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Junshi CEO discusses Chinese pricing plans for Keytruda competitor

Shanghai Junshi Biosciences Co. Ltd. will price its immuno-oncology drug Tuo Yi at roughly one-third of the price for Merck & Co. Inc.'s Keytruda on an annual basis.

➤ The melanoma therapy, also known as toripalimab, received approval from Chinese regulators in December 2018, making it the first approved domestic PD-1 class of checkpoint inhibitors in the country.

➤ Chinese regulators have so far granted approval for four PD-1 drugs — Keytruda, Tuo Yi, Innovent Biologics Inc.'s Tyvyt and Bristol-Myers Squibb Co.'s Opdivo.

➤ Junshi plans to increase Tuo Yi production by about tenfold by 2020 to satisfy demand from 150,000 to 200,000 patients.

CEO Li Ning joined Junshi in early 2018. The former Sanofi vice president, who also worked at the U.S. Food and Drug Administration for more than 12 years, remains an adjunct faculty member of Johns Hopkins University and Peking University.

Li spoke to S&P Global Market Intelligence about the company's commercialization and production strategy for Tuo Yi. The Shanghai-based company has also started about 10 trials for Tuo Yi as a combination treatment with drugs developed by Hutchison China MediTech Ltd., Betta Pharmaceuticals Co. Ltd. and others, according to Li.

Junshi will join the negotiations this year to bring Tuo Yi into China's national drug reimbursement list. None of the four immuno-oncology drugs approved in China have been included to date, which means patients need to pay full price for these drugs.

Junshi has 13 treatments in its pipeline, and seven of the drugs are immuno-oncology therapies. The company went public in Hong Kong on Dec. 24, 2018, marking the fifth company listing in Hong Kong under the city's relaxed listing rules.

Below is an edited and translated transcript of the interview.

S&P Global Market Intelligence: Tuoyi's first indication is melanoma, which is the same as Merck's Keytruda. Why did Junshi start with melanoma? Any concern that this will intensify your competition with foreign drugmakers?

CEO Li Ning: Melanoma is actually the best indication to test whether a PD-1 drug is safe and effective. That's why most leading drugmakers in the world picked melanoma as the first indication for their therapies.

Melanoma is very aggressive and it doesn't respond to other treatments besides immunotherapy. If a PD-1 drug works on melanoma, it will very likely work on other solid tumors. We are not too worried about the competition, as our drug is effective, safe, just as good as Keytruda and also has a pricing advantage.

SNL ImageCEO Li Ning
Junshi

What's the pricing of Tuo Yi? How will you make the low price possible?

We will price the drug at one-third of Keytruda's price.

We own the patent right to Tuo Yi, so we don't need to pay loyalty fees as others do who licensed in their drugs. Also, we can produce about 6 grams of the drug with every 1 liter of our titer, higher than other competitors.

What's Tuo Yi's target market share in the Chinese PD-1 drug market?

I agree with the current market projection that imported drugs will take 30% of the market share in China, and domestic drugs will obtain 70%.

We are currently the only Chinese drugmaker that develops the PD-1 class of checkpoint inhibitor for solid tumors. With that and the pricing advantage, I think we are able to get one third to half of that 70% share if capacity permits.

What's Junshi's production capacity? Do you have any plans for expansion?

The capacity of our factory in Suzhou can meet the demand from 15,000 to 18,000 patients. We will also have a new plant ready in Shanghai by the end of this year or early 2020. The new plant will allow us to satisfy demand from 150,000 to 200,000 patients.

When and where can patients buy Tuo Yi in the market?

We received the approval on Dec. 17, 2018, and started production on Dec. 18, 2018. Patients will be able to buy our drug in the market in February. We will sell the drug through pharmacies first, and our partnered distributors own more than 100 pharmacies outside of hospitals. We are also negotiating with hospitals in China and will sell the drug through hospitals too.

When will you release Tuo Yi overseas?

We are also testing the drug in the U.S., Singapore and Southeast Asian countries. The first overseas release will likely be in Southeast Asia as we have started a phase 3 clinical trial for nasopharyngeal carcinoma in the region. If everything moves smoothly, we will complete the phase 3 trial in two to three years and then file the application.

However, it is also possible that the U.S. release will come faster as we are also seeking opportunities for priority review. The drug is under phase 2 trials in the U.S. for six indications.

Do you plan to license in some drugs as you are exploring combo treatments with Tuo Yi?

We are broadly looking for targets and will license in drugs that are suitable and have synergy with Tuo Yi. Actually, part of the proceeds we gathered from the Hong Kong IPO will be used for this purpose.

When do you plan to release UBP1213, an arthritis drug in the pipeline that is close to commercialization?

We have completed the clinical trials for the drug and plan to submit an application in four to five months.