The hype in the secondary market of weight loss pills has significantly cooled, with global market leaders Eli Lilly from the United States and Novo Nordisk from Denmark experiencing the largest cumulative stock price drops of 13% and 12%, respectively, from their high point on October 13th. In terms of A-shares, Changshan Pharmaceutical, Haofan Biotech, and Baihua Pharmaceutical have all experienced their largest cumulative decline of over 30% since their October high.
On the news, Borui Pharmaceuticals, Kanghui Pharmaceuticals, and Baihua Pharmaceuticals all received warning letters last week due to the hot topic of weight loss pills. The Chairman of Borui Pharmaceuticals received warning letters due to misleading remarks. The Securities Regulatory Bureau decided to take supervisory and management measures to issue warning letters to Baihua Pharmaceuticals and Cai Ziyun. Kanghui Pharmaceuticals Securities Regulatory Commission decided to take administrative regulatory measures to issue warning letters to the company, as well as Wang Yanling and Dong Juan. The specific situation is as follows:
Industry analysis suggests that the continuous issuance of warning letters on weight loss drug concept stocks may be related to stabilizing market trading order, reducing market hype, or strictly regulating the use of weight loss drug concepts to speculate in stock prices. Some institutional insiders have previously revealed to the Cailian News Agency that it is not ruled out that some listed companies "use" investor interaction platforms to find "agents" to ask questions, and then intentionally answer vague or misleading investors, in order to influence and manipulate stock prices.
Listed companies strongly deny the relevant layout of weight loss drugs. Changshan Pharmaceutical and other hypoglycemic drugs have become popular in the capital market as weight loss drugs
In fact, at the height of the GLP-1 concept's popularity, secondary markets frequently engage in various ways of catching on to hot topics. In addition to the three pharmaceutical companies that received warning letters mentioned above, several listed companies with abnormal stock prices such as Changshan Pharmaceutical and Shuanglu Pharmaceutical have also issued "risk warning announcements" in recent times, all of which have stated that they do not have a weight loss drug industry chain layout.
In addition, according to incomplete statistics from Cailian News Agency, several listed companies, including Runben Co., Ltd., Shapu Aisi, Longjin Pharmaceutical, Huiyu Pharmaceutical, Bohui Innovation, Xinnuwei, Jingfeng Pharmaceutical, Kangzhi Pharmaceutical, Guangshengtang, Jiabiyou, Rundu Co., Ltd., Saito Biology, Hongyuan Pharmaceutical, etc., have recently publicly clarified on interactive platforms that they do not involve the concept of weight loss drugs.
According to Choice data, Changshan Pharmaceutical ranks first in the 60 day growth chart of the weight loss medicine sector. From a time perspective, the stock price of Changshan Pharmaceutical has been rising since August 31st, but its semi annual report disclosed on August 30th is currently unsatisfactory. In the first half of 2023, the company's operating revenue was 820 million yuan, a year-on-year decrease of 28.45%, and a net loss of 156 million yuan, which turned into a loss on a year-on-year basis; The latest financial report shows that the company's operating revenue in the third quarter was 319 million yuan, a year-on-year decrease of 50.68%; The net loss attributable to shareholders of the listed company is 232 million yuan.
Based on this, the market generally believes that the stock price fluctuations of Changshan Pharmaceutical are closely related to the concept of weight loss pills. It is worth mentioning that Changshan Pharmaceutical added the concept of "weight loss medicine" on August 11 this year, because its subsidiary, Ibenatide, and Smeglutide, are both GLP-1 drugs. Public information shows that Smeglutide injection can be used for blood glucose control in some patients with type 2 diabetes, and it is also suitable for some obese patients. But in fact, although they are both GLP-1 products, according to Changshan Pharmaceutical, albenatide is currently only suitable for the treatment of type 2 diabetes, not obesity, and has not been approved for marketing.
In addition to Changshan Pharmaceutical, many weight loss drug concept stocks are related to the treatment of diabetes, such as Ganli Pharmaceutical and East China Medicine. On July 4th, Huadong Pharmaceuticals announced that its wholly-owned subsidiary, Zhongmei Huadong, has received a "Drug Registration Certificate" approved and issued by the National Drug Administration, and the application for marketing permission for the obesity or overweight indication certificate of Liraglutide injection declared by Zhongmei Huadong has been approved. The original research enterprise of Lilalutide injection is Novo Nordisk, whose diabetes indication was approved by the European Drug Administration in 2009. Ganli Pharmaceutical said on August 9 on the interactive platform that GZR18, a class 1 innovative therapeutic biological product under research, is a kind of long-acting glucagon like peptide-1 (GLP-1) receptor agonist drug that is expected to be injected once a week. The approved clinical indications are adult type 2 diabetes, obesity/overweight weight management.
There are many hidden worries behind the popularity of weight loss drugs: Fosun Pharmaceuticals, Xinda Biotechnology and other competitors may face competition or internal competition. The industry claims that hypoglycemic drugs still pose health risks when used for weight loss
According to the prediction of CITIC Securities, the market size of GLP-1 receptor agonists for weight loss drugs in China is expected to reach around 38.3 billion yuan by 2030, with a market size of about 25.5 billion yuan for obese individuals and 12.9 billion yuan for overweight individuals.
In the GLP-1 field, the domestic pharmaceutical companies that have been approved for weight-loss related purposes are Huadong Pharmaceutical's Liraglutide biological analog drug and Renhui Biological's Benraglutide injection. Both drugs were approved for launch in July this year, and companies waiting for their products to be launched in China also include Fosun Pharmaceutical, Xinda Biological, and Shiyao Group. According to incomplete statistics from Ping An Securities' research report on October 18th, the research pipeline of weight loss drugs in China is summarized as follows:
The industry points out that in the face of huge market demand, the rush to popular drugs also means facing significant market risks, and products may eventually face fierce price wars. The typical lesson of the domestic pharmaceutical industry in the past was the globally popular tumor immunotherapy star drug PD - (L) 1. Junshi Biological, Baekje Shenzhou, Hengrui Pharmaceutical, and Xinda Biological products were all launched earlier and enjoyed the dual stimulation of price and sales. However, with the decline in industry prices, most companies had to abandon the PD - (L) 1 project that had been invested for many years and endure the pain of being eliminated. In other words, there is not much time left for domestic pharmaceutical companies at present.
It should also be noted that the indications for weight loss related to Smegglutide in China have not been approved. To control weight with Smegglutide, one can only use its hypoglycemic drug version, namely Novotel. Using hypoglycemic drugs to lose weight is a super indication medication, and hypoglycemic drugs are also prescription drugs. The industry indicates that there are still certain health risks associated with self use of these drugs for weight loss in China. For example, the manual of Novotel mentions common adverse reactions including hypoglycemia, nausea, diarrhea, dizziness, and high heart rate, which occur in at least 10% of people. In addition, the drug has a certain dependence, and some analyses suggest that once the drug is stopped and enthusiasm for food is restored, many people's weight will rebound.
Undoubtedly, the R&D battle between A-share pharmaceutical companies around the "slimming miracle drug" GLP-1 has begun, but the slimming drug market is by no means a "winner take all" market. From the perspective of the industry, while embracing technological development, it is also important to stay clear when pursuing market trends. Whether it is a blooming flower or a burning oil, it still needs to be seen through product practice.