Pien Tze Huang Acquires Class 1.1 TCM New Drug 'Wen Fei Ding Chuan Granules' for RMB 13.58 Million
On April 8, Pientzehuang issued an announcement stating that it recently signed a "Technology Transfer Agreement" with Kangzhonghong Pharmaceutical. Kangzhonghong has transferred to Pientzehuang all rights and interests related to its Class 1.1 new traditional Chinese medicine drug, "Wenfei Dingchuan Granules," including but not limited to the technology and intellectual property rights, the "Notice of Approval for Clinical Drug Trials" (Notice No.: 2024LP01271), production rights, development rights, usage rights, and transfer rights. The total transfer fee amounts to RMB 13.58 million.
Pursuant to the Agreement, provided that Pientzehuang fulfills its contractual obligations, Kangzhonghong shall provide full-process technical guidance and consulting services to Pientzehuang throughout the entire research and development cycle prior to the regulatory approval and market launch of the Project. Kangzhonghong shall also accept technical commissions from Pientzehuang as warranted by the actual progress and needs of the Project’s R&D. Furthermore, Kangzhonghong shall cooperate with Pientzehuang in completing all relevant procedures necessary to obtain approvals from regulatory authorities and other relevant departments required for the transactions contemplated under this Contract.
Wenfei Dingchuan Granules have the effects of tonifying the lung and warming the kidney, relieving cough and asthma, resolving phlegm and removing blood stasis. They are mainly used for the treatment of chronic obstructive pulmonary disease (COPD) in the stable stage with lung-kidney qi deficiency and phlegm-blood stasis blocking the lung syndrome.
Chronic Obstructive Pulmonary Disease (COPD) is a chronic respiratory condition. Characterized by complex etiology, high incidence, and a large patient population—with an average medication duration exceeding five years—it represents substantial market demand. In terms of market size, the global COPD treatment market was valued at RMB 107.052 billion in 2023 and is projected to reach RMB 170.606 billion by 2029, reflecting a compound annual growth rate (CAGR) of 8%.
Despite the vast size of the COPD market, no new drugs with novel mechanisms of action have been launched in this field for many years. Currently, commonly used medications for chronic obstructive pulmonary disease (COPD) include bronchodilators and inhaled corticosteroids, with inhalation therapy being the preferred route of administration. Mainstream treatment regimens primarily rely on combination therapies using established agents. Facing a market valued at hundreds of billions of yuan, leading multinational corporations (MNCs) such as AstraZeneca, Sanofi, GSK, Pfizer, Johnson & Johnson, Amgen, and Novartis, alongside domestic companies including Hengrui Medicine, Quanxin Biotech, CSPC Pharmaceutical Group, and Runsheng Pharmaceutical, are all vying to establish their presence in the pipeline of new COPD therapeutics.
Compared with the aforementioned biopharmaceutical companies, Zhangzhou Pientzehuang Pharmaceutical Co., Ltd., with a 500-year heritage, has chosen to enter this field with a new traditional Chinese medicine (TCM) drug. As of the announcement date, no TCM product with the same indication has been approved for marketing in China. Once Wenfei Dingchuan Granules are approved for marketing, they are expected to open up an emerging market for TCM treatment of chronic obstructive pulmonary disease (COPD). Pientzehuang also stated that the company’s acquisition of the Wenfei Dingchuan Granules project through technology transfer further supplements and improves its existing R&D pipeline, which is conducive to enhancing the company’s competitiveness and sustainable profitability, and plays a positive role in its strategic layout.
In addition to the Class 1.1 new traditional Chinese medicine (TCM) drug Wenfei Dingchuan Granules, Pientzehuang had three Class 1 new chemical drugs, three Class 1.1 new TCM drugs, and one Class 1.2 new TCM drug enter the clinical trial stage, according to its 2024 semi-annual report. These candidates cover multiple therapeutic areas, including oncology, pain management, and neuropsychiatry.
In the past year alone, Pientzehuang has achieved multiple clinical milestones in various new drug areas: the innovative traditional Chinese medicine (TCM) PZH1204, indicated for the treatment of mild-to-moderate generalized anxiety disorder (phlegm-heat internal disturbance syndrome), has entered Phase III clinical trials; the innovative TCM PZH1201, indicated for the treatment of diarrhea-predominant irritable bowel syndrome (liver qi invading spleen syndrome), has completed Phase IIb clinical trials and obtained the clinical trial summary report; the innovative chemical drug PZH2107, indicated for the treatment of fibromyalgia, has completed Phase I clinical trials and obtained the clinical study report; the innovative chemical drug PZH2113 capsules, indicated for the treatment of relapsed/refractory non-Hodgkin lymphoma predominantly diffuse large B-cell lymphoma, have received clinical trial approval; and the clinical trial application for the innovative TCM PZH1219, indicated for the treatment of diminished ovarian reserve, has been accepted by the National Medical Products Administration.
In addition to intensifying new drug development efforts, Pientzehuang is also focusing on the secondary development of its core flagship products, thereby strengthening the planning and pipeline reserve of innovative traditional Chinese medicines (TCM), classical prescriptions, and innovative chemical drugs. Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. has systematically conducted more than 30 studies on the pharmacological mechanisms of Pientzehuang in treating viral infections, as well as over 10 clinical trials on its efficacy in treating intermediate-to-advanced primary liver cancer. The company has also initiated efficacy research on product lines such as Compound Pientzehuang Lozenges, Yindan Pinggan Capsules, and Xinshubao Tablets.
It seems that, while most people were unaware, the well-known “old TCM practitioners” have long been quietly exerting comprehensive efforts in the field of innovative drugs, achieving remarkable results.
Pientzehuang, the core product of Zhangzhou Pientzehuang Pharmaceutical Co., Ltd., is a National Grade I Protected Traditional Chinese Medicine (TCM) variety. Its traditional manufacturing techniques have been included in the National List of Intangible Cultural Heritage. For many consecutive years, it has ranked among the top exported single-variety Chinese proprietary medicines, earning the reputation as a “Chinese Symbol” on the “Maritime Silk Road.” Its formula and production process are classified as state secrets and have never been disclosed to date. As a National Grade I Protected TCM variety, it represents the highest level of protection for Chinese proprietary medicines. Since July 1, 2005, each pill of Pientzehuang has been affixed with a uniquely numbered “Special Label for China’s Wildlife Management,” and its production is subject to quota restrictions.
The scarcity of Pientzehuang has driven its price to soar. According to data from a Southwest Securities research report, the price of Pientzehuang tablets was raised 19 times between 2004 and 2020. On May 5, 2023, Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. announced that, due to rising costs of key raw materials and labor, the domestic retail price of Pientzehuang tablets would be increased from RMB 590 per pill to RMB 760 per pill, representing a 29% increase.
However, in the two years following the retail price increase of Pientzehuang tablets, not only did the buyback prices plummet, but the performance growth rate of its listed parent company, Zhangzhou Pientzehuang Pharmaceutical Co., Ltd., failed to accelerate; instead, it slowed down compared to the same periods in previous years. In the first three quarters of 2024, the company experienced a decline in both revenue and net profit growth rates, while its overall gross profit margin dropped to 45.44%, the lowest level in the past five years.
An overreliance on a single-product business structure has left the company lacking sufficient flexibility. In recent years, Pientzehuang has recognized this issue and embarked on a path of diversified innovation and transformation. Beyond Pientzehuang, other traditional Chinese medicine (TCM) enterprises—including Yunnan Baiyao, Yiling Pharmaceutical, Baiyunshan, Kanion Pharmaceutical, Tasly, China Resources Sanjiu, Tongrentang, Kuihua Pharmaceutical, Jilin Aodong, and Dong-E-E-Jiao—have also been actively laying out their innovative product portfolios in recent years. The fact that major TCM companies are concurrently focusing their efforts on the same domain stems from a shared aspiration: to achieve breakthroughs beyond their traditional areas of strength and drive their performance to new heights.
In addition to sustaining inherent advantages and seeking breakthroughs, traditional Chinese medicine (TCM) enterprises may face profit pressure in the future as cost-containment measures under medical insurance schemes are advanced. On the other hand, apart from a few TCM companies that possess exclusive blockbuster products and maintain long-term differentiated advantages, the TCM sector is crowded with numerous participants, resulting in intense market competition. Consequently, positioning in innovative drugs has undoubtedly become a major direction for the transformation of TCM enterprises. Leveraging their abundant cash reserves and years of accumulated commercialization expertise, leading TCM companies have already begun to compete in the innovative drug arena.
Reference: “Pientzehuang, Back in the ‘Mortal World,’ Remains ‘Competitive’”