Hengrui Pharmaceuticals Shocks the World! First Bupivacaine Liposome Injection Obtains FDA Approval, Enjoying a 6-Month Monopoly in the US Market, Expected Revenue of Over 4 Billion Yuan!

Hengrui Pharmaceutical's global first-in-class generic drug bupivacaine liposome injection has received FDA approval for marketing in the US, becoming the first company to receive such approval in the US. According to US policies, from the date of drug approval, Hengrui Pharmaceutical's bupivacaine liposome injection will be the only generic version of the drug on the US market, enjoying a six-month market exclusivity period. It is estimated that the original research drug's market size in the global market in 2023 will be close to 4 billion yuan, so the revenue prospects of bupivacaine liposome injection are promising.

However, Hengrui Pharmaceutical's global first-in-class drug's successful launch in the US also reflects the complex challenges faced by China's generic drug market. As the policy and market demand changes, the generic drug industry is undergoing a profound transformation.

At present, the size of China's generic drug market accounts for about 70% of the overall pharmaceutical market, but with the continuous promotion of the national drug procurement policy, the price of generic drugs has plummeted, and duplicate and low-end generic drugs will gradually be eliminated or replaced by high-quality products. The size of the generic drug market is expected to gradually shrink.

In this context, as domestic pharmaceutical enterprises grow, participating in international competition has become an inevitable trend. The buprenorphine liposome injection approved by Hengrui Pharmaceuticals in the US for the treatment of neuropathic pain uses a unique liposome carrier technology to protect the stability of the drug in the body, improve bioavailability, and reduce side effects. The drug was first developed by Pacira Pharmaceuticals in the US and was approved for marketing in 2011. Due to the high technical barriers, no imitation products have successfully entered the market in the past ten years.

So-called high-end generic drug formulations refer to relatively rare, technologically challenging, complex, and promising generic drug formulations, such as liposomes, liposome nanoparticles, nanogels, long-acting sustained-release microspheres, and inhalation formulations for systemic administration. High-end generic drugs not only have strong technical barriers but also have fewer participants and can "expand into the international high-end market," making them an important strategic direction for generic drug companies in the fierce market competition.

Looking back at history, buprenorphine liposome injection is not the first high-end generic drug launched by Hengrui Pharmaceuticals. The company has accumulated rich experience in the development of high-end formulations. According to PharmZoom data, in January 2022, ondansetron oral disintegrating film (oral disintegrating film formulation) was approved for marketing in China. Tacrolimus sustained-release capsules (sustained-release formulation) were approved for marketing in China in June 2022 and approved by the US FDA in January 2024, becoming a dual-first-in-class high-end formulation generic drug. The launch of bupivacaine liposome injection in the US marks another important step forward in Hengrui Pharmaceutical's international development of high-end formulations.

The Chinese generic drug market is entering an adjustment period, with increasing competition among companies. On the one hand, the generic drug market has adjusted after the procurement. According to PharmZhi Data, the Chinese generic drug market size reached 121 billion yuan in 2023, up 2% year-on-year, with the market size stable around 120 billion yuan. At the same time, the structure of the Chinese drug market has changed. From 2016 to 2023, the market share of generic drugs continued to decline, from 83.4% to 77.8%.

On the other hand, as the work on generic drug consistency evaluation progresses, the first batch of products passed the evaluation or were deemed equivalent to it in 2017, and the number of approved products and enterprises has continued to grow in subsequent years, intensifying competition in the generic drug market. According to PharmZhi Data, the number of ADNA applications for generic drug products reached 2,877 in 2023, up 74% year-on-year. In the context of the stabilizing market size and shrinking share of generic drugs, the continuous growth of drug submission numbers indicates that there are still considerable potential opportunities in the domestic generic drug market. It also indicates that the competition among generic drug enterprises is becoming increasingly fierce under the dual impact of drug procurement and medical insurance cost control.

In such a context, developing high-end generic drug formulations and expanding overseas markets have become a good direction for pharmaceutical enterprises to seek development in the generic drug sector.

The global generic drug market has maintained a growth trend, with the estimated market size reaching $440.6 billion in 2023 and $664.2 billion by 2032, with a compound annual growth rate of 4.32% during the forecast period. Of which, the United States is currently the largest generic drug market in the world, with the penetration rate of sales volume reaching about 90% in 2019, and the value of the 90% sales volume of generic drugs in the market is expected to reach about $415 billion by 2023.

The driving force behind the growth of the global generic drug market is on the one hand the expiration of patents of several drugs with sales exceeding $1 billion, creating huge market opportunities for generic drugs. On the other hand, with the continuous increase of the elderly population, the incidence rate of chronic diseases, diabetes and cardiovascular diseases is also increasing. Therefore, the high demand for generic drugs in the global pharmaceutical market will continue to drive the growth of the global generic drug market. With the intensification of domestic market competition, many Chinese enterprises have begun to seek overseas markets to expand new growth points. The US market is one of the largest markets for generic drugs globally. By breaking through in developed markets such as the US, enterprises may be able to achieve significant revenue growth, aiming to achieve the strategic goal of "imitating to innovate" and sustainable development.