On Wednesday of this week, the National Medical Insurance Administration announced the results of this year's medical insurance negotiations. Compared with the main theme of "soul bargaining" in previous years, this year's theme has shifted to supporting medical innovation. Through the annual major milestones, it can be observed that the market returns of innovative drugs on the market in China are motivating enterprises and investors to continue investing in innovation.
The innovation ecosystem in China is undergoing tremendous changes, and the Chinese pharmaceutical innovation industry is constantly bursting with vitality. The strategic model of multinational pharmaceutical companies in China is also continuously upgrading. For Sanofi, exploring the depth of innovative drugs and improving the breadth of drug accessibility have become the main focus at present.
On December 15th, Sanofi China and Shanghai Pharmaceuticals announced the official signing of a strategic cooperation agreement to engage in extensive and in-depth cooperation across all channels and across the country in key disease areas, building an end-to-end value chain system from import, distribution to terminal sales. Both parties will maximize drug accessibility through this win-win cooperation and business model, allowing Sanofi's high-quality products to benefit more Chinese patients and contribute to the sustainable development of China's local medical and health ecosystem.
Some analysts in the pharmaceutical industry from securities firms believe that there is competition and cooperation between multinational corporations and local pharmaceutical companies. Currently, the two sides are working together in all aspects of research and development, production, sales, and other aspects, which has become a trend in industry development. Global leading multinational pharmaceutical companies are accelerating domestic research and development and listing, while also actively aiming for global integration, aiming to benefit patients in China and around the world. Currently, multinational pharmaceutical companies have begun to explore differentiated innovation models, including differentiation in the treatment field and technology platforms, extension and coverage of value chain capabilities, multi-party cooperation in research and development and commercialization stages, etc., to promote multi-party collaboration in the ecosystem and enable pharmaceutical innovation to benefit patients in China and globally.
Strong collaboration: increasing the accessibility and breadth of drugs, allowing more innovative drugs to benefit a wider range of patients
Foreign funded enterprises are an important component of comprehensively promoting high-quality economic development in China and building a new pattern of open economic development. Recently, the State Council issued the "Opinions on Further Optimizing the Foreign Investment Environment and Increasing the Attraction of Foreign Investment", which pointed out that 24 policy measures were proposed in 6 aspects to solve the pain points and difficulties of foreign investment and operation, and increased the guidance for foreign investment, creating a first-class business environment and broad market opportunities for foreign-funded enterprises.
Driven by policies, it has become a trend to strengthen cooperation between multinational pharmaceutical enterprises and local innovative pharmaceutical enterprises. According to information disclosed by Sanofi, this cooperation with Shanghai Pharmaceutical Group Co., Ltd. is a comprehensive upgrade of Sanofi China and Shanghai Pharmaceutical Group Co., Ltd. on the basis of long-term cooperation, and has extremely high strategic significance. Both sides will engage in extensive cooperation across all channels and nationwide in key disease areas, including but not limited to cardiovascular diseases, central nervous system diseases, tumors, etc., focusing on multiple high-quality Sanofi products. Through a series of measures such as strong alliances with Shanghai Pharmaceutical Group, Sanofi aims to establish a business model that is more suitable for the local market and achieve operational optimization and innovation, further consolidating Sanofi's innovative development model in China.
From the perspective of the significance of this strategic cooperation, Shanghai Pharmaceutical Holdings relies on a nationwide supply chain network, and through strong alliances with partners such as Sanofi China, continuously strengthens the national omnichannel integrated marketing service system, promotes innovative breakthroughs in supply chain models, and is committed to building the first brand of commercial marketing in China's pharmaceutical industry.
This is one of the largest, widest, and deepest strategic collaborations between pharmaceutical industry and commerce in recent years. Together, the two sides have built a new strategic model, greatly improving the efficiency of the pharmaceutical industry chain and promoting deep integration of pharmaceutical industry chain innovation. Currently, the fundamental conditions of China's medical system are undergoing tremendous changes, and there is an urgent need for a new market model to achieve a balance and synergy of 'efficiency+innovation', and better integrate it Service Healthy China Strategy. This industrial chain cooperation has achieved a perfect combination of local circulation enterprise commercial efficiency and multinational pharmaceutical enterprise innovation advantages, promoting the cross integration of industrial chain innovation chains through the construction of a new ecosystem, and pushing more valuable drugs to the market and benefiting the people in a more efficient way. We believe that we have the ability to advance this new model of strategic cooperation to a higher level, and we also believe that the path created by this model will be unstoppable Li Yongzhong, Executive Director and CEO of Shanghai Pharmaceuticals, said.
Focusing on research and development: Digging into the depth of innovative drugs and accelerating the layout of multiple heavyweight drugs
From the perspective of the overall environment, under the influence of the COVID-19 in recent years, the R&D pipeline of global pharmaceutical enterprises is seeking integration in the challenge, and each is promoting reform to achieve continuous improvement of pharmaceutical R&D productivity.
Although the impact of COVID-19 on the world has gradually decreased, the epidemic still affects the global pharmaceutical market, and the global pharmaceutical market will continue to face challenges. Especially with the well-known high cost, high risk, and long cycle of innovative drug development, reducing the R&D pipeline can to some extent reduce the R&D costs of enterprises. While streamlining product pipelines, enterprises also need to constantly summarize their experience from market challenges and explore new market growth points.
In recent years, due to strategic and commercial potential reasons, multiple multinational pharmaceutical companies have responded to market changes, focusing on their core areas and seeking new growth points. The focus of competitors in the global pharmaceutical industry is expected to become more focused in the future.
Sanofi introduced the company's R&D strategy and key R&D projects at the recent R&D Day event. The company's executives stated that there are 12 new molecular entities (NMEs) in its R&D pipeline that have the potential to become heavyweight drugs, with a record high number, and are fully committed to building a leading position in the immune industry.
In fact, the fields of immunology and inflammation have always been the market ace of Sanofi. Public information shows that currently Sanofi's pipeline layout in the field of immunity mainly includes three categories: systemic disease pathways such as asthma and atopic dermatitis; Autoimmune challenges of peripheral inflammatory diseases such as rheumatoid arthritis, type 1 diabetes and cancer; Combined with Sanofi's advantages in the vaccine field, they have built the company's innovative pillar for the future, with immunity as an important component.
According to Frost Sullivan data, the global market for autoimmune disease drugs is expected to grow from $127.7 billion in 2021 to $176 billion in 2030, with a compound annual growth rate of 3.6%. In 2021, the market size of autoimmune disease biologics was 89.1 billion US dollars, and it is expected to increase to 142.1 billion US dollars by 2030, accounting for 69.8% and 80.8% of the global autoimmune disease drug market in 2021 and 2030, respectively.
By 2030, Sanofi also expects its sales in the fields of immunity and vaccines to exceed 22 billion euros and 10 billion euros. According to Sanofi's third quarter financial report, most of its research and development pipelines have potential first or best opportunities in the same category. The immune and neuroinflammation product pipelines developed by the company are currently in the middle and later stages of development, with a peak sales potential of at least 2 to 5 billion euros for each product.
In addition, according to data disclosed by Sanofi R&D Day, the number of Phase III clinical trials of Sanofi will increase by 50% between 2023 and 2025, which is expected to achieve the strongest product pipeline in history. In the next two years, it is expected that 25 mid to late stage clinical trial results will be released globally, and up to 19 new products or indications will be submitted for market application. The innovative drugs launched globally in the near future are expected to contribute over 10 billion euros in annual sales to Sanofi. The continuous launch of innovative drugs will provide sustainable growth momentum for the company until 2030 and even longer.
Sanofi is also accelerating the provision of accessible innovative drugs and vaccines to the Chinese public, and by 2023, China has achieved participation in over 90% of global synchronous research and development projects. So far, 10 innovative drugs, vaccines, and indications have been approved in China, setting a new record for the number of approvals the company has received over the years. It is promoting the launch of innovative products at an unprecedented pace of development. For over 40 years, Sanofi has been rooted in China and has introduced nearly 50 innovative drugs and vaccines to the Chinese people. Its health solutions cover seven of the top ten deadly diseases in China, making positive contributions to the development of China's medical industry.
Behind this series of fruitful achievements lies Sanofi's vision and mission of "pursuing scientific miracles", aiming to improve the quality of life and well-being of patients through scientific innovation. As Sanofi Greater China President Shi Wang said: "Establishing a pharmaceutical innovation business model with local partners is an important part of Sanofi's China innovation development strategy. We will accelerate the pace of innovation research and development, expand the depth and breadth of innovation cooperation, enhance the height of innovation strategy, and achieve a dual focus on innovative product pipelines and innovative business models. We will enable more innovative, high-quality, and accessible original research drugs and vaccines to benefit the Chinese people and make continuous contributions to the Healthy China 2030 strategy."
Currently, in the market environment of value orientation, patient-centered, and fee based reform, international pharmaceutical and device companies are experiencing many new capabilities in their commercial operations. These new capabilities are not only a trend for the pharmaceutical industry to return to the source of value, but also an industry that encourages innovation, enhances competitiveness, and transforms towards better serving patients. Especially as China strides into the second tier of global pharmaceutical innovation, the pharmaceutical market is facing unprecedented historical opportunities.
Looking ahead to the next decade, guided by the needs of patients, multinational pharmaceutical companies and local enterprises will work together to promote multi-party collaboration in the ecosystem, and benefit Chinese and global patients with pharmaceutical innovation originating from China, creating a vibrant and globally competitive pharmaceutical innovation industry. The cooperation between Sanofi and Shanghai Pharmaceutical Group is a new strategic model jointly constructed by both parties, and will also be one of the mainstream cooperation models targeted by pharmaceutical companies in the future. At present, commercial cooperation between pharmaceutical companies is becoming increasingly common, with a variety of cooperation models. From research and development to sales, complementary advantages can quickly capture market opportunities.