Hengrui Pharma's 'Respiratory Moment': $12.5B Deal with GSK for COPD Drug HRS-9821 and Pipeline

On July 28, Hengrui Pharma announced a significant cooperation agreement with multinational pharmaceutical giant GSK. Under the agreement, Hengrui Pharma will grant GSK global rights (excluding mainland China, Hong Kong, Macao, and Taiwan) to its core respiratory pipeline HRS-9821 and 11 other early-stage projects for an upfront payment of $500 million, potential milestone payments totaling up to $12 billion, plus sales royalties.

(Image source: Hengrui Pharma official website)

Upon the release of the news, the capital market instantly boiled over. Hengrui Pharma's A-share price surged 7.5% in the morning session, while its H-share skyrocketed by 10.21%.Hengrui PharmaMarket value firmly surpasses the 400 billion yuan mark！

The Strategic Value Behind $12.5 Billion

The upfront payment of $500 million (approximately 3.6 billion RMB) is arguably the most significant "kickoff" in the history of BD transactions by Chinese pharmaceutical companies, with an amount even close to the annual revenue of one of Hengrui Pharma's core products. The total potential milestone payments of up to $12 billion have further pushed the value of China's innovative drug out-licensing to an unprecedented new height.

This transaction adopts the "1+11" model. The core asset HRS-9821 (PDE3/4 inhibitor) is a definitive target, while the other11 Early Projects (Covering Oncology, Respiratory, Autoimmunity, and Inflammation) Grant GSK Future Option RightsHengrui Pharma led the development up to the completion of Phase I clinical trials, including overseas data. GSK has the option to exercise its rights at this point. This structureLocking in core value while laying the groundwork for future pipeline explosions。

GSK Dares to Spend Big, Hengrui Stands OutClinical Development Efficiency and Cost Advantages Are the Core AttractionsIn addition, GSK can also use this to quickly advance the global Phase III and capture the billion-dollar COPD market.

Unlock the Global COPD Market

HRS-9821 is a highly promising dual PDE3/4 inhibitor, directly targeting the unmet super-market of chronic obstructive pulmonary disease (COPD). There are over 500 million COPD patients globally (including 108 million in China), and traditional hormone therapies have limited efficacy, leaving an urgent need to improve patients' quality of life.

However, the Phase I data has not been disclosed yet.GSK's willingness to pay a $500 million upfront payment already hints at its extremely impressive data.Compared with Verona's marketed Ohtuvayre, Hengrui Pharma’s molecule has been reported to optimize key performance features——Local drug exposure in the lungs increased 3 times，Significant improvement in atomization deposition rate, and the clinical effect is worth expecting.

As one of the traditional "Big Three" in the respiratory field (GSK, AZ, BI), GSK urgently needs its next-generation flagship product. Its star product Advair's patent has expired, and the growth of Nucala (IL-5 monoclonal antibody) has slowed. The acquisition of Hengrui Pharma's PDE3/4 pipeline is a key strategic move to counter Merck (which holds Verona's Ohtuvayre), complete its target layout (IL-5, TSLP, IL-33), and strengthen its leading position in inhalation devices!

Hengrui Pharma Sees "Full Bloom"

Following last year's $1.77 billion licensing deal with Merck for the Lp(a) oral lipid-lowering molecule, this billion-dollar collaboration with GSK once again proves —Hengrui's ability to "generate profits" through international BD is no accident, but a systematic and sustainable enhancement of its core competitiveness.。

One of the biggest highlights of this deal isHengrui Pharma's "Double Blossom" in Respiratory and Chronic Disease FieldsFor Hengrui, it not only effectively breaks the market's stereotype of Hengrui as "relying solely on oncology," but more importantly, it highlights Hengrui's innovative depth and commercial potential in its comprehensive layout across multiple therapeutic areas (oncology, respiratory, autoimmune, chronic diseases).

GSK has the world's top commercialization network for respiratory diseases and an advanced technology platform for inhalation devices. Through a deep partnership with GSK, Hengrui Pharma will not only gain substantial cash flow but also leverage GSK’s global influence to maximize the realization of innovative value and accelerate its internationalization process.

The Great Moment of the Respiratory Track Outbreak Has Arrived

Global TOP pharmaceutical companies hold $1.3 trillion in M&A funds, and the respiratory field is becoming a new M&A focus thanks to its huge market (over 850 million patients with COPD and asthma) and technological breakthroughs. The valuation of high-quality assets in China remains low (only 1/5 to 1/10 of similar assets in Europe and the US), indicating enormous room for appreciation!

Global pharmaceutical companies are targeting the respiratory sector, "snapping up" China's respiratory assets. The collaboration between Hengrui Pharma and GSK is by no means an isolated case, and we will witness more pharmaceutical enterprises competing in the respiratory field in the future.

Many major pharmaceutical companies in China are active in the COPD field. Currently, China Biologic Products' TQC2731 and TQC3721 are both targeting chronic obstructive pulmonary disease.

(Image Source: Huihui Yaoka)

(Image source: China Biologic Products Holdings official website)

Haisco's HSK31858 (a new generation PDE4 inhibitor) demonstrates stronger anti-inflammatory effects and superior safety, with its nebulized formulation directly targeting Verona.

(Image source: Haisco official website)

The approaching patent cliff, the intensifying global aging population, and breakthroughs in target technologies such as PDE3/4, IL-5, and P2X3 have jointly ignited the respiratory track, a field once considered to have "low growth."

From Merck's $10.7 billion acquisition of Verona, Sanofi's "blockbuster drug" Dupixent being approved for a new COPD indication, to GSK's recent major investment in acquiring the respiratory pipeline HRS-9821,The "Blue Ocean" Competition in the Respiratory Track Officially Begins。

Conclusion

The golden track for innovative drugs in respiratory diseases has been laid out, and Chinese pharmaceutical companies with cutting-edge technologies and distinctive pipelines are embracing unprecedented globalization opportunities.

The fire ignited by Hengrui Pharma is just the beginning.

As global giants with substantial funds start to turn their attention to the East, the true highlight moment for China's innovative drugs is arriving.