Following its successful approval by the U.S. Food and Drug Administration (FDA), the domestically produced PD-1 inhibitor, Toripalimab, has achieved another milestone by successfully entering the European market.

On September 24th, Junshi Biosciences announced that its independently developed anti-PD-1 monoclonal antibody drug, Toripalimab (European trade name: LOQTORZI®), has been approved by the European Commission (EC) for the treatment of two indications: first, Toripalimab in combination with cisplatin and gemcitabine for the first-line treatment of adult patients with recurrent, inoperable or non-radiotherapeutic, or metastatic nasopharyngeal carcinoma (NPC); second, Toripalimab in combination with cisplatin and paclitaxel for the first-line treatment of adult patients with unresectable advanced/recurrent or metastatic esophageal squamous cell carcinoma (ESCC).

After achieving success in the United States and China, Toripalimab's entry into the European market marks it as the first and only approved drug for the treatment of nasopharyngeal carcinoma in Europe, and it is also the only approved first-line immunotherapy drug for advanced or metastatic esophageal squamous cell carcinoma without restrictions on PD-L1 expression in Europe.

In this regard, a pharmaceutical industry analyst from a securities firm, when interviewed by a reporter from 21st Century Economic Report, stated that the continuous expansion of the international market by Chinese pharmaceutical companies reflects the increasing maturity of domestic PD-1 drug technology and growing global ambitions. Internationalization not only meets commercial needs but also demonstrates that the R&D capabilities of pharmaceutical companies have reached a leading global level, which is one of the reasons why many pharmaceutical companies submit market applications to the FDA and EC.

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"In the future, the Chinese PD-1 market will attract more participants, and competition will no longer be limited to the domestic market but will develop towards internationalization and globalization. The competition in China's PD-1 market is already very intense, and for those companies that have not yet entered the late clinical stage, continuing to invest heavily in PD-1 drug R&D may no longer be cost-effective," the analyst further pointed out. Given the relatively limited selection of overseas PD-1 products, "internationalization" has become a key strategic direction for Chinese PD-1 pharmaceutical companies.

The intense competition in the PD-1 market is well-known, and it can be seen from the performance reports published by major pharmaceutical companies that this competition has reached a white-hot stage.

According to the latest financial report data, in the first half of this year, Junshi Biosciences' revenue reached 786 million yuan, a year-on-year increase of 17%. Among them, the revenue from the PD-1 monoclonal antibody drug Tuoyi (Toripalimab) was 671 million yuan, a year-on-year increase of about 50%.During the reporting period, Toripalimab has obtained NMPA approval for three new indications, including the first-line treatment of intermediate-to-high-risk unresectable or metastatic renal cell carcinoma in combination with Axitinib; the first-line treatment of extensive-stage small cell lung cancer in combination with Etoposide and platinum; and the first-line treatment of recurrent or metastatic triple-negative breast cancer with PD-L1 positivity (CPS≥1) as assessed by validated tests, in combination with injectable Paclitaxel (albumin-bound). Currently, Toripalimab has been approved for 10 indications in China.

Starting from 2024, the three new indications for Toripalimab will be included in the new version of the national medical insurance directory, bringing the total number of indications included in the national medical insurance directory to six.

In overseas markets, Toripalimab has conducted over 40 clinical studies across more than 15 indications in various regions, including China, the United States, Southeast Asia, and Europe. In October last year, Junshi Biosciences announced that Toripalimab (trade name in the United States: LOQTORZI®) received FDA approval, becoming the first domestically produced PD-1 drug to successfully pass FDA review.

In addition to the European and American markets, Toripalimab has also submitted marketing authorization applications in the United Kingdom, Australia, Singapore, Malaysia, Hong Kong, India, South Africa, Chile, Jordan, and other places, with its global commercialization network covering more than 50 countries.

Junshi Biosciences stated to reporters from the 21st Century Economic Report that the company and its partners are actively promoting the marketing application process of Toripalimab in the cooperation regions and are exploring the possibility of launching more indications in some areas.

In the PD-1 market, the current situation is "he who gets the indication gets the world." In addition to Junshi Biosciences, BeiGene's progress in overseas markets has also been quite smooth. BeiGene's PD-1 antibody drug Tislelizumab (trade name: Tyvyt®) achieved sales of 2.191 billion yuan in the first half of 2024, a year-on-year increase of 19.4%. The growth in sales of Tislelizumab is mainly due to the increased demand for new patients brought by the inclusion of new indications in medical insurance and the increase in the number of hospitals where the drug is available. Currently, Tislelizumab has been approved for 13 indications in China, 11 of which have been included in the national medical insurance directory.

Globally, Tislelizumab has been approved in multiple markets worldwide, including Europe, the United States, South Korea, and Switzerland. At the same time, it is also under review by regulatory authorities in various countries and regions. In September last year, BeiGene announced that Tyvyt® was approved by the European Union for the treatment of adult patients with unresectable, locally advanced, or metastatic esophageal squamous cell carcinoma (ESCC) who have previously received platinum-based chemotherapy. As a result, Tislelizumab became the first PD-1 product to "go overseas" and fully entered the global market. On April 23, BeiGene announced that the European Commission (EC) had approved Tislelizumab for the first-line and second-line treatment of three non-small cell lung cancer (NSCLC) indications. The trade name of Tislelizumab approved by BeiGene for the above NSCLC indications is TIZVENI, which is the second approval obtained by Tislelizumab in the region.

In addition to BeiGene and Junshi Biosciences, Innovent Biologics' PD-1 Sintilimab (trade name: Tyvyt®) also achieved significant results in the first half of this year, with sales revenue of $239.7 million (approximately 1.7 billion yuan), a year-on-year increase of 46%. Innovent Biologics pointed out in its semi-annual report that by fully leveraging a diversified product portfolio, extensive coverage of the national medical insurance drug directory and access channels, as well as a solid market brand position, the sales performance of Sintilimab injection and other main products remain strong, new products are growing rapidly, and their contribution to revenue is increasing.

Among the domestic layout enterprises in the first echelon of PD-1, only HengRui Medicine has not disclosed the market sales of Camrelizumab. However, it is not difficult to find that PD-1/PD-L1 checkpoint inhibitors are one of the hot fields that top pharmaceutical companies are competing for. Due to fierce market competition, this field is called the "king of internal volume" in the industry. According to IQVIA data, over the past five years, the performance of PD-1/PD-L1 inhibitors has been significantly better than the global oncology market, with a compound annual growth rate of 45%, three times the overall growth rate of oncology.

The above analysts pointed out that from the current market competition pattern, price is a very important factor in such a fiercely competitive market. At the same time, the clinical data of each PD-1 product is also an important consideration for doctors when recommending and choosing drugs. Better drug stability and lower side effects will become important selection factors. However, to open up a broader market space, "going overseas" is a necessary path."The space for PD-1 in the domestic market is becoming increasingly limited. Only by 'going global' can we avoid 'involution' and achieve better market performance," the analyst believes that under the condition of the same indications, differentiated competition is currently the most important point of competition in the PD-1 market.

Domestic PD-1 accelerates "going global"

According to IQVIA data, over the past five years, the global oncology market has been eye-catching, with a compound annual growth rate of 45%, three times the overall oncology market growth rate. Calculated based on the manufacturer's ex-factory price, the global market size reached $36 billion in 2021. With the maturation of the PD-1/PD-L1 market, it is expected that future growth will slow down to a compound annual growth rate of 15%. IQVIA predicts that by 2025, global sales will increase to $58 billion. Although this growth rate is relatively low, it is still higher than the expected 10% compound annual growth rate of the entire oncology market.

Given the considerable market size of the global market, it has also given birth to the "king of drugs" in the PD-1 field. By combing Merck's financial statements, it can be seen that Keytruda (pembrolizumab, K-drug) continues to shine. In the first half of this year, K-drug revenue reached $14.217 billion, a year-on-year increase of 18%. According to public information, as the new "king of drugs" that dethroned the "king of drugs" Humira, which had been in the throne for 11 years, K-drug has now been approved for 40 indications, and there are new indications being explored, and the market may continue to grow.

However, the market competition in the PD-1 track remains fierce. On the one hand, O-drug cooperates with local pharmaceutical company Zai Lab, hoping to challenge K-drug's leading position in the Chinese market; on the other hand, some key patents of K-drug will expire in 2028, and the influx of biosimilars and the "going global" of domestic PD-1 will erode K-drug's market share.

According to the combing of reporters from the 21st Century Economic Report, as of the first half of 2024, China has approved 15 PD(L)-1 monoclonal antibody drugs for market launch. In addition, the number of clinical trial registrations for PD-1/PD-L1 drugs in China exceeds 600, involving more than 150 companies, of which nearly 200 have entered the Phase III clinical stage.

This is also expected to promote PD-1 products from the initial annual treatment cost of hundreds of thousands of dollars to the current "ten thousand yuan era", which means that there is fierce competition in the PD-1 field. Companies must seek international development and pursue differentiation in order to occupy a place in the market. However, at present, only two domestic PD-1 drugs have been approved for market launch in Europe and the United States, namely BeiGene's tislelizumab and Junshi Biosciences' toripalimab. This phenomenon is partly due to the difficulty of the "going global" path.

For example, in the first half of this year, Hengrui Pharmaceutical's PD-1 drug encountered setbacks when trying to obtain FDA approval. At that time, Hengrui Pharmaceutical announced that it received a complete response letter (Complete Response Letter) from the FDA regarding the biologics license application (BLA) for camrelizumab combined with apatinib for the first-line treatment of patients with unresectable or metastatic hepatocellular carcinoma. In the letter, the FDA stated that it would conduct a comprehensive assessment based on the company's response to the production site inspection deficiencies and pointed out that due to travel restrictions in some countries, it was not possible to complete the necessary biological research monitoring plan (BIMO) clinical inspections within the review cycle.Industry insiders have analyzed that the Complete Response Letter (CRL), as commonly referred to in the industry, will detail potential defects and risks and propose recommended solutions. If the applicant completes the changes within the specified time, the CRL does not actually affect the final approval. This means that the U.S. market launch procedure for Hengrui's Camrelizumab has only been delayed.

When discussing the current internationalization status of innovative pharmaceutical companies, Sun Chuan, Managing Partner of the Shanghai office of Morrison & Foerster and Partner for M&A/Technology Transactions, said in an interview with 21st Century Economic Report that the core value of a product lies in its quality, especially the efficacy of the drug. This mainly depends on the advancement of technology.

Although the external environment is indeed an influencing factor, as long as the product is excellent, the founding team is strong, the technology is advanced, and the indications targeted by the original research drug or new drug have huge market potential, even in the early stages of clinical trials (Phase I), or even before Phase I, as long as positive results can be achieved, it usually attracts a lot of investor attention, even in the current poor economic situation.

"Regarding the approval standards of overseas regulatory agencies, it is not directly related to the market itself. This is because clinical trials are a long and complex process, requiring multiple reviews and encountering various issues. Ethical committees will also assess the results of clinical trials and must follow a series of procedures. But the key factors are still the superiority of technology, the strength of indications, and safety and efficacy. If significant results are achieved in Phase II trials and the experimental design is appropriate, then we can continue to advance," Sun Chuan said.

Sun Chuan emphasized that one of the key reasons for entering the overseas market is innovative drugs. Due to centralized procurement or other similar situations, the profit margins of innovative drugs tend to be more inclined towards overseas markets. "The country has noticed this issue, and we have heard some proposals, such as hoping to provide preferential policies for innovative drugs in centralized procurement or other aspects, or to increase their prices. This is a positive strategy for encouraging innovation, after all, the research and development behind each innovative drug may require tens of billions or even hundreds of billions of investments."