How does Hengrui Medicine turn to the innovative drug leader A-share medicine "market value one brother" is how to make it?

Interview with Hengrui Pharmaceutical Shengdi Production Plant

â– Reporter Zhang Liang Zhang Min

Outside the glass isolation window of the cyclophosphamide aseptic production line in the Shengrui Pharmaceutical Shengdi production plant, the staff told the reporter that in order to prevent the production of bacteria during the injection, the movement range of the employees must be very small, and the operation must be strictly in accordance with the specifications. On one occasion, FDA officials observed seven or eight hours outside the production workshop window, and finally asked the staff: "Is that person a real person?" Such high standards and strict requirements for quality control are the culture of Hengrui Medicine.

In the A-share market, there is such a "White Horse" company:

In the past 17 years since its listing, its net profit has decreased by 2.17% in 2002, and the other 16 years have achieved positive growth, with a compound annual growth rate of 25.94%. In the last 10 years, the return on net assets has remained above 21%, and its profitability is very eye-catching. In 2016, it was selected as one of the “Top 100 Pioneer Enterprises of the State's First Innovative Enterprises” and became the only pharmaceutical company among the first nine innovative enterprises...

It is the A-share medical sector "market value of a brother" Hengrui Medicine.

As the saying goes, good beginnings are easy to end with. Why does Hengrui Medicine continue to maintain its excellent growth momentum? As the "plate" grows bigger, can it continue to grow at a high rate? In this era of innovation, what is the difference between Hengrui’s innovation?

With this series of question marks, the "Securities Daily" reporter recently made a special trip to Lianyungang, where the company headquarters is located, interviewed senior management, and went to the workshop to communicate with employees in R&D and marketing departments to explore the story behind the beautiful data of Hengrui Medicine.

Heavy gold to create an innovation system

China is a big pharmaceutical country, but a non-pharmaceutical power. Hengrui Medicine is one of the Chinese companies that can technically challenge multinational pharmaceutical giants.

“Hengrui Medicine has three dreams: the first is that the products are exported overseas; the second is the innovative innovative drugs listed in China; the third is the original innovative drugs listed in the world.” After the video conference of the pharmaceutical headquarters, a general international corporate video broadcast, general manager Zhou Yunxi told the "Securities Daily" reporter.

In fact, these dreams have been or are becoming a reality. Hengrui Medicine has transformed from a leading generic drug company in China to an innovative pharmaceutical leader. On this extraordinary dream road, the innovation strategy is the fundamental source of its sustainable development.

"Innovation has penetrated into the bone marrow of the company's growth." After graduating from college in 1995, Zhou Yunyi worked at Hengrui Medicine, recalling the past, and he still remembers: "The company's innovative R&D has been prepared before going public. Sun Feiyang, chairman of the board of directors, believes that the competition for generic drugs will be fierce in the future. Only innovative drugs can make enterprises grow young."

“We determined the development strategy of innovation and transformation in 1999. At the beginning, the company also experienced production, research and research, and cooperation with foreign scientific research institutions, but found that this is not the company's own innovation.”

Zhou Yunyi still remembers clearly that when he and his chairman Sun Feiyang visited overseas, Pfizer acquired a Swedish company in the initial stage of research and development, which cost tens of millions of euros. "My embarrassment, the Chinese companies in the initial stage can't afford this money!" Zhou Yunqi exclaimed: "The chairman made up his mind at that time, instead of spending huge sums of money to buy overseas products, it is better to spend money to introduce talents and build their own innovation system. ”

Zhou Yunqi said: "After overseas study, Hengrui Medicine set up a R&D center comparable to overseas in Shanghai and hired professional talents from overseas. The company's philosophy and actions were relatively advanced at the time."

At present, Hengrui Medicine has a research and development team of more than 2,000 people, including more than 1,000 doctors and masters, including more than 100 foreign employees. The company has set up R&D centers in Lianyungang, Shanghai, Chengdu, Suzhou and other places, and has set up R&D centers in the United States and Japan.

Among them, the Shanghai R&D Center is dedicated to the research and development of innovative drugs. “The Shanghai R&D Center was only 50 people at the beginning of its establishment. Up to now, there are more than 400 R&D personnel.” Zhou Yunxi said that with the expansion of the scale, the company has introduced Zhang Lianshan and Cao Guoqing, both of which are internationally Influential high-tech talents.

“Our core R&D staff have worked in large overseas pharmaceutical companies for 5 to 10 years or even longer. Currently, 5 of the companies introduced by the company are among the 'National Thousand Talents Plan'. 10 experts in the 'National Thousand Talents Program'."

“Different from other companies, the company is creating an 'innovation system', and the innovative product layout is rich. This product can't be done or the research and development direction is wrong, there will be other products to quickly add up.” Zhou Yunxi said.

“In addition, it is particularly worth mentioning that Sun Feiyang, the chairman of the company, is really passionate about the research and development of new drugs. He is a scientist himself, he will deepen research and development and make judgments on the direction of research and development. This is also different from other companies. local."

At present, Hengrui Medicine has established a large and rich product development pipeline with its focus on scientific research in the fields of anti-tumor drugs, surgical anesthetics, contrast agents, major diseases and areas where effective therapeutic drugs have not yet been available. The innovation model has gradually moved from the initial me-too and me-better to the source innovation. The innovative drug layout is transforming from small molecule drugs to macromolecular drugs, resulting in an antibody toxin fusion (ADC) technology platform with independent intellectual property rights. Tumor immune antibody series products develop proprietary technology. In the field of biotechnology, which represents the development direction of the global pharmaceutical industry, the company has established a series of research and development platforms, and is the first to apply for the international leading antibody toxin conjugate ADC drug (biological missile) in China.

The heavy investment has demonstrated the determination of Hengrui Medicine to be determined to innovate. The data shows that the total research and development expenses of Hengrui Medicine ranks first in China's pharmaceutical industry for many years, and the proportion of research and development expenses to operating income is maintained at 8% to 10%. Among them, in 2016, Hengrui Pharmaceutical invested 1.18 billion yuan in research and development, a year-on-year increase of 32.82%, accounting for 10.67% of the company's operating income for the year.

Come to the active head to come alive. Under the support of continuous innovation, Hengrui Medicine has achieved profitability and quality profitability in successive years.

The data shows that in the 17 years since the listing of Hengrui Medicine, its operating income has increased from 480 million yuan in 2000 to 11 billion yuan in 2016, and net profit has increased from 65.27 million yuan to 2.588 billion yuan. As the first listed company in China's pharmaceutical industry with a market value of over 100 billion yuan, the market value of Hengrui Medicine has exceeded 140 billion yuan, which is 38 times higher than the first day of listing. It continues to maintain the leading position of A-share medicine “market value one brother”.

Preparation business overseas flowering

The current development strategy of Hengrui Medicine is innovation + internationalization. “Innovation and internationalization complement each other and enhance each other.” Zhou Yunqi said that under the grand strategy of innovation + internationalization, the company’s first dream, the internationalization of products, has gradually spread overseas.

“Different from other companies, Hengrui Pharmaceutical's preparation export business has a high starting point. The company started from injections, which has higher requirements for the company's quality system and R&D team.” Hengrui Medicine is responsible for the overseas drug registration sales. Manager Shen Yaping told reporters.

In 2011, Hengrui Pharmaceutical's first product, irinotecan injection, was approved by the FDA in the United States, which is the first injectable drug approved for marketing in the United States. Six years later, the company's nine preparation products, including injections, oral preparations and inhaled anesthetics, have been approved for overseas sales.

Since the beginning of this year, benzenesulfasy-atracurium injection, docetaxel injection, etc. have been certified by the US FDA, and caspofungin acetate for injection has been awarded by the UK Medicines and Health Products Administration and the German Federal Medicines and Medical Devices. Drug marketing license. In addition to Europe and the United States, the company has gradually strengthened its registration in other emerging markets such as Russia, South America and the Middle East.

The internationalization of Hengrui Medicine has brought great returns to the company. Compared with the export of APIs, the profit margin of preparation exports is extremely high, and in mature markets such as the US and Europe, the market rules are relatively transparent, market barriers are low, and generic drugs can quickly occupy market share through price advantage.

However, not all generic drugs that have been approved by the US FDA can generate substantial returns. "The competition of generic drugs in the United States is also very fierce." Shen Yaping told reporters that Hengrui Medicine can win because the company insists on "quick, special and difficult" in the internationalization of preparations, that is, products must be listed first, and strive for the first imitation. Doing distinctive products; products with high technical barriers, difficult for outsiders to enter or less competitors.

Cyclophosphamide is the pride of Hengrui Medicine. It is understood that after entering the US market, cyclophosphamide has a market share of more than 50%, contributing a large amount of profits to Hengrui Pharmaceutical's overseas business. In addition, sevoflurane, which was sold to the US market last year, has also been highly anticipated by the outside world. "In the future, the company will have more difficult products to export overseas." Shen Yaping told reporters.

Innovation results enter the harvest period

Zhou Yunxi told reporters that Hengrui Medicine's understanding of innovation is that the company's scientific and technological innovation must truly solve the clinical needs, especially the emphasis on innovative treatment, targeting Chinese diseases.

"Our current goal is First in class, to quickly follow the progress of international innovation, in order to catch up with the research and development level of international pharmaceutical companies. In the future, we hope to participate in international competition, to do original research and innovation drugs, innovation results are recognized overseas, products Listed globally." Zhou Yunxi said.

In 2014, Hengrui Pharmaceutical's 10-year research and development of apatinib was approved for domestic listing. This is the second innovative drug of Hengrui Medicine after Eric.

"This is the world's first small molecule anti-angiogenic targeted drug that has proven to be safe and effective in advanced gastric cancer. Apatinib is classified as an innovative drug of our true significance." Zhou Yunqi introduced that gastric cancer is a Chinese multi-disease, globally Nearly half of patients with gastric cancer are in China. "The drug is listed and can really treat Chinese diseases."

In this regard, a brokerage research report pointed out that if the approval of Ai Ruixibu marks the official entry of Hengrui Medicine into the era of innovative medicine, then the approval of apatinib marks the company's full entry into the harvest period of innovative drugs.

In 2015, the State Council issued the “Opinions on Reforming the Examination and Approval System for Pharmaceutical Medical Devices”, encouraging clinical value-oriented drug innovation, optimizing the evaluation and approval procedures for innovative drugs, and accelerating the review of clinically urgently needed innovative drugs. The data shows that a total of seven varieties of Hengrui Medicine entered the priority review list.

What makes Hengrui Medicine proud is not only that.

On September 1, 2015, this day was a bit special for Hengrui Medicine. The company reached an agreement with Incyte, which will have a proprietary IPD pd-1 monoclonal antibody (code "shr1210" for tumor immunity. The treatment) project was transferred to the US company Incy. The license transfer will bring up to $795 million in revenue for Hengrui Medicine.

It is understood that PD-1 is one of the most popular new drug projects in the world, which can effectively improve the body's anti-tumor immunity.

“This transaction has for the first time realized the export of innovative medicine technology from Chinese companies to the United States.” Zhou Yunyi expressed his gratitude to reporters.

Hengrui Medicine has also started the internationalization of innovative drugs. "This internationalization is divided into two aspects, one is to conduct clinical trials in the United States and other countries, and the other is to actively explore advanced technologies and projects at home and abroad, and introduce them into the country." Zhou Yunqi said that in 2016 Hengrui Pharmaceutical introduced Japan Oncolys BioPharma The oncolytic adenovirus product TelomelysinTM complements the company's line of oncology products.

At present, Hengrui Medicine has basically formed a benign development trend in which many innovative drugs are applied for clinically and innovative drugs are listed every year in the development of innovative drugs. It is said that the company now has 17 innovative drug varieties at different stages of clinical research.

"These products will be listed in the future, which will be sufficient to support the future development of Hengrui Medicine. For the company, one of the important tasks now is to build a product organization framework to ensure that these products can achieve sufficient market space after listing." Zhou Yunxi said .

Building a quality "lifeline"

"It is difficult to defend the mountains and rivers by playing Jiangshan." The R&D and marketing capabilities of Hengrui Medicine are obvious to all. At the time of entering the market value club of 100 billion yuan, the pace of internationalization is accelerating, and the research and development of new drugs has entered the harvest period, Hengrui Medicine has received increasing attention. The management of the company knows that the greater the ability and the greater the responsibility, the quality of the product is the cornerstone of the company's development on the road to the world dream of Hengrui Medicine.

"In the European and American markets, the cost of making mistakes is extremely high. Any failure to meet the standards will bring crisis to the company, or even the disaster." A pharmaceutical industry expert told reporters.

According to the 2016 Annual Report of Hengrui Medicine, the company has successfully passed the inspections of Jiangsu Shengdi, Formula 1 and Shanghai Hengrui through the US FDA and the European Union.

Outside the glass isolation window of the cyclophosphamide aseptic production line in the Shengrui Pharmaceutical Shengdi production plant, the staff told the reporter that in order to prevent the production of bacteria during the injection, the movement range of the employees must be very small, and the operation must be strictly in accordance with the specifications.

“On one occasion, FDA officials observed seven or eight hours outside the production shop window, and finally asked the staff, that person is not a real person.” The staff told me.

Because of such high standards and strict requirements for quality control, in July 2013, cyclophosphamide injection passed the FDA GMP on-site inspection with a high standard of zero defects, setting a new record for the US FDA certification in China. The phosphoramide production process is also a model for FDA aseptic production operations.

“This is a kind of feedback to the company that has made great efforts and high investment in building an international standard quality system for many years, and it is an incentive,” Zhou Yunxi said.

It is understood that Hengrui Pharmaceutical has copied the growth route of Japanese pharmaceutical company Takeda to a certain extent: generic drugs started, formed brand generic drugs, passed FDA certification, and products went abroad. The first innovative drugs were listed globally, and successively listed and innovated. Drug echelon. At that time, Takeda Pharmaceuticals jumped into a world-class pharmaceutical company in the 1980s with the listing of innovative drugs. The latest data shows that Takeda ranks 16th in the world pharmaceutical industry.

“In the future, Hengrui Medicine also needs innovative drugs to be listed globally, so that it can rank among the world-class pharmaceutical companies,” said Dai Hongbin, deputy general manager of Hengrui Medicine.

Huaguoshan in Lianyungang, Jiangsu Province has attracted many tourists to come and watch. Hengrui Medicine, which is also located in Lianyungang, has attracted many investors to come and investigate. “In the past, there were more domestic investors, and now more and more are overseas investors.” Liu Xiaohan, director of Hengrui Medicine, said.