Medicine is good again!

On January 20th, the Geneva Drug Patent Pool (MPP) announced that it had signed agreements with 27 generics companies to produce Merck & Co Inc's oral COVID-19 antiviral drug molnupiravir, which would be supplied to 105 low-and middle-income countries.

A total of five Chinese pharmaceutical companies have been shortlisted for the agreement.$Shanghai Fosun Pharmaceutical (02196.HK) $, Borey Pharmaceuticals, Shijiazhuang Longze Pharmaceutical and Shanghai Disano are licensed to produce both raw materials and finished drugs for Molnupiravir.$via creature (01873.HK) $Longhua Pharmaceutical, a subsidiary of Longhua Pharmaceuticals, is licensed to produce Molnupiravir APIs. Merck & Co Inc, his partner Ridgeback Biotherapeutics, and Emory University in the United States, which invented the drug, will not receive royalties from the Molnupiravir sales of MPP sub-licensees.

Prior to this, intermediate concept stocks continued to soar without a real hammer, and now Shanghai Fosun Pharmaceutical and Borey Pharmaceutical two listed companies have been licensed, which is undoubtedly a big boost for their share prices. In addition, Adi Pharmaceutical, which has a stake in Longze Pharmaceutical, may also benefit from this. However, this could be another small shock for vaccines, masks and testing stocks.

Xinguan oral administration opens large-scale imitation

According to Reuters, the Drug Patent Pool Organization (Medicines Patent Pool, MPP) announced that it has signed agreements with 27 generic drug manufacturers to produce and supply high-quality and affordable anti-novel coronavirus Molnupiravir generic drugs to Merck & Co Inc in 105 low-and middle-income countries around the world, so as to promote the affordability and accessibility of oral anti-novel coronavirus drugs in low-and middle-income countries and help prevent and control the local epidemic.

According to the results of clinical trials, the antiviral pill was urgently approved in the United States in December and can reduce the number of hospitalizations and deaths of high-risk patients by about 30%. The deal, negotiated by the United Nations-backed Drug Patent Pool (MPP) with Merck, will increase production by increasing the number of companies that produce the drug after Merck signed licensing agreements with eight Indian drugmakers in October last year.

The agreement stipulates that the pill will be distributed to 105 less developed countries, MPP said. A spokesman later said that some of the companies covered by the deal could start delivery as early as February.

A MPP official involved in negotiations with drugmakers said that citing preliminary estimates from drugmakers, a five-day course of 40 molnupiravir tablets was expected to cost about $20 in poorer countries. This is far less than the $700 per course agreed by the United States. But it is twice as high as originally estimated by the World Health Organization (WHO)-supported project to procure COVID-19 drugs and vaccines for the world.

Charles Gore, Executive Director of MPP, said: "We are encouraged that many new and existing partners have moved quickly to obtain sub-licenses from molnupiravir through MPP. This is a key step in ensuring global access to much-needed drugs for COVID-19. We believe that with manufacturers working closely with regulators, low-and middle-income countries will soon have access to the drug. "

Five Chinese enterprises are approved to imitate

According to the agreement, a total of five Chinese pharmaceutical companies were shortlisted. Shanghai Fosun Pharmaceutical, Borey Pharmaceuticals, Shijiazhuang Longze Pharmaceuticals and Shanghai Diseno were licensed to produce both Molnupiravir APIs and finished products, while Longhua Pharmaceuticals, a subsidiary of via Biology, was allowed to produce Molnupiravir APIs. Merck & Co Inc, his partner Ridgeback Biotherapeutics, and Emory University in the United States, which invented the drug, will not receive royalties from the Molnupiravir sales of MPP sub-licensees.

So, how good is it? Guosheng Securities has made a unified interpretation of several issues of high market concern:

1. How to apply for MPP?

If drug companies are willing to apply for MPP permission, they can fill in EOI online to provide specific information about production capacity, quality assurance drug production records, research and development capabilities and regulatory compliance. MPP uses the information in EOI to select qualified generic drug companies to authorize implementation licenses, and licensed generic drug companies can produce and sell generic drugs to low-and middle-income countries as stipulated in the license agreement. That is, the MPP organization is screened based on some qualifications and experience of past enterprises, and is authorized (regarded as pre-certified).

2. What are the other steps after obtaining the qualification?

After the current agreement is signed, Merck Sha Dong will transfer the technology to the authorized enterprise and provide the enterprise with the technology package. The enterprise then carries on the research and development of API and preparation according to the technology package, and then submits the PQ application to WHO after R & D. After submitting a PQ application, WHO may or may not conduct an on-site inspection, but we understand that Pharmaceutical can sell its products to 105 countries after submitting an PQ application. (the specific follow-up time depends on the company's R & D capability, which is uncertain. You can refer to the timeline answered by Colin on the investor platform.)

Which countries are the quantity, price and supply?

Low-and middle-income countries. Volume and price are for the business team to negotiate with national governments or large drug dealers. China is not included in the countries authorized by Merck & Co Inc and Pfizer Inc to MPP.

4. What are the possible enterprises of Pfizer Inc's MPP?

The current application for Pfizer Inc's MPP should also have been submitted. According to questions and answers from investors on the Coren platform, Coren submitted an application, and the situation submitted by other companies could not be determined for the time being.

According to Reuters, MPP is committed to increasing access to life-saving drugs in poorer countries. It also reached an agreement with Pfizer Inc to sub-license its COVID-19 tablets paxlovid to generic drugmakers.

Eddie Pharmaceutical also benefits? What other potential stocks are there?

Of the above five companies, two are listed companies, namely Shanghai Fosun Pharmaceutical and Borey Pharmaceuticals, which have about 305000 shareholders. From this positive level, many netizens think that shareholders can start counting boards. However, some analysts believe that since Merck & Co Inc does not charge money, generic drugs are probably embarrassed to sell too high, and it is estimated that they will eventually rely on small profits and quick turnover.

At the same time, Eddie Pharmaceuticals may also benefit. According to the company's response on the investor interaction platform, the company's investment project in Shijiazhuang Longze Pharmaceutical Co., Ltd. was completed on January 18, 2021, and the relevant industrial and commercial change procedures were completed on February 19, 2021. So far, the company has a 4.76% stake in Longze Pharmaceutical.

According to the aforementioned analysis of Guosheng Securities, the current MPP applications for Pfizer Inc should also have been submitted. According to questions and answers from investors on the Coren Pharmaceutical platform, Coren submitted an application, and the situation submitted by other companies could not be determined for the time being. Prior to this, Yaben Chemical continued to soar due to rumors of "supplying carbonic anhydride to Pfizer Inc", but was later denied by the company, and the company is still suspending trading. Jincheng Pharmaceutical also once soared because of intermediates.

However, it is worth mentioning that before the introduction of oral medicine by Merck & Co Inc and COVID-19, vaccine stocks had fallen sharply, and it remains to be seen whether this will also have an impact on stocks such as vaccines and in vitro testing.