00:00Yes, there's been a rally after those signals of U.S. openness.
00:04Suzhou headquartered Innovent Biologic shares closed up 6% on the Hong Kong Stock Exchange.
00:11Arkeso, which is best known for developing a cancer treatment antibody, was up close to 10%.
00:17Now, the new rules have not been confirmed, but pharmaceutical partnerships between China and the U.S.
00:24have continued to expand despite broader geopolitical tensions.
00:29Almost half of U.S. deals to license drugs from overseas last year were with Chinese companies.
00:35And this year, U.S. multinational Pfizer announced a collaboration with Innovent Biologics
00:42to develop cancer drugs in a deal that could be worth up to $10.5 billion.
00:49It's part of a wider boom in China's pharma and biotech sectors.
00:54Chinese drug makers signed a record 81 out-licensing deals with global pharma worth more than $100 billion in the
01:04first half of this year.
01:05That means granting permission for a foreign company to develop, manufacture and sell its invention.
01:11China has unveiled a new five-year plan for its pharma industry with the goal of becoming a global biomedicine
01:19powerhouse by 2030.
01:21The key aims include for at least a quarter of first-in-class drugs on the global market to have
01:28originated in China
01:29and for its innovative drugs industry to grow by 20% annually.
01:34Last year, China had more than 4,700 innovative drugs in the pipeline, which is around a third of the
01:42global total.
01:43Well, let's talk more about this.
01:44Fiona Sincotta is an analyst at financial services company Citi Index.
01:49Fiona, so if this goes ahead with the U.S. licensing, what would that mean for China's pharma and biotech
01:56sectors?
01:57I mean, this is really huge news if it does go ahead.
02:01I think it's particularly interesting because it's on a very different sort of branch to what we're seeing with the
02:06restrictions in AI and semiconductors.
02:10This is very much feels like it's on a different level.
02:14And it's great news in the sense that it does mean that potentially Chinese biopharmaceuticals have access to a much
02:21larger market share in the U.S.
02:25And, you know, the U.S. is a major buyer here, as it was noted.
02:29Deals so far this year have got to $110 billion.
02:34And that's just in the first half.
02:36So this is potentially a very big market.
02:38And we're seeing that optimism being reflected in the share price, with some shares jumping 7% to 8%
02:44on this news.
02:45We're seeing more global pharma companies turning to China for new drugs.
02:50Why is China becoming so important?
02:53Yeah, this is really interesting.
02:54So we're no longer just looking at the sort of low-cost-based manufacturing.
02:58This is very much more about innovation, about the science behind it.
03:03And, you know, China has got this immense, enormous pipeline of clinical trial drugs.
03:09Also, there have been reports done by KPMG which have really highlighted the speed at which trials take place.
03:16And also the cost as well.
03:18The same report carried out by KPMG earlier this year noted that the cost of clinical-stage drug trials in
03:25China is significantly less, around 40% less than that in the U.S. and Europe.
03:30So, you know, you've got a couple of things coming together here.
03:32There's obviously a lot of the necessary professionalism, the right staff required, also the cost and the speed.
03:42And that's very attractive.
03:44And let's just look more broadly now.
03:46So the shares for Chinese companies are up, but it wasn't a good day for Novo.
03:51Their shares were down after they announced their new growth strategy.
03:54Just what's going wrong there?
03:57Yeah, so basically they failed to really convince the market regarding their near-term outlook at least.
04:04So, you know, they put the revenue growth for, or forecast for 26 to 30 was going to be in
04:10line with industry peers,
04:11which disappointed a market that potentially was looking for signs of a re-acceleration after the success of its GLP
04:20-1 drugs with Vigovia and Ozempec.
04:23I mean, there was quite a lot in the strategy, you know, as far as expansions, new developments, launches, etc.
04:29But it just wasn't enough to be able to convince the market that it was going to be able to
04:34get the growth that investors were looking for.
04:37Where do you see the best opportunities for growth in the pharma industry at the moment?
04:43So I think given what we've seen, I think we're in quite a difficult position.
04:47There are a lot of big farmers that are sort of approaching sort of patent cliff edges.
04:52Obviously, there's a lot of competition as far as GLP-1s are concerned.
04:56So, again, that makes it quite a challenging factor.
04:58But this bio-pharmaceuticals in China, if we do get this announcement come through with what the U.S. said,
05:07then that would, as I said, open up a huge, huge market again further and create some opportunity there.
05:14Fiona Sincotta, thank you very much for that.
05:17And it's an exciting time for the innovative drugs industry in China.
05:20Absolutely.
05:20Yeah, for sure.
05:21Thank you so much.
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