The landscape of biotechnology and pharmaceuticals is ever-changing, and among the firms making significant strides is Innovent Biologics, a company with ambitions that resonate far beyond its current achievements.
Recently, the company unveiled its product revenue forecasts for 2024. This announcement followed a vocal commitment by Innovent to achieve a remarkable RMB 20 billion revenue target, sparking considerable interest within the market.
Innovent's journey is set against a backdrop of a fluctuating market for innovative drugs, as the industry has been witnessing both booms and downturnsThe company finds itself in a delicate balancing act, navigating choices alongside relentless efforts that define its growth and expansion.
Emerging from the waves of pharmaceutical innovation, Innovent seeks its place as a major player.
The pivotal moment for DrShen Yu, the founder of Innovent, came during the 1990s while living in the United StatesHis family's experience seeking medical treatments there exposed him to state-of-the-art pharmaceuticals and the staggering costs associated with them, alongside the glaring lack of equivalent innovative options back home in China.
This transformational experience ignited Yu's vision for providing high-quality, affordable innovative medications to the Chinese populaceAfter returning to China around 2006, he took the reins at Kanghong Pharmaceutical, where he led the development of the cancer treatment, Conbercept, which was subsequently approved and has sales nearing RMB 2 billion annually.
However, Dr
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Yu sought more than just this initial successHe founded Innovent in Suzhou and set his sights on advancing PD-1 inhibitors, a class of cancer treatments regarded as miracle drugs due to their broad applicabilitySignificant revenues for competing products from Bristol-Myers Squibb and Merck reached RMB 37 billion and RMB 25 billion, respectively, within a couple of years of their release.
With a global perspective, Yu swiftly recognized industry trends; Innovent's pivot towards PD-1 drug development soon bore fruitIn 2018, Innovent went public on the Hong Kong Stock Exchange, and its competitive PD-1 therapeutics were subsequently approved, drawing substantial investment from major institutional players like Sequoia Capital and Hillhouse Capital.
The influx of capital wasn't coincidental; in that same period, imported PD-1 drugs saw immense success in ChinaWith institutional investors flocking to innovative medications, the valuations of such enterprises were increasingly buoyantInnovent's rapid growth can be ascribed to both timely capital influx and an efficient research and development team, aided by the bonus of a favorable market era.
By 2020, Innovent marked a significant turning point when three new products received approval in rapid succession, effectively broadening its pipelineThis expansion was facilitated by a Fast Follow strategy, which included partnerships, external acquisitions, and internal development initiativesAs of January this year, the company has gained approvals for over ten products.
Within this ocean of innovative drugs, Innovent aims to be a formidable fishIn 2022, the company boldly declared its goal of reaching RMB 20 billion in product revenue by 2027; at the same time, its product revenue had already exceeded RMB 4.1 billion that same year, suggesting a potential trajectory for achieving its lofty ambitions.
Is choosing the right path even more crucial than sheer effort?
To realize the RMB 20 billion target, Innovent has ramped up its product revenue growth.
For 2024, the company anticipates product revenues exceeding RMB 8.2 billion, boasting a growth rate of over 40% year-on-year
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Notably, the fourth quarter is expected to yield over RMB 2 billion, with an impressive growth of more than 25%.
If the company maintains this growth rate, the RMB 20 billion revenue goal appears within reach.
Among the major contributors to this future revenue stream will likely be the PD-1 inhibitor, TyvytInnovent had previously forged a collaboration with Eli Lilly to co-develop and commercialize this productHowever, sales of Tyvyt dropped to USD 294 million in 2022, a decrease of 29.7% year-on-year, influenced by external market dynamics and intensified competition as new players proliferate, leading to a fierce price war.
Nevertheless, the market may have underestimated the immense potential of innovative drugsThe recent turnaround in Tyvyt's sales can be viewed as a reward for effective commercialization efforts rather than just a sudden spike due to competition.
In 2023, comparable products offered by companies like BeiGene and Junshi Biosciences posted revenues of over RMB 3 billion and RMB 1 billion, respectivelyBoth target large patient populations with conditions such as gastric and lung cancers, a fact that provides a lucrative market to tapMoreover, Tyvyt received newly approved indications for non-small cell lung cancer (NSCLC), aligning the product with burgeoning market demand.
In the realm of innovative pharmaceuticals, perhaps strategic choices outweigh mere effortA product with extensive coverage and substantial applications can create multiple successful avenuesDrYu's decision to transition from Conbercept to PD-1 inhibitors exemplifies such a key decision in his career
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In the first half of 2024, Tyvyt and Conbercept's sales were RMB 1.728 billion and RMB 1.173 billion, respectively, highlighting the clear path of profitability driven by effective strategy.
Going forward, Innovent may shift its focus towards monoclonal antibodies targeting PCSK9 and semaglutideThe former has been approved and included in the latest National Medical Insurance Catalogue, primarily aimed at lipid reduction, competing with industry players like Sanofi and Amgen, while the latter represents a potential blockbuster with indications for both weight loss and type 2 diabetes, expected to gain approval soon.
The current landscape for weight-loss medications mirrors the earlier situation for PD-1 inhibitors, offering lucrative opportunities for innovators.
Personal stakes abound in this journey.
As DrYu propels Innovent forward, his personal wealth continues to swellSince its IPO, the company's market capitalization has fluctuated, once exceeding HKD 100 billion before settling back to over HKD 60 billionIn this roller-coaster environment, his every move is under scrutiny.
In October 2024, the company announced a conditional agreement with Lostrancos for a USD 20.5 million subscription to new pre-A series preferred shares in Fortvita, a wholly-owned subsidiary focused on international innovative drugs, with IBI363 already receiving relevant qualifications in the U.S.
Coincidentally, shortly before this announcement, DrYu sold a portion of his shares in Innovent for approximately HKD 152 million
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