Free generic COVID-19 oral medicine, how big is the Molnupiravir market?

On January 20, 2022, the drug patent pool organization MPP announced that it has reached an agreement with 27 generic drug manufacturers to license the production of the low-cost COVID-19 oral drug Molnupiravir free of charge and supply it to 105 low- and middle-income countries (excluding China).Five of the 27 companies are from China, including Fosun Pharmaceuticals, Longze Pharmaceuticals (Eddy Pharmaceuticals), Langhua Pharmaceuticals (ViviaBio Holdings), Borui Pharmaceuticals, and Disano Pharmaceuticals.

Stimulated by favorable news, Fosun Pharmaceuticals (A shares) surged 7.58%, Borui Pharmaceuticals rose and stopped by 20cm, Eddy Pharmaceuticals surged 13%, and ViaBiotech surged 15.8%.

Currently, anti-coronavirus oral drugs mainly have two mechanisms: polymerase inhibitors (RdRp) and protease inhibitors (3CL).The COVID-19 polymerase inhibitor is a nucleoside analog. It blocks the replication of viral RNA by integrating into the RNA chain through the RNA polymerase (RdRP) dependent on viral RNA.

Overseas, two oral medications, Pfizer's protease inhibitor Paxlovid (Nirmatrelvir+ ritonavir) and MSD's polymerase inhibitor Molnupiravir, have been approved by the EUA to treat patients with mild cases of COVID-19. Among them, Paxlovid had excellent efficacy, reducing the risk of hospitalization or death by 89% compared to placebo.Molnupiravir was slightly less effective, reducing the risk of hospitalization or death by 30% compared to placebo.

Mild clinical phase III data of molnupiravir

Source: Huachuang Securities

According to reports, the price of MSD's COVID-19 oral medication Molnupiravir is 700 US dollars in developed European and American countries, and the price of Pfizer's COVID-19 oral medication Paxlovid is 500 US dollars in developed European and American countries. Pfizer's CEO said it is expected to produce 12 million courses of Paxlovid by the end of 2022, and total sales are expected to reach 63.48 billion US dollars. MSD expects to produce at least 30 million courses of Molnupiravir by the end of 2022, with total sales reaching $15 billion at that time.

The current license agreement between MPP and MSD Molnupiravir covers 105 low- and middle-income countries.However, the overall ability to pay is weak, and the drug market share is small.Also, citing preliminary estimates from drug manufacturers, it is estimated that in poorer countries, a 5-day course of 40 molnupiravir tablets will cost about $20, far below the $700 pricing in the US market.

Taken together, this authorization has had little impact on MSD's COVID-19 oral sales; it mainly relies on sales in the European and American markets. The COVID-19 drug market in low- and middle-income countries is relatively small. For big pharmaceutical companies like Fosun Pharmaceuticals, talking is better than nothing, but it is a great opportunity for small generic drug companies.

105 low- and middle-income countries covered by licensing agreements

Source: Medical notes

In addition, the study found that changes in infectivity in specific regions reduced the pathogenicity of the Omicron strain and increased its infectivity.According to data from researchers at the University of Hong Kong: Within 24 hours after infection, Omicron's ability to replicate in upper respiratory tract cells is about 70 times that of the original strain and Delta. Within 24 hours after infection, Omicron's ability to bind to alveolar cells was only 1/10 of the original strain.

Comparison of the efficiency of Omicron, Delta, and the original COVID-19 strain on upper respiratory tract and alveolar infections

Source: Guosheng Securities Research Institute

Although there are currently few COVID-19 patients in China, the gradual opening of the country's doors is the general trend, and there is an urgent need for domestically produced oral COVID-19 medicines to be autonomous and controllable.Only a combination of “COVID-19 vaccine+specific drug” prevention and treatment can truly reduce the impact of the virus on normal social life. Small molecule oral drugs with accurate curative effects and easy to use have great clinical application and commercial development value.

At present, many domestic pharmaceutical companies have deployed a variety of oral anti-COVID-19 drugs, which are at different stages of clinical development:The real life form of azvudine is in phase III clinical phase; Junshi/ Wangshan Wangshui's VV116 has entered clinical research and has been approved by the EUA in Uzbekistan; oral 3CL inhibitors from companies such as Goli, Xiansheng, and Zhongsheng are in the pre-clinical research stage and are expected to enter clinical trials one after another in the next 6 months.

Some COVID-19 anti-viral small molecule drugs marketed and under development

Source: Company announcement, Guosheng Securities Research Institute

Finally, although the pathogenicity of Omicron may be less than the previous mainstream variants, and the admission rate and death rate have been drastically reduced, the pandemic due to its strong transmission power will still have a strong impact on normal social operations in a short period of time. Especially in countries with limited medical resources, a “COVID-19 vaccine+specific drug” is indispensable.

$Jiangsu Aidea Pharmaceutical Group (688488.SH)$$Brightgene Bio-Medical Technology Co.,Ltd. (688166.SH)$$Shanghai Fosun Pharmaceutical (600196.SH)$

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