Reference News Network, January 22 report: According to the Hong Kong South China Morning Post website, January 21 report, Shanghai-based Huijun Pharmaceuticals has invested in Spruce Biosciences, a US company, which is the latest example of Chinese innovative drug development companies gradually shifting from one-time licensing deals to long-term equity partnerships with overseas partners.

The report stated that analysts said, according to an announcement disclosed by the Hong Kong Stock Exchange on the 19th, this transaction also highlights the increasing influence of Chinese companies in the global pharmaceutical industry.

Saie Medical Partners Asia President Selia Deng (translated) said: "In the coming years, we will see more Chinese biotech companies engage in equity investment and joint R&D with global pharmaceutical giants, rather than being limited to licensing out."

She added: "Global pharmaceutical giants no longer view Chinese companies as contract manufacturers, but as R&D partners with their own independent innovation platforms."

The announcement shows that this Shanghai-based pharmaceutical company exercised the warrant provided for in the licensing agreement it signed with Spruce Biosciences last year, thereby holding approximately 3.8% of the outstanding shares and about 3.1% of the fully diluted shares of Spruce Biosciences.

Previously, a subsidiary of Huijun Pharmaceuticals reached an agreement with Spruce Biosciences to license the early candidate drug SPR202, used to treat rare hormonal disorders, to the latter for research and commercialization outside the Greater China region. The share purchase option was determined in this licensing agreement.

According to the report, Wang JinSong, founder and CEO of Huijun Pharmaceuticals, said in a statement: "The exercise of this warrant marks an important milestone in our partnership with Spruce Biosciences. Our collaboration has gone beyond traditional licensing relationships and built a deep strategic partnership."

Selia Deng pointed out that from now until 2030, as multiple blockbuster drugs' patents expire, the core competitiveness of multinational pharmaceutical companies will depend on their ability to fill innovation gaps. She further said: "Companies that can leverage the power of Chinese innovation may lead the development of the next generation of the global pharmaceutical industry."

She explained that in licensing deals, the licensor grants the partner exclusive rights to develop, produce, and market the drug in exchange for an upfront payment, milestone payments, and future sales royalties. Equity investment allows both parties to become stakeholders and gives them say in the development and commercialization strategies of the drug under development, which helps reduce the risk of failure in later-stage clinical trials.

The report said that besides Huijun Pharmaceuticals, Suzhou-based Innovent Biologics and Shenyang-based SanBio have also made similar equity transactions.

Morgan Stanley's research shows that by 2040, drugs originating from China could account for 35% of new drug approvals by the US Food and Drug Administration, while the current proportion is only 5%.

Shawn Laman, head of Morgan Stanley's U.S. small- and mid-cap biotechnology stock research, said in his research report: "In the competition to develop next-generation therapies, China is gradually becoming an indispensable partner and competitor."

According to the report, Zhong Yanliang, a healthcare investment partner at Hong Kong Hillhouse Group, said in an interview in January that Chinese biotech companies are still "highly dependent on the U.S. market" in terms of commercialization. He pointed out that China has advantages in early drug innovation, clinical development, and manufacturing, but commercialization capability remains a weakness in the entire industry ecosystem.

Selia Deng believes that equity cooperation gives Chinese pharmaceutical companies the opportunity to learn how to promote their products overseas. (Translated by Yang Ke)

Original: toutiao.com/article/7598005155888136756/

Statement: This article represents the views of the author.