Restructuring and Breakthrough: Short-Term Tactics and Long-Term Strategies in China's Innovative Drug Industry

August 10–11, the “2023 Xipu Conference · The 6th Pharmaceutical Innovation Ecosystem Conference” was held in Boao, Hainan. The conference featured a roundtable discussion session on “Dilemmas and Breakthroughs in the Development of Innovative Drugs in China.”

This discussion was led by the Vice President of the Drug Marketing Department at Hua MedicineDong QingModerator, participating guests included the Chairman of Akeso Inc.Xia YuMs., Founder of Alphamab OncologyXu TingMr. , Chief Executive Officer and Executive Director of CStone PharmaceuticalsYang JianxinMr., Chairman of HenliusZhang WenjieMr. These leading figures in the pharmaceutical industry discussed, from an industry perspective, how innovative medicines can break through the current predicament of capital downturn and rising costs.

VCBeat New Medicine has compiledRoundtable Discussion Content,As follows:

Xu Ting:Since 2015, we have witnessed significant changes across the entire industry:

First, a shift in mindset: from drug accessibility to addressing clinical needs, and further advancing toward globalization and overseas expansion; second, technological advancements: gene editing, artificial intelligence, and numerous other emerging technologies have surfaced in recent years. However, these new technologies have not yet matured into productive forces and require time to consolidate; third, the past decade has seen the emergence of many blockbuster products in innovative pharmaceuticals. While the previously effective precision strategies remain in place,However, the methodology of relying on a single drug to dominate the market is also undergoing changes.。What is truly needed is the emergence of the next blockbuster product to break the current state of stagnation.

The pharmaceutical industry can learn from the photovoltaic, automotive, and mobile phone sectors, all of which have already “gone global.” Innovative drugs are inevitably destined to “go global” as well. While other industries have continuously experienced ups and downs, innovative drugs are only just getting started.

Zhang Wenjie:The history of scientific development has always witnessed the continuous updating and iteration of paradigms, with each paradigm shift giving rise to a new generation of products. Where will the next paradigm lead? No one knows.However, from a cross-sectional perspective, has the surge of biotech companies over the past decade been supported by sufficient new paradigms?

I believe it is unrealistic and unfeasible to sustain enterprises of such a massive scale. This approach is also inefficient and irrational for the industry structure, and it is not the optimal path for long-term development. Every industry experiences both its heyday and its harsh winter; we are currently in the latter. While conditions may either deteriorate further or improve, the current predicament is ultimately beneficial for the long-term development of enterprises. It will lead to a more rational industry landscape and more efficient resource utilization.

Yang Jianxin:I believe that the overseas market urgently needs to be developed.For instance, overseas expansion can be initiated as early as the global clinical trial phase.In the past, the prevailing approach was to develop overseas operations in an ad hoc manner, without treating them as a strategic priority. However, as the industry enters a downturn, the innovative drug market must adapt accordingly and can no longer remain confined to a China-centric mindset. At this stage, the most critical objective is corporate survival—generating revenue while maintaining cost control. We must concentrate our efforts and capital on the areas of greatest value, specifically on the products that deliver the highest value to the company.

Xia Yu:When we were young, we studied materialist dialectics, which teaches that all things progress in a spiral pattern toward their ultimate destination. The current phase of cross-border expansion and breakthroughs is also part of this spiral ascent. Since 2015, various reforms have been implemented to break through barriers in the pharmaceutical sector and for innovative drugs."I do not consider the current situation to be an impasse, but rather a process of spiral ascent; nor is there any so-called breakthrough."Entrepreneurs must embrace the spiral trajectory of growth; after reaching one milestone, they should welcome new challenges and advance toward the next.

Yang Jianxin:For enterprises, it is essential to consider which assets should be avoided and which, if continued, will inevitably become negative assets.Even with ample funds, spending should be prudent. One must consider how to allocate resources when capital is abundant, how to manage expenses when funds are tight, and how to prepare for future financial constraints. A company that fails to engage in such strategic thinking lacks foresight.

The emergence of homogeneous drugs is also a positive development, prompting us to reflect on our growth strategies. In response, whether for overseas expansion or domestic sales, the approach for such drugs essentially involves further reducing sales and production costs to offer them at extremely low prices, thereby ensuring product profitability.

Xu Ting:In China, the industry-academia-research collaboration actually needs to include “government,” as the government is the biggest driving force.Although China's R&D achievements, publications, and patent counts have already ranked first globally, several issues remain:

First, basic research is predominantly follow-on rather than original, making it difficult to generate products with translational potential from such research. Second, China’s industry-academia-research system tends to favor independent or domestic collaborative efforts, lacking sufficient international exchange and cooperation. Third, Chinese physicians are extremely busy with patient care, clinical duties, and social activities, resulting in limited genuine clinical translation. There is also scant bidirectional translation between biotech startups and large pharmaceutical companies. Much of the translational work is being carried out by amateurs or generalists.

The challenges we face are also opportunities. Given China’s vast patient population and its unique ethnic characteristics, I believe new therapeutic targets, novel mechanisms, and innovative products are likely to emerge.

Xia Yu:This requires a broad vision and strategic thinking. In terms of drug commercialization, internationalization and global expansion are imperative. Domestic innovative pharmaceutical companies have already taken the initiative to expand overseas, which is a positive direction.

I believe the current industry should not dwell on pseudo-innovation.Of course, innovation must demonstrate value., but it is not necessary for new drug development companies in China to pursue entirely novel targets.Because there are still many unmet clinical needs in China.

How can we leverage technological platforms to develop innovative drugs with high efficacy and low toxicity against known targets? This approach holds genuine druggability value and is worthy of pursuit.

Xu Ting:We are now increasingly convinced of the necessity of expanding overseas,It is important for a new drug to generate revenue in Europe and the United States.. With the pandemic behind us, geopolitical factors will have limited impact on clinical practice. In the future, innovative drugs are likely to require global clinical development strategies.Regarding the strategic layout, it is essential to consider the speed and investment required for market approval in China, while striving to minimize the impact of overseas patient enrollment.Of course, an indispensable prerequisite is that the product must address unmet needs, offer differentiation, and possess a certain degree of leadership.

Yang Jianxin:If the indications are not particularly broad,Whether a drug can go global depends on its worldwide ranking; I believe it is best to be among the top three globally.If it cannot be demonstrated that this drug is superior to other medications, it will have limited market value. From a commercialization perspective, appropriate pricing must be set based on market conditions. Furthermore, inclusion in the National Reimbursement Drug List (NRDL) has a fundamental constraint: the product must not be sold at a loss.

When introducing originator drugs, companies should conduct thorough assessments and exercise extreme caution in their investments. Enterprises must evaluate the value of introducing originator drugs from multiple perspectives, including the cost differential between imported originator drugs and self-developed drugs, as well as issues related to sales revenue sharing for imported originator drugs.

Zhang Wenjie:Regarding the future, globalization is undoubtedly one of the key factors that this generation of innovative pharmaceutical companies must consider. The strategic considerations for global expansion should be traced back to the historical development of these innovative drug enterprises. Companies are not highly standardized systems,The considerations for new products today differ from those of five or ten years ago. We must now take a comprehensive approach that integrates biological, clinical, and market factors, extending beyond just the Chinese market.

During the Process of Enterprise DevelopmentA holistic perspective is also crucial.. For an evolving and emerging industry, how can we ensure its healthy development? Every enterprise is a member of the industry; if everyone engages in cutthroat competition, the industry will ultimately receive negative feedback. If all parties work together to build a robust ecosystem, every enterprise can benefit from it.

Zhang Wenjie:The greatest advantages of China’s innovative drugs are as follows: First, the vast domestic market can support many of the future resource needs of innovative pharmaceutical companies; second, on a global scale,One of the strongest competitive advantages of Chinese innovative pharmaceutical companies is execution efficiency.. This may be a very important consideration for how to innovate and how to innovate efficiently in the future; third, due to the relatively weak foundation of basic research, when choosing how to innovate, short-term decisions require high prudence and in-depth evaluation to ensure more effective utilization of resources.

Xia Yu:Innovative drugs are indispensable. I believe we are currently undergoing a process of natural selection, where only the strongest survive. If early-stage entrepreneurs can perform well and also possess entrepreneurial capabilities, they will ultimately be able to scale their businesses significantly. From a micro perspective,The transition from scientist to entrepreneur is an essential part of China’s innovative drug industry."Amidst adversity, we believe these scientists will ultimately establish international and innovative standards."

Yang Jianxin:For the innovative drug industry, enduring a winter is beneficial, as it triggers industry consolidation and a survival-of-the-fittest process. Some uncompetitive companies will disappear, but the industry’s inherent advantages remain intact. Although the cost of clinical trials in China is rising, the abundant patient population represents a significant global cost advantage. After surviving the downturn, remaining innovative pharmaceutical companies will prioritize introducing valuable, cost-effective products and carefully evaluate which drugs to develop and which to avoid.Therefore, I believe that now is the best time for investors to acquire product pipelines and companies.