important milestone in the development of therapeutic nuclear medicine in recent years, igniting enthusiasm for the RDC track in China.

In the past, China Isotope & Radiation Corporation and Dongcheng Pharmaceutical were undoubtedly the giants in China's nuclear medicine field, presenting a duopoly competition pattern.Nowadays, some new players have also entered the field. Nearly 20 pharmaceutical companies, such as Hengrui Medicine, Grand Pharmaceutical, Beijing Xiantong International Technology Co., Ltd., Radiodio, Fluence Pharmaceuticals, and Hexin Pharmaceuticals, are accelerating their layout in nuclear medicine, gaining favor from the capital market.

Sullivan data further shows that the financing amount for China's radiopharmaceuticals in 2022 has approached 900 million yuan; Ablaze Pharmaceuticals completed a 75-million-dollar financing at the end of 2021; Fulllink Therapeutics' total financing for its R&D pipeline has reached 47 million dollars; RayzeBio, which independently developed the first Class 1 innovative drug in China’s nuclear medicine field, received strategic investment from Baiyang Pharmaceutical Group. Additionally, the two parties have jointly laid out plans in areas related to the nuclear medicine industry chain, such as high-sensitivity nuclear medicine SPECT and nuclear medicine molecular probes; Tongrui Biopharmaceuticals' R&D and production base project plans to reach a total investment of 3 billion yuan; In July 2023, Beijing Xiantong International Technology Co., Ltd. raised over 1.1 billion yuan in its Series E financing round, setting a record for pharmaceutical financing this year.

This also means that, beneath the trends, opportunities and risks coexist. The continuous investment from capital and the remarkable achievements of participants are forming an upward良性循环, and nuclear medicine is gradually showcasing the风采of the next ADC.