19 Chinese Pharmaceutical Firms Retain National Innovation Demonstration Enterprise Status and Advance IPO Plans

Recently, the official website of the Ministry of Industry and Information Technology announced the results of the review and evaluation of the 2019 National Technological Innovation Demonstration Enterprises. It is reported that this review and evaluation was conducted on 148 national technological innovation demonstration enterprises recognized or having passed the previous review in 2016. A total of 145 enterprises passed the review and evaluation, including 19 pharmaceutical companies such as Tasly Pharmaceutical, Yangtze River Pharmaceutical Group, Luoxin Pharmaceutical, Qilu Pharmaceutical, and Hengrui Pharma.

Hengrui Pharma: Gradually Moving Towards Source Innovation

According to Hengrui Pharma’s annual report, the company achieved an operating revenue of RMB 17.418 billion in 2018, a year-on-year increase of 25.89%; net profit amounted to RMB 4.066 billion, representing a year-on-year growth of 26.39%. Notably, Hengrui Pharma made significant achievements in technological innovation: the injection of pegylated recombinant human granulocyte colony-stimulating factor (HS-110) was successfully approved for market launch; pyrotinib demonstrated breakthrough efficacy in Phase II clinical trials and received conditional marketing approval; camrelizumab (for lymphoma indications) was granted priority review status and completed technical evaluation. In the first quarter of 2019, Hengrui Pharma reported operating revenue of nearly RMB 5 billion, a year-on-year increase of 28.77%; net profit exceeded RMB 1 billion for the first time, reflecting a year-on-year growth of 25.61%.

Hengrui Pharma focuses its R&D efforts on oncology drugs, surgical anesthetics, contrast agents, treatments for major diseases, and therapeutic areas with no currently effective medications, thereby establishing a robust product development pipeline. In recent years, the company has continuously increased its R&D investment, which grew from RMB 1.184 billion in 2016 to RMB 2.670 billion in 2018, accounting for 15.33% of its operating revenue. According to available data, Hengrui Pharma has undertaken 36 projects under the “National Major New Drug Creation” special program, 23 national-level key new product projects, and dozens of provincial-level scientific and technological projects. The company has filed 752 invention patent applications, including 272 international patent applications. Its innovative drugs—Imrecoxib, Apatinib, PEGylated Recombinant Human Granulocyte Colony-Stimulating Factor (PEG-rhG-CSF), and Pyrotinib—have been approved for market launch. In 2018, 56 innovative drugs were in clinical development. In terms of innovative drug development, Hengrui Pharma has essentially established a sustainable growth trajectory, with innovative drugs entering clinical trials annually and new innovative drugs being launched every two to three years.

Recently, Hengrui Pharma has issued multiple announcements. Clinical trials for camrelizumab for injection (SHR-1210) are set to commence shortly. The manufacturing of the generic abiraterone acetate tablets (250 mg) under Category 4 has been approved; this product is the first generic version in China and is deemed to have passed the consistency evaluation. In addition, the subsidiary CadiasunPharma GmbH has successively received approval letters from the German Federal Institute for Drugs and Medical Devices and the Dutch Medicines Evaluation Board, approving the marketing applications for ivabradine bisulfate tablets in Germany and the Netherlands. Furthermore, the company has invested over USD 100 million to introduce the patented lead compound VT-1161 from the U.S.-based Mycovia Pharmaceuticals Inc., whereby Hengrui Pharma will obtain exclusive rights for the clinical development, registration, and commercial sales of this compound in China. Hengrui Pharma stated that innovation has been a major strategy consistently upheld by the company for many years and serves as the driving force behind its development. The company’s innovation model has gradually evolved from initial me-too and me-better approaches toward source innovation.

Luoxin Pharmaceutical: Research and Innovation as the Core Driver for Long-Term Development

Luoxin Pharmaceutical’s core business involves the research and development, manufacturing, and sales of pharmaceutical products, divided into two major segments: pharmaceutical manufacturing and pharmaceutical commerce. The pharmaceutical manufacturing segment primarily focuses on the R&D, production, and sales of chemical drug formulations and active pharmaceutical ingredients (APIs) along with excipients. Eleven key products, including Lansoprazole for Injection, Ambroxol Hydrochloride for Injection, and Ceftizoxime Sodium for Injection, hold strong positions in the therapeutic areas of gastroenterology, respiratory diseases, and antibiotics. The pharmaceutical commerce segment is mainly engaged in the logistics and distribution of pharmaceuticals and medical devices. In 2018, the company’s operating revenue exceeded RMB 6 billion, with a net profit of RMB 512 million.

Data shows that Luoxin Pharmaceutical holds 48 new drug certificates and 314 drug registration approvals. Eleven of its products have been included in the National Major Science and Technology Project for “Major New Drug Innovation,” four in the “National Key New Product Program,” twelve in the “National Torch Program,” and 139 projects in the “Shandong Provincial Torch Program, Shandong Provincial Science and Technology Development Program, and Shandong Provincial Technological Innovation Projects.” Multiple products have received the “Science and Technology Progress Award,” with the technology “Establishment and Application of a Key Technical System for Chemical Drug Crystal Forms” honored with the Second Prize of the National Science and Technology Progress Award.

Luoxin Pharmaceutical regards R&D and innovation as the core driving force for its long-term development. In recent years, its R&D expenditure has consistently accounted for over 6% of its revenue. The company adopts an R&D strategy of “transitioning from generics to innovation, with a combination of both,” focusing on R&D in multiple small-molecule therapeutic areas, including oncology, cardiovascular system, digestive system, respiratory system, and anti-infectives. Luoxin Pharmaceutical has established a trinity research and production system comprising the Shanghai Research Center, the Linyi Research Institute, and the Hengxin Pharmaceutical R&D Center. The Shanghai Research Center primarily focuses on the development of innovative drugs, consistency evaluation of generic drugs, industry-university-research collaboration, and international technology introduction; the Linyi Research Institute mainly engages in the development of generic drugs and consistency evaluation studies; while the Hengxin Pharmaceutical R&D Center is fully responsible for the innovation and development of active pharmaceutical ingredients (APIs).

In April this year, Luoxin Pharmaceutical planned to go public via a backdoor listing through Dongyin Shares at a valuation of RMB 7.5 billion, committing to nearly RMB 2 billion in net profits over three years, which attracted market attention upon announcement. Subsequently, the Shenzhen Stock Exchange issued an inquiry letter regarding the restructuring; Dongyin Shares released a revised version of the plan; and Dongyin Shares and Luoxin Pharmaceutical held a briefing on the major asset restructuring, among other developments. On July 20, Dongyin Shares received the "Notice of First Feedback on Administrative Licensing Project Review" from the China Securities Regulatory Commission (CSRC), which raised 33 questions concerning the application for the major asset swap and the issuance of shares to purchase assets, requiring written responses and explanations.

Tasly Pharmaceutical: Advancing a Collaborative Biopharmaceutical Industry Framework Integrating Modern Traditional Chinese Medicine, Biologics, and Chemical Drugs

Tasly Pharmaceutical continues to focus on three major therapeutic areas: cardiovascular and cerebrovascular diseases, digestive and metabolic disorders, and oncology. It is committed to developing drugs that address urgent clinical needs or even fill gaps in China’s clinical market. Leveraging the synergistic advantages of modern traditional Chinese medicine, biologics, and chemical drugs, Tasly strategically lays out its innovative drug portfolio, maintaining its international leadership and driving force in R&D innovation. In 2018, the company achieved operating revenue of RMB 18 billion and net profit exceeding RMB 1.5 billion, representing year-on-year growth rates of over 10% for both indicators.

In the field of modern traditional Chinese medicine (TCM), Tasly Pharmaceutical has solidified its leading position in TCM research and development. Adhering to international innovation standards and modern medical criteria, Tasly has leveraged its flagship product, Compound Danshen Dripping Pills, to drive a portfolio of leading brands including Yangxue Qingnao Granules (Pills), Qishen Yiqi Dripping Pills, and Yiqi Fumai Injection, thereby establishing a comprehensive modern TCM pharmaceutical system primarily focused on cardiovascular and cerebrovascular medications. In the biopharmaceutical sector, Tasly has built an innovative R&D cluster. Tasly Bio possesses the exclusive marketed product Recombinant Human Pro-urokinase for Injection (Puyouke) and a robust pipeline of subsequent candidates in development, making it a rare fully integrated biopharmaceutical commercialization platform encompassing R&D, production, sales, and investment. In the chemical pharmaceutical sector, Tasly achieves leadership across multiple fields through a combination of generic and innovative drug development. Jiangsu Tasly Diyuan Pharmaceutical serves as the core hub for chemical drug R&D and manufacturing. Its marketed products include series for oncology, cardiovascular diseases, psychiatric conditions, and hepatoprotection. Among these, the active pharmaceutical ingredients (APIs) cover 12 varieties, including temozolomide and flutamide, while the oral solid dosage forms include multiple products such as Temozolomide Capsules (Diqing), a Class II new drug for the treatment of glioma.

In terms of R&D, Tasly Pharmaceutical has rapidly advanced its “four-in-one” drug innovation and development model, encompassing independent R&D, product introduction, collaborative R&D, and investment in market licensing priority rights, with continuous increases in R&D expenditure. In 2018, the company’s R&D expenditure amounted to RMB 1.202 billion, accounting for 6.68% of its total operating revenue and 16.87% of its pharmaceutical industry revenue. The company has established a pipeline of 77 products under development, building competitive advantages across three major therapeutic areas: cardiovascular and cerebrovascular diseases, digestive and metabolic disorders, and oncology. This pipeline includes 22 Class 1 innovative drugs, with 43 drugs (including nine drugs undergoing consistency evaluation for generic drugs) having entered clinical stages.

Regarding future development, Tasly Pharmaceutical stated that it will accelerate the rapid growth of its biopharmaceutical industry and its transformation into an international platform enterprise. The company will place greater emphasis on the introduction of innovative products, supply-side structural reform, and the transformation of its business model, while expediting digitalization and intelligent development. In particular, Tasly will seize the historical opportunity presented by national policies encouraging the innovation of new drugs and biologics. By leveraging industry-finance integration to drive the listing of its biologics segment in Hong Kong, and using capital as a link, the company aims to build a new, future-oriented innovation platform for biological innovative drugs. This strategy will promote a synergistic development pattern across its three major pharmaceutical sectors—modern traditional Chinese medicine (TCM), biologics, and chemical drugs—within the broader biopharmaceutical industry landscape.

Notably, Tasly Bio, which had previously planned to list on the Hong Kong Stock Exchange, saw new developments on June 25 this year. Tasly Pharmaceutical announced that its controlling subsidiary, Tasly Bio, has submitted an application to the China Securities Regulatory Commission (CSRC) for the issuance of overseas listed foreign shares (H-shares) and for listing on the Main Board of The Stock Exchange of Hong Kong Limited.

Regarding the enterprises that have passed the re-evaluation for National Technological Innovation Demonstration Enterprises, the Ministry of Industry and Information Technology stated that it hopes these enterprises will effectively play a demonstrative and leading role, continuously improve institutional frameworks, increase investment in technological innovation, strengthen efforts to tackle key core technologies, and steadily enhance their independent innovation capabilities.

Source: Official website of the Ministry of Industry and Information Technology, announcements of listed companies

Original Title: These 19 Pharmaceutical Companies Shine! Hengrui, Yangtze River, Tasly, Shenwei... Selected as National Technological Innovation Demonstration Enterprises