Coronavirus infections are on the rise. How much market does Xenoxin still have?
author | Wu Lijuan
editor | Gao Yan
source | Yema Finance
Recently, many netizens have posted their "two positive" and "three positive" antigen test results on social platforms. A few days ago, the WHO also issued a warning that more than 80 countries have monitored an increase in the number of new coronavirus infections. During the Paris Olympics alone, at least 40 athletes have been infected with the new coronavirus and other respiratory disease pathogens.
At the same time, sales of many companies that supply COVID-19 drugs, testing reagents and other related products have increased. On August 12, the well-established pharmaceutical company Simcere Pharmaceuticals (2096.hk) publicly stated on many occasions that starting last month, the company’s first domestically approved oral anti-COVID-19 drug, Xenoxin, began to be shipped. Growth continued this month.
When the new coronavirus infection is on the rise again, the new crown concept sector is making waves in the secondary market, Yiling Pharmaceutical (002603.sz), Guangshengtang (300436.sz), Shutai Shen (300204 .sz) and other stocks have reached their daily limit recently, and there have been corrections to varying degrees.
However, the stock price of Simcere Pharmaceuticals did not cause much splash in the capital market. It closed up 4.28% on August 12, but there was no obvious improvement after that. As of August 16, it closed at HK$5.54/share, with a market value of HK$14.1 billion. has fallen by more than 60% compared to the intraday high of HK$13.94/share in 2021..
The wealth of Simcere Pharmaceuticals’ controlling shareholder and chairman Ren Jinsheng has also “shrunk significantly.” In 2021, the Ren family successfully entered the "Forbes Rich List", ranking among the top 300. The "Hurun Global Rich List" list shows that from 2023 to 2024, Ren Jinsheng's family wealth fell from 17 billion yuan to 7.2 billion yuan..
In the first half of 2024, Simcere Pharmaceuticals is expected to deliver a report card with both revenue and profits declining. Can the "Forbes Rich" create another wealth myth?
Coronavirus infections are on the rise
How much market is there for Xenoxin?
The national new coronavirus infection situation released by the China Centers for Disease Control and Prevention on August 8 showed that the positive rate of new coronavirus in influenza-like cases in sentinel hospitals across the country continued to increase from 8.9% in the 27th week to 18.7% in the 30th week. In July, a total of 7,042 valid genome sequences of the new coronavirus from local cases were reported across the country, all of which were Omicron mutant strains.
The Guangdong Provincial Bureau of Disease Control and Prevention released an overview of the province's notifiable infectious disease epidemic situation in July, which showed that there were 18,384 cases of new coronavirus infections, an increase of more than 10,000 cases compared with June.
At present, new coronavirus infections are showing an upward trend.
There are currently 6 oral COVID-19 drugs that have been approved for marketing in China, including two imported COVID-19 oral drugs ( Paxlovid produced by Pfizer , Merck Monolavir) as well as the real biological Azivudine and Simcere. Xenogravir tablets/ritonavir tablet combination packaging (trade name: Xenoxin®), Junshi Bio-uhtl25 deuterated remidevir hydrobromide tablets (trade name: Mindevi), All living beings’ Laretevir tablets (trade name: Le Ruiling).
Simcere Pharmaceuticals was founded in 1995. It was listed on the New York Stock Exchange in 2007. It was delisted from the US stock market through privatization in 2014 and was listed on the Hong Kong Stock Exchange in October 2020. At present, Simcere Pharmaceutical's business is mainly concentrated in the fields of nervous system, tumors, autoimmunity and other fields.
On January 30 last year, the official website of the Beijing Municipal Medical Security Bureau issued an announcement that the new coronavirus oral drug Xenoxin (Xenogravir tablets/ritonavir tablet combination packaging) developed by Simcere Pharmaceuticals was initially quoted at 750 yuan per box.
Xenoxin is the first 3cl oral small molecule drug for COVID-19 in China. Compared with Pfizer paxlovid's 1,890 yuan per box, the price is only 40% of that. Xenoxin automatically enters the "temporary medical insurance", and the personal medical insurance account is paid at a rate of 10%, and the self-pay price is less than 100 yuan.
Source: Simcere Pharmaceuticals 2023 Annual Report
During the previous peak of the domestic epidemic, Pfizer's paxlovid, Merck's Monoravir, and RealBio's Azivudine had already taken the lead. Pfizer's paxlovid was once sold on the black market for 50,000 yuan per box, and Merck's drug was also hard to find, and it even became popular with Indian and Bangladeshi generic drugs.
Pfizer Authorized Generic Drugs in Bangladesh Source: Can Gallery
However, after the 2023 epidemic, consumption downgraded the virulence of the new coronavirus, weakened the harm, and the sales of new coronavirus drugs were weak.
Therefore, even though Xenoxin has a huge advantage in price compared to Pfizer paxlovid, its efficacy has not been fully tested by the market. At the same time, has lost its first-mover advantage .
Simcere Pharmaceuticals recently responded to the Beijing News, stating that starting from July, the shipment volume of Simcere has increased compared with before. From the delivery area, we can feel that the new coronavirus is gradually moving northward from the southern cities in my country. The annual production capacity of Xenoxin can reach tens of millions of doses, and sufficient Xenoxin products have been produced to supply the market; at the same time, Simcere Pharmaceuticals has made preparations in terms of raw material reserves, equipment and staffing, and can be ready at any time. Adjust Xenoxin production capacity according to market demand to ensure sufficient supply of .
html On August 6, some netizens posted that the monthly sales of Meituan the drug Xenoxin increased from 2,000+ to 3,000+. On August 15, Yema Finance discovered at Meituan’s self-operated clinic that the monthly sales of the drug had reached 5,000+.
Mr. Li, a veteran of pharmaceutical companies, believes that Xenoxin was only conditionally approved for listing in January 2023, and it missed the small peak of the new crown outbreak in the second half of 2022 and the Spring Festival of 2023. However, this year’s summer vacation travel has returned to pre-epidemic levels, the mutation and incidence of COVID-19 are on the rise, and the demand for COVID-19 treatment drugs has exploded. Even so, new crown treatment is still a niche product , and there are competing products such as Pfizer's nematvir tablets/ritonavir tablet combination, Merck's monogravir capsules, etc., which share the market , and Xanoxin cannot fill the gap. Aotan's hole will not grow into a billion-level blockbuster product.
According to a research report previously released by Southwest Securities , the global market size for oral new coronavirus drugs is estimated to be between billions and tens of billions of dollars. Can Simcere Pharmaceuticals capture the tens of billions of dollars in the COVID-19 oral drug market? It remains to be tested by time.
Simcere Pharmaceuticals expects profits to plummet by approximately 80%
According to the performance forecast, as of June 30, 2024, Simcere Pharmaceuticals will achieve revenue of approximately 3.084 billion yuan to 3.144 billion yuan, a year-on-year decrease of approximately 7% to 8.8%. The decrease in revenue was primarily attributable to a decline in promotional services revenue and a decline in Xenoxin® sales revenue following changes in the COVID-19 pandemic.
's revenue dropped, and its profits plummeted by 80%. In the first half of the year, Simcere Pharmaceuticals' profits attributable to equity shareholders were approximately 427 million yuan to 487 million yuan, a year-on-year decrease of approximately 78.6% to 81.2%. The main reason is the change in investment income. First, changes in the fair value of 3D Medicines Inc.'s shares held by company resulted in a net pre-tax loss of 's fair value of 48 million yuan. In the same period last year, the investment achieved a net pre-tax income of 1.134 billion yuan. ; In addition, disposed of subsidiaries in the same period last year and realized a one-time pre-tax income of approximately 789 million yuan.
Mr. Li, a person from the above-mentioned pharmaceutical company, believes that the decline in revenue may be due to the products promoted by agents not meeting expectations. Because Olmesartan Medoxomil Hydrochlorothiazide Tablets (Floatan) entered the national centralized procurement and failed the bid, the joint promotion service agreement with Daiichi San Pharmaceutical (Shanghai) Co., Ltd. was terminated, resulting in the promotion revenue of Fuatan returning to zero; pdl1 monoclonal antibody, which has high hopes, The agency promotion of Volimab Injection (owned by Sichuan Silu Kangrui Pharmaceutical) did not meet expectations.
It is worth noting that in the first half of last year, Simcere Pharmaceuticals' profit was approximately 2.275 billion yuan, an increase of approximately 3466.17% compared to 64 million yuan in the same period of 2022, a surge of nearly 35 times.. However, in this interim report, which showed a sharp increase in net profit, most of the profits came from equity investment.
In the first half of 2024, the stock price of Silidi, invested by Simcere Pharmaceuticals, fell, which was one of the important factors leading to the decline in profits. In December 2022, Silidi (1244.hk) was listed on the Hong Kong Stock Exchange, and in July 2023 It rose to its highest value of HK$131.5 per share on March 13, and the stock price fell rapidly thereafter. As of August 16, Studi stock closed at HK$3.89 per share, which has plummeted.
Source: Canned Gallery
Success is also a new crown, failure is also a new crown. The severe damage to the COVID-19 business has caused many related pharmaceutical companies to fail, but some pharmaceutical companies have adjusted their business focus.For example, CanSino Biologics , since last year, the company's sales focus has shifted from the new crown vaccine to the meningococcal meningococcal vaccine. The sales revenue of the two meningococcal vaccine products increased by 266.39% year-on-year. The innovative drug business has also become the main driving force for the continued growth of Simcere Pharmaceuticals' performance.
As a pharmaceutical company dominated by innovative drugs, Simcere Pharmaceuticals has always invested heavily in R&D.
From 2019 to 2021, Simcere Pharmaceuticals’ R&D costs were 716 million yuan, 1.153 billion yuan, and 1.417 billion yuan respectively, showing an upward trend year by year. The R&D income ratios are 14.2%, 25.3% and 24.1% respectively, which are much higher than the average R&D investment ratio of domestic pharmaceutical companies. From 2020 to 2023, the research and development expenses of will be 1.142 billion yuan, 1.417 billion yuan, 1.728 billion yuan, and 1.563 billion yuan respectively.
However, this is still far behind the sales and distribution expenses of . During the same period mentioned above, its sales and distribution expenses were 1.57 billion yuan, 2.037 billion yuan, 2.403 billion yuan, and 2.356 billion yuan respectively. At the same time, the research and development expenses of in 2023 have been declining. .
Source: 2023 Annual Report
Taking the drug Xenoxin as an example, its direct research and development cost has exceeded 500 million yuan.
According to public information, the cost of each box of Xenoxin’s API is 334.53 yuan. If calculated based on the initial price of 750 yuan per box, even excluding distribution and sales costs, Simcere Pharmaceuticals needs to sell at least more than 1.2 million boxes of Xenoxin to earn back the direct research and development costs.
The R&D expenses of Xenoxin exceed 500 million yuan, accounting for approximately 32% of Simcere Pharmaceuticals’ R&D expenses for the whole year of 2023. Among the R&D expenses of 652 million yuan announced in the first half of 2022 financial report before the drug is launched, approximately 77%.
Will it be a big gamble to invest nearly 40% of the company's annual research and development expenses into the research and development of oral drugs for COVID-19?
Generic drugs started out
"Forbes Rich" bets on innovative drugs
From starting out as a generic drug to becoming a leading domestic innovative drug company, the founder of Simcere Pharmaceuticals, Ren Jinsheng, is called the "Musk of China's pharmaceutical industry". He also has the legendary experience of going from being an ordinary employee in the workshop of a pharmaceutical company to leading the company to go public and becoming the helmsman.
’s 2023 financial report shows that Ren Jinsheng, together with SIG (a company controlled by Ren Jinsheng), p&h holdings (Ren holds 100% of the shares), right wealth (Ren Weidong holds 100% of the shares), Ren (Ren Jinsheng’s son), Li Shimeng (Ren’s wife), Ren Weidong (Ren Jinsheng's brother), Ren Zhen (Ren Jinsheng's sister), Peng Suqin (Ren's mother) and Wang Xi (Ren Jinsheng's spouse) jointly control approximately 68.51% of the shares of Simcere Pharmaceuticals.
Wang Xi joined the company in May 2020 and has served as vice president since then. Starting from January 2023, Wang Xi has been appointed as an executive director. Financial reports show that Wang Xi was 41 years old at the time, 20 years younger than Ren Jinsheng.
In April 2007, Simcere Pharmaceuticals went public in the United States and became "the first Chinese pharmaceutical company to be listed on the New York Stock Exchange." Ren Jinsheng was also selected into the Hurun Report in the same year. But the good times did not last long. Simcere Pharmaceuticals encountered troubled waters by shorting concept stocks. At the same time, it suffered a setback when it acquired Yanshen Biotechnology, the second largest domestic rabies vaccine manufacturer at the time. It was delisted from the U.S. stock market in 2014.
In October 2020, Simcere Pharmaceuticals was listed on the Hong Kong stock market for the second time. The market value of the shares held by the Ren family exceeds 20 billion yuan. This also allowed the Ren family to successfully squeeze into the 2021 Forbes rich list, ranking among the top 300.
Source: Forbes WeChat public account
From 2017 to 2019, Simcere Pharmaceuticals’ operating income was 3.886 billion yuan, 4.535 billion yuan, and 5.062 billion yuan respectively, and its net profits were 350 million yuan, 734 million yuan, and 1.004 billion yuan respectively. Sales revenue from generic drugs accounted for 60.7%, 54.9%, and 46.5% of Simcere Pharmaceutical's total revenue respectively. During the same period, the company's innovative drug revenue accounted for 21.4%, 25.5% and 32.9% of total revenue respectively. It can be seen that generic drug revenue contributed a large part of Simcere Pharmaceuticals' revenue.
Source: wind
However, the company's performance has taken a sharp turn since 2020. In 2020, Simcere Pharmaceuticals' operating income was 4.535 billion yuan, a year-on-year decrease of 10.42%; net profit was 670 million yuan, a year-on-year decrease of 33.29%.
At that time, the pharmaceutical industry had already undergone sudden changes, and innovative drugs had replaced generic drugs as the main theme of the market. Ren Jinsheng was unwilling to give up and bluntly said that the company was undervalued.Therefore, we will focus more on the company's investment in innovative research and development and transform into an innovative pharmaceutical company.
The company’s innovative drug business revenue in 2023 will be approximately 4.756 billion, accounting for 72% of total revenue. In the earlier years of 2017, 2018 and 2019, the proportion of innovative drug revenue in total revenue was 21.4%, 25.5% and 32.9%.
As of December 31, 2023, Simcere Pharmaceuticals has six commercialized innovative drugs and nearly 60 innovative drug R&D pipelines. is conducting registered clinical research on 15 new drug molecules, of which are in NDA or Phase III clinical trials. There are 3 new drug molecules in the research stage, 12 new drug molecules in phase I/II, and about 40 preclinical drug candidates.
However, Simcere Pharmaceuticals' independent innovation capabilities are still in doubt.. Its financial report shows that Xianbixin sublingual tablets, Enzesu (sucetalumab for injection), and Enrito , which are in the NDA (new drug marketing application) stage, are not independently developed products . Mr. Li, a veteran of
pharmaceutical companies, believes that Simcere calls itself an innovation and R&D-driven pharmaceutical company. It has more than 60 innovative drug pipelines, but it is more pre-clinical, with nearly 40 pre-clinical drug candidates. Blockbuster varieties that have been launched on the market, such as Edaravone Dexbobornol Injection and Recombinant Human Endothelostatin Injection, are all approved by corporate mergers and acquisitions or outsourcing transfers, and are not independently developed. The boss, Ren Jinsheng, made his first pot of gold through pharmaceutical sales agency. He is not a scientist or R&D person, and has weak control over medical innovation. The R&D team has experienced several cycles of expansion of recruitment of talents and contraction of layoffs after the launch of new drugs. can provide a glimpse The shortcomings of unclear research and development goals and insufficient strategic focus are .
Zhang Yi, CEO and chief analyst of iiMedia Consulting, pointed out that overall, the challenges faced by China’s innovative drug research and development are still huge. The emergence and development of emerging technologies such as tumor immunotherapy require more in-depth technical research and clinical trials, which means higher investment costs and more reserves of technical research and development capabilities; the research and development of innovative anti-tumor drugs also faces challenges Challenges in various aspects such as intellectual property protection, drug accessibility, and drug review and approval require a better policy environment, R&D strength, management capabilities, marketing, and sufficient forward-looking predictions to ensure.
Is there anyone around you who has been infected with Fuyang recently? Do you know Simcere Pharmaceuticals’ Xenoxin oral COVID-19 drug? Leave a message to chat!
