Semaglutide Weight Loss Therapy Approved Domestically, Tirzepatide on the Way: Can Domestic Products Replicate the "Peptide Miracle"?

Finally, semaglutide weight loss therapy has been approved in China! The peptide market is set to surge once again. How will domestic pharmaceutical companies involved in "anti-diabetic and weight loss" peptide products respond? How can the "peptide miracle" continue in the Chinese market?

Leading the Way Like Lilly, Semaglutide Weight Loss Therapy Approved in China

On June 25, the NMPA approved Novo Nordisk's semaglutide injection (brand name: NovoCare) for long-term weight management in China. As the world's first and currently only GLP-1 receptor agonist (GLP-1RA) weekly formulation for long-term weight management, semaglutide achieves an average 17% (16.8kg) weight reduction and offers multiple health benefits beyond weight loss.

The newly approved innovative drug is indicated for obese or overweight patients with a BMI ≥ 30 kg/m2 or ≥ 27 kg/m2 with at least one weight-related comorbidity. With a significant medical demand yet to be met for obesity treatment in China, the approval of semaglutide promises to reshape domestic obesity therapy. Frost & Sullivan predicts China's GLP-1 drug market to reach 51.5 billion yuan by 2030.

Semaglutide's long-time rival, Lilly's "Tirzepatide," is currently approved in China solely for improving glycemic control in adults with type 2 diabetes. However, Lilly's GLP-1R/GIPR dual agonist Tirzepatide for weight loss was accepted for registration by the NMPA in August last year. Clinical data reveals Tirzepatide as the most effective product for clinical weight loss, surpassing Novo Nordisk's semaglutide.

Tirzepatide/Tirzepatide's registration application for weight loss is based on clinical studies including 26 trials from the SURMOUNT series. Primary endpoint results demonstrate that after 52 weeks of treatment, the average percentage change in weight from baseline for Tirzepatide/Tirzepatide's 10mg and 15mg treatment groups was -14.4% and -19.9%, respectively, superior to the placebo group (-2.4%). The proportion of patients achieving ≥5% weight loss was higher with Tirzepatide/Tirzepatide (10mg, 91.4%; 15mg, 92.7%) compared to the placebo group (29.4%).

With one approved and another advancing, the peptide arena led by these giants is stirring up, focusing competition on the domestic front.

Under Pressure from Global Giants, Domestic Peptides Face Challenges

Before semaglutide was approved today, only two domestic companies had received approval for GLP-1 class drugs for weight management. These were Liraglutide injection (Liruping) by Central China Pharmaceutical's subsidiary Zhongmei Huadong, approved on June 30, 2023, for obesity or overweight treatment; and Benapaliotide injection (Filsom) by Renhui Biotech, approved in July of the same year. Liruping is a generic of Novo Nordisk's liraglutide, targeting the hospital market, while Filsom, developed independently, targets the medical aesthetics market outside hospitals. Liruping is priced around 300 yuan per injection, whereas Filsom's price is as high as 3000 yuan per injection.

According to "Deep Blue View," semaglutide's entry into the weight loss market has increased pressure on the commercialization of domestic GLP-1 products. The report mentions that Filsom achieves annual sales of approximately 100 million yuan in beauty salons. Due to its higher pricing compared to semaglutide, which requires three injections per day, Filsom struggles to compete.

Liruping, a generic of the first-generation GLP-1 product liraglutide, is overshadowed by the upgraded semaglutide in terms of convenience of weekly injections, glycemic control, weight loss efficacy, and compliance. In the evolving GLP-1 market, sales of liraglutide have continuously declined. In August 2021, liraglutide held a 35% market share in Shanghai. By the same period in 2022, its share had dropped to 13%.

Multinational pharmaceutical giants such as Lilly, Novo Nordisk, and Amgen, leveraging their advantages in research and development and brand recognition, continue to launch new iterations of GLP-1 products, intensifying their impact on the Chinese market. "Deep Blue View" suggests that despite the ambitious intentions of each domestic GLP-1 producer to nibble at the market share of multinational pharmaceutical companies, their ability to secure hospital access and physician prescribing rights under intense competition and stringent regulatory scrutiny remains a critical challenge. Unless domestic pharmaceutical companies develop a GLP-1 product capable of standing toe-to-toe with multinational counterparts, their path forward may be fraught with obstacles.

According to Guideview: On June 20, Central China Pharmaceutical announced that its oral weight loss drug HDM1002 tablets showed significant weight reduction in Phase Ib trials in China, with doses of 100mg or higher demonstrating dose-dependent efficacy, achieving an average weight reduction of 4.9% to 6.8% from baseline by day 28.

Earlier, Senwei Bio's oral peptide technology achieved validation in Phase I clinical trials, with Inoglutide ideally achieving a 6.8% weight reduction over six weeks, as shown in the trial data.

In addition to original drugs, domestic pharmaceutical companies including Central China Pharmaceutical, Betta Pharmaceuticals, Lijun Group, Shiyao Group, China Resources Pharmaceuticals, Hanyu Pharmaceutical, and Trety Pharmaceuticals are all involved in the development of semaglutide-like drugs, many of which are in Phase III trials. Reports from "Deep Blue View" indicate that as subsequent GLP-1 products are gradually launched, competition in the consumer market will escalate, potentially leading to a price war among domestic GLP-1 products.

Of course, improved products may represent a "breakthrough path" for domestic pharmaceutical companies. According to BioWorld reports, Cinda Bio's collaboration with Lilly to develop the weight loss drug Mazdutide is a dual agonist of glucagon-like peptide-1 (GLP-1) and glucagon (GCG) receptors, with GCG promoting metabolism and fat tissue burning. Earlier disclosed Phase II clinical trial results demonstrate its weight loss efficacy comparable to semaglutide, with a 15.4% reduction in average BMI=34.3 obese Chinese individuals treated for 24 weeks with a 9mg dose group. Next week, Cinda Bio will announce Phase III clinical trial data at the American Diabetes Association annual meeting, with the 9mg dose group achieving up to a 19% weight reduction after nearly a year.

Mazdutide is expected to receive approval from China's drug regulatory authorities for weight loss in the first half of 2025, making it the world's first approved GLP-1/GCG dual-target weight loss drug.

"Peptide Miracle" on the Horizon, Brightening China's Pharmaceutical Industry Amid Challenges

Despite fierce upcoming competition in the consumer market, China's pharmaceutical sector holds promise for a "Peptide Miracle" turnaround. Amidst this, peptide CDMO companies are thriving amidst the industry's challenges.

Recently, leading peptide CDMO Nortai Bio (688076) announced its financial forecast for the first half of 2024, expecting a net profit attributable to shareholders (excluding non-recurring items) to range between 180 million yuan and 250 million yuan, marking a year-on-year increase of 318.59% to 481.38%. Nortai Bio attributed this profit surge to the continuous scale-up of independently selected products and the increased revenue share. The semaglutide series products are the primary contributors to Nortai Bio's revenue, with the revenue from these products reaching 125 million yuan in 2023, reflecting a 571.41% year-on-year growth.

Another peptide CDMO company, Sanuo Bio (688117), reported a 27% increase in revenue and a 17% increase in net profit for the first quarter of 2024.

While domestic markets brace for a showdown between major players and potential chaos in branded and generic drugs, Hanyu Pharmaceutical stands out for its international peptide strategy amid the pharmaceutical winter. Hanyu Pharmaceutical, as China's first listed synthetic peptide company, reached its performance peak with revenue of 1.246 billion yuan and net profit of 330 million yuan. However, since 2018, the company has struggled as its five major products faced challenges in government centralized procurement and other investments, leading to nearly continuous losses. The company barely returned to profitability in 2021, having recorded annual losses as high as 885 million yuan.

With the rise of GLP-1, Hanyu Pharmaceutical seized the opportunity. It successfully navigated from raw material production bases to formulation production bases, passing rigorous cGMP inspections by the US FDA. The company secured multiple overseas commercial contracts for GLP-1 raw materials and formulations, including a contract worth 219 million yuan for GLP-1 peptide raw materials and a 14.0832 million USD contract for liraglutide injections with a major US pharmaceutical company. On June 7, the first batch of liraglutide injections was officially shipped to the US market.

Additionally, on May 28, Hanyu Pharmaceutical announced the sale of its rights to semaglutide injections (for weight management indications) in China and some markets to Sanse Pharmaceuticals under Sanse Mundi, in exchange for milestone payments (an initial payment of 45 million yuan, with potential milestones up to 270 million yuan), exclusive purchase rights, and approximately double-digit sales royalties.

Financial analysts view Hanyu Pharmaceutical's strategic divestments as a means to swiftly recover capital and focus more on expanding its international business. In 2023, Hanyu's international operations accounted for 26.01% of total revenue, with profits exceeding 30%. With domestic business declining rapidly, international expansion has become Hanyu's most practical and effective lifeline. The company aims to elevate its overseas business to 40% of total operations this year.

Conclusion

Intense competition in the domestic market is inevitable, yet as patents for original drugs approach expiration, both GLP-1 formulations and raw materials are poised for a global surge in demand. While domestic peptide generics struggle to thrive, they find success overseas—a lesson for Chinese pharmaceutical companies striving in the GLP-1 arena: early pursuit of international opportunities may indeed be a wise choice.