On November 15, news from Blue Whale reported (journalist Tu Jun) that on November 14, the leading commercial company Baiyang Pharmaceutical (301015.SZ) announced that its wholly owned subsidiary Beijing Baiyang ZhihHe Medical Achievement Transformation Service Co., Ltd. (referred to as "Baiyang ZhihHe") has signed a "Marketing Promotion Service Agreement" with Beijing Huahao Zhongtian Biomedical Co., Ltd. (i.e., Huahao Zhongtian Pharmaceutical, 2563.HK). According to the agreement, Baiyang Pharmaceutical will obtain the exclusive marketing promotion rights for the class 1 innovative drug Youtidelong Injection (brand name: Youti Di) independently developed by Huahao Zhongtian Pharmaceutical in mainland china, with a contract term of 10 years.

Youtidelong is the only class 1 innovative drug that is a microtubule inhibitor independently developed by a domestic enterprise, and it is also the only anti-tumor new drug with a novel molecular structure approved globally since 2010. The first approved indication is in combination with capecitabine, suitable for patients with recurrent or metastatic breast cancer who have received at least one chemotherapy regimen, and is included in the national medical insurance directory in 2022.

Frost & Sullivan stated that as the sales of innovative paclitaxel formulations continue to increase and new microtubule inhibitors are launched, the expected market scale of microtubule inhibitors in china will see further growth, predicting it will reach 18.1 billion yuan by 2030, with a compound annual growth rate of 12.2% from 2023.

According to the agreement, Baiyang Pharmaceutical will pay an non-refundable advance payment of 50 million yuan to Huahao Zhongtian Pharmaceutical; meanwhile, based on the research and sales progress, Baiyang Pharmaceutical will pay milestone payments for research and sales to Huahao Zhongtian Pharmaceutical. Huahao Zhongtian Pharmaceutical will pay Baiyang Pharmaceutical a promotion service fee based on the annual terminal sales amount on a gradient basis.

Baiyang Pharmaceutical stated that obtaining exclusive promotion rights for Youti Di from all medical institutions and pharmaceutical retail businesses in mainland china reflects the recognition of the company’s brand operation capabilities by innovative pharmaceutical companies, expanding its brand matrix in the tumor and other serious medication categories. If the agreement is successfully implemented, it will benefit the company’s sustained profitability and have a positive impact on its performance.

Public information shows that Baiyang Pharmaceutical’s main business is providing comprehensive commercial solutions for pharmaceutical product manufacturers, covering three sectors: brand operation, wholesale distribution, and retail.

Among them, brand operation is the company's core business. According to Baiyang Pharmaceutical's report for the third quarter of 2024, the company achieved revenue of 6.144 billion yuan in the first three quarters, an increase of 2.65% year-on-year; among which, its core business brand operation achieved revenue of 4.133 billion yuan, an increase of 15.48% year-on-year.

It is worth noting that in July of this year, Baiyang Pharmaceutical completed the acquisition of Shanghai Baiyang Pharmaceutical Co., Ltd. (hereinafter referred to as "Baiyang Pharmaceutical"). Baiyang Pharmaceutical acquired 60.199% of the shares of Baiyang Pharmaceutical through cash, with a transaction amount of 0.88 billion yuan.

Public information shows that Baiyang Pharmaceutical focuses on the modernization of traditional chinese medicine and the research and production of sustained-release formulations, with main products including the exclusive chinese patent medicine type Fuzheng Huayu for liver disease and high-end formulations such as Metformin, Nifedipine, and Celecoxib, centered on sustained-release formulation technology.

The industry believes that this acquisition transaction is beneficial for Baiyang Pharmaceutical to enrich its product structure and extend its medical industry chain.