China Galaxy Securities: The future domestic substitution space for diabetes is broad, and innovation is expected to achieve a curve overtaking

According to the report from China Galaxy Securities, GLP-1 drugs are experiencing explosive market growth due to their dual indications for blood sugar reduction and weight loss. The global market is expected to exceed $50 billion in 2024, while China's market size in 2023 is projected to be 8.7 billion yuan, with an expected growth to 23.3 billion yuan by 2025. The diabetes drug market is vast, with various drugs currently dominated by imported manufacturers, leaving significant room for domestic alternatives in the future. Innovative new pipelines are expected to achieve a leapfrog development. The industry is evolving towards "long-acting, multi-target, and innovative formulations," with innovation becoming the core theme, and the prospects for leading companies are promising.

The main viewpoints of China Galaxy Securities are as follows:

The diabetes drug market is worth trillions, with GLP-1 drugs as the main growth driver

Innovations in blood sugar-lowering medications are driving continuous growth in the global diabetes drug market, which is expected to reach $90.2 billion by 2025 and grow to $109.1 billion by 2030. China is the largest country for diabetes, with the blood sugar-lowering drug market expected to reach 116.1 billion yuan by 2025 and grow to 167.5 billion yuan by 2030. Clinical guidelines recommend three types of drugs for diabetes treatment: traditional oral hypoglycemic agents, insulin, and GLP-1 drugs. The mechanisms of action, advantages, disadvantages, and applicable populations of different hypoglycemic drugs vary significantly, largely determining their lifecycle. Among them, GLP-1 drugs are experiencing explosive growth due to their dual indications for blood sugar reduction and weight loss, with the global market expected to exceed $50 billion in 2024, while China's market size in 2023 is projected to be 8.7 billion yuan, with an expected growth to 23.3 billion yuan by 2025.

Traditional drug procurement promotes domestic substitution, GLP-1 drugs upgrade from injection to oral

① Oral hypoglycemic drugs have limited overall market growth due to nearly full coverage in previous procurement rounds, with only DPP-4i/SGLT-2i drugs maintaining a growth trend, while new mechanism drugs like GKA/PPAR also show potential. ② In the insulin market, third-generation and new formulations (such as weekly formulations) are gradually replacing second-generation products, with procurement promoting the market share of domestic companies like Gan & Lee and THDB. ③ Competition in the GLP-1 field has entered a heated stage, with Novo Nordisk and Eli Lilly leading globally. As patents for bestselling GLP-1 peptide drugs expire, many domestic companies are laying out biosimilars. In terms of innovative drugs, the current R&D competition has entered a heated stage, with emerging pharmaceutical companies and biotech firms accelerating their layouts. Multinational pharmaceutical companies are seizing the track through cooperation and mergers, while Chinese pharmaceutical companies are joining the competition through license-in or independent development. Innovent Biologics' Ma Shidu peptide was approved for market launch at the end of June, and products from Heng Rui, Gan & Lee, Huadong, Hansoh, Borui, and Zhongsheng are all in phase III clinical trials. In the future, competition in the GLP-1 track will focus on oral formulations, long-acting (biweekly/weekly formulations), and multi-target synergy (GLP-1/GIP/GCGR/FGF21).

Accelerating the layout of innovative pipelines, the prospects for industry leaders are promising

The industry is evolving towards "long-acting, multi-target, and innovative formulations," with innovation becoming the core theme. ① Gan & Lee: Both volume and price of insulin are rising, providing new growth through innovation abroad; ② THDB: Domestic insulin duopoly, laying out dual-target/oral GLP-1; ③ Innovent Biologics: Ma Shidu peptide shows strong blood sugar-lowering efficacy, with rapid commercialization of weight loss expected; ④ Heng Rui Medicine: GLP-1/GIP dual-target HRS9531 is about to submit NDA, and oral small molecule HRS-7535 has entered Phase III; ⑤ East China Medicine: Comprehensive layout of oral/multi-target/biosimilar drugs; ⑥ Bo Rui Medicine: Dual-target BGM0504 collaborates with China Resources Sanjiu, laying out insulin BGM1812; ⑦ United Pharmaceutical: GLP-1/GIP/GCG triple-target UBT251 authorized to Novo Nordisk for $2 billion; ⑧ Zhongsheng Pharmaceutical: Biweekly formulation RAY1225 for dual indications enters Phase III clinical trials.

Risk Warning

Risks of product development not meeting expectations, risks of product commercialization sales not meeting expectations, risks of intensified market competition, risks of policy changes, risks of price reductions of generic drug competitors