How does License in promote the development of China's innovative drugs?

China's current innovative drug road is in the bottom-building stage, but it has shown an obvious unstoppable and upward spiral trend.

01

The road to China's innovative drugs is spiraling upward

Based on the comprehensive analysis of the history of China’s pharmaceutical development, national pharmaceutical/medical insurance policies, and local commercial insurance, China has provided strong support for the development of innovative drugs in many ways.

The foundation for the development of innovative drugs is that companies have a complete product pipeline.

02

Status of License in in China

License in, also known as license introduction, is to obtain the commercial rights and interests of product development, production and sales in certain countries and regions by paying a certain down payment to the product licensor, and agreeing on a certain amount of milestone payment and future sales commissions.

With the rapid development of the domestic economy and the support of multiple capitals, it has become a trend for companies to expand their R&D pipelines through License in in line with their own development needs.

According to the statistics of Firestone Creation Database, after 2015, there were 62 companies with license in transactions.

Table 1: List of companies with license in transactions greater than 5 after 2015

Source: Flint Creation Database

Zai Lab focuses on the areas of unmet clinical needs and the introduction of differentiated R&D pipelines through License in.

Genting Xinyao focuses on 4 areas of tumor, immunity, heart and kidney, and infectious diseases.

BeiGene approved the introduction of SYLVANT (stuximab) on January 13, 2020.

License in's products mainly include medicines, technologies, platforms, and equipment, of which 94% are related rights and interests of medicines.

Figure 1: License in indication distribution

Source: Flint Creation Database

Up to now, the transaction volume and transaction volume of License in are on the rise.

Table 2: List of license in transactions exceeding 100 million U.

Source: Flint Creation Database

In addition, there will be one transaction with a total transaction volume of over US$500 million in 2019, and two transactions with a transaction volume of over US$500 million in 2020.

Table 3: 2019-Today's License in Drug Transaction Total Over US$500 Million List

***The amount includes the disclosed down payment + milestone payment + sales commission

Source: Flint Creation Database

03

Capability requirements for license in

What capabilities do companies need to have to expand their pipelines through License in?

First, it is the research ability.

Secondly, it is financial ability and business ability.

Finally, research and development capabilities and execution capabilities.
Projects that are permitted to be introduced quickly obtain stage results, and a reasonable clinical trial plan needs to be designed.
To promote the smooth development of clinical trials until commercialization, efficient R&D capabilities and execution capabilities are required.

summary

Combining the current situation of China's encouraging innovation in medicine and the fact that License in has many advantages such as short R&D cycle, fast accumulation of experience, and low initial R&D investment, it has become a trend for local companies to rapidly expand R&D pipelines.
Through accurate License in, companies that have entered the market earlier have gradually entered the harvest period.

However, with the gradual congestion of the License in market, the transaction volume has risen, and the distribution of rights has led to a limited market for projects.
The attractiveness for commercial capital may gradually decrease, which has become a major disadvantage of restricting the License in model.