In 2022, biotech companies face challenges to maintain valuations and are going through slow downward trend in IPOs, compared to huge growth in 2020 and 2021; but the overall trend is still upward, and price has remained historically positive. On the other hand, the investment and deal appetite of big pharma remain stable and even to accelerate in this year. Based on our observation, transaction market has following highlights through this year:

与2020年和2021的巨大增长相比，2022年生物技术公司在稳定估值上面临挑战，且IPO的势头也有所放缓；但总体趋势仍在向上，价格一直保持历史正增长。另一方面，大型制药企业的投资和交易需求保持稳定，甚至在今年还有所增长。根据我们的观察，今年交易市场有以下亮点：

• The position of biotech companies and big pharma become distinct. Biotech companies establish themselves as innovation engine with steady contribution of high-quality clinical-stage breakthroughs. Big pharma, demonstrated by revenues, expand its trial ownership and build scaled operation.
  生物技术公司和大型制药公司的定位呈现差异化。生物技术公司，凭借其持续贡献出高质量的临床阶段创新产品，成为创新引擎。而大型制药公司，以营收论，旨在扩大产品线并建立规模化运营。
   

• With the continuous impact of Covid-19 and recent geopolitical tensions, investors (or buyers) have become more conservative by rethinking cash management and portfolio prioritization. The number and deal size of cross-border licenses-in deals decrease; the leading products in cross-border license-in deals are either pre-clinical products with smaller deal size, or mature pipeline ready to be launched on the market.
  随着新型冠状病毒的持续影响和最近地缘政治紧张局势，投资者（或买家）变得更加保守，重新考虑现金管理和产品组合优先顺序。跨境许可交易的数量和交易体量有所减少；跨境许可交易中受到主要青睐的产品要么是交易体量较小的临床前产品，要么是即将上市的成熟产品。
   

• A highlight is that domestic transactions increase significantly in terms of both number and deal size. Also, the deal structure in domestic license deals is diversified, combined with joint development, joint venture or equity investment. It is a trend in domestic deals that the typical product-focused license deal will develop into business collaborations in a larger scope.
  值得注意的亮点是，境内交易在数量和交易体量方面都大幅增加。此外，境内许可交易的交易结构也比较多元化，在许可交易的同时还有可能结合联合开发、合资或股权投资等形式。境内许可交易的一个趋势是从以产品为中心的经典许可交易模式发展为更大范围的业务合作。

From the regulatory perspective, regulations on human generic resources and cross-border data transmission remain important issues impacting the deal structure and design of global trials. Furthermore, the following concepts in local legislations has been and will continue to be key factors influencing the market:

从监管角度来看，与人类遗传资源和跨境数据传输相关的法律法规仍然是影响交易结构设计和全球临床试验布局的重要议题。此外，中国法律法规中的以下概念也一直是并将继续是影响市场的关键因素：

• Clinical stage: clinical value is the top priority.
  临床阶段：临床价值是首要之义
  
  Center for Drug Evaluation of the National Medical Product Administration (“CDE”) this year established the R&D base rule that clinical value is the top priority in cancer drug trials. This echoes the industry’s encouragement on innovative drugs with clinical value.
  国家药品监督管理局药品审评中心（“药审中心”）今年确立了开展药品研发的基本原则，即抗肿瘤药物应当以临床价值为导向。这呼应了业界一直以来对具有临床价值的创新药物的倡导和鼓励。
   

• Registration stage: accelerated process for breakthrough products
  注册阶段：加快突破性治疗药物审评工作
  
  The Provisions for Drug Registration incorporates a chapter entitled “Accelerated Drug Marketing Registration Procedures” and identified four specific procedures, namely “Breakthrough Therapy Drug Procedure”, “Conditional Approval Procedure”, “Priority Review and Approval Procedure”, and “Special Review and Approval Procedure”, to encourage and support clinical value-oriented drug innovation. In order to facilitate the implementation of the new provisions, the National Medical Products Administration has further organized the formulation and release of a series of corresponding implementation rules to accelerate the review and approval process for new drug products with breakthrough therapy or critical innovation. Such rules will effectively encourage pharmaceutical enterprises to pay more attention to the research and development on clinical value-oriented drugs.
  《药品注册管理办法》专设“药品加快上市注册程序”一章，确定“突破性治疗药物程序”、“附条件批准程序”、“优先审评审批程序”、“特别审批程序”四项药品加快上市注册程序，支持和鼓励以临床价值为导向的药物创新。为配合新规定的实施，国家药品监督管理局进一步组织制定并发布了一系列相应的实施细则，以加快突破性治疗或关键创新新药产品的审批流程。这些规则将有效鼓励医药企业更加重视临床价值导向药物的研发。
   

• Drug Patent Linkage System
  药品专利链接制度
  
  Conversely, drug products with less innovation and clinical value may not enjoy the same benefits. Other than the requirement of carrying out quality and efficacy conformity evaluation for generic drugs, the adoption of Drug Patent Linkage System also raises challenge to the approval of generic drugs.
  相对应地，创新性较差和临床价值较低的药品则无法享受同样的红利。除了明确需要对仿制药进行质量和疗效一致性评价的要求外，药品专利链接制度的确立也对仿制药的批准提出了挑战。
  
  The Drug Patent Linkage System aims to provide a patent dispute resolution mechanism for generic drugs in the process of marketing evaluation and reduce the risk of patent infringement and corresponding disputes after generic drugs are marketed. The significance of the Drug Patent Linkage System is to maximize drug accessibility by balancing the interests of innovator drug research enterprises and generic drug enterprises. With the implementation of the Drug Patent Linkage System, a new competitive situation and a new litigation mode between the innovator drugs and generic drugs will be presented. The game of patent litigation strategies between innovator drug enterprises and generic drug enterprises under the Drug Patent Linkage System will become increasingly intense, especially against the background of a series of medical reforms such as the state-organized centralized procurement of drugs and the continued deepening of generic drug incentive policies.
  药品专利链接制度旨在为仿制药在上市审评环节提供专利纠纷解决的机制，减少仿制药上市后的专利侵权风险及相应纠纷。药品专利链接制度的重要意义在于通过平衡原研药企业和仿制药企业利益，最大限度地推动药品可及性。随着药品专利链接制度大幕的拉开，原研药与仿制药将呈现新的诉讼模式和新的竞争态势。原研药企与仿制药企在专利链接制度下专利诉讼策略的博弈，尤其在一系列医药改革，例如药品集中带量采购、仿制药鼓励政策继续深入的大背景之下，将会愈演愈烈。

The industry continues to squeeze the benefits at distribution channel to bring more benefits to the end-users and therefore enhance drug accessibility. With the impact of Covid-19, the industry has been encouraging online hospital and online sales of drugs to allow patients to have telemedicine service as well as easy access to prescription drugs.

医药行业继续挤压分销渠道的利益，为终端用户带来更多利益，从而提高药品的可及性。受新型冠状病毒的影响，行业在鼓励互联网医院和网售处方药，以使患者能够获得远程医疗服务以及方便地获得处方药。

• Fast Development of Online Hospitals
  互联网医院的快速发展
  
  Following the three foundation regulations regarding the Internet-based hospitals and telemedicine issued in 2018, the National Health Commission and the National Administration of Traditional Chinese Medicine further released the Rules for the Supervisions of Internet-based Diagnosis (for Trial Implementation) to guide and standardize online medical practices. Some of the highlights are: (i) all physicians and patients shall conduct identity verification before any telemedicine services; (ii) the prescription shall not be automatically generated by AI software, the prescription medicines shall be provided after and according to the prescriptions, and the circulation information of prescription shall be traceable; (iii) physicians are prohibited from connecting their income with the revenue of pharmaceutical products. While a large number of internet-based medical enterprises and internet-based hospitals are born with the policy encouragement, these new guidance calls for a more transparent and orderly development of online hospitals and telemedicine services.
  继2018年发布的关于互联网医院和远程医疗的三项基本规定后，国家卫生健康委员会和国家中医药管理局进一步发布了《互联网诊疗监管细则（试行）》以指导和规范互联网医疗行为。部分重点包括：（i）所有医生和患者在任何远程医疗服务之前都应进行实名认证；（ii）严禁使用人工智能自动生成处方，处方药应在处方开具之后根据处方提供，处方流转信息应当可追溯；（iii）禁止医生将其收入与药品收入相挂钩。可见，在大量互联网医疗企业和互联网医院在政策鼓励下应运而生的同时，这些新的指导方针也对互联网医院和远程医疗服务的发展提出了更加透明和有序的发展要求。
   

• Affirmation of Legitimacy of Online Drug Sales
  确立网售处方药的合法性
  
  After several backs and forth, it is now officially regulated that even prescription drugs (except for drugs subject to special administration such as vaccines, blood products, anesthesia and psychiatric drugs, medical use poisons, radiative drugs, drug precursor chemicals) can be sold online. It is expected that the pharmaceutical e-commerce industry will usher in a new stage of development, but under strict governmental supervision and restriction.
  在多轮“拉锯战”后，法律规定即使是处方药也可以在网上销售（但疫苗、血液制品、麻醉药品、精神药品、医疗用毒性药品、放射性药品、药品类易制毒化学品等国家实行特殊管理的药品除外）。医药电子商务行业有望在严格的政府监管和限制下迎来一个新的发展阶段。
  
  In addition, although the existing policies have affirmed the legitimacy of online sales of prescription drugs, issues such as the full-cycle responsibility traceability system and the docking of the medical insurance payment system have yet to be resolved. In the future, only by attaching importance to the compliance can pharmaceutical e-commerce enterprises proceed fast and steadily in the “draught” of the industry.
  此外，尽管现有政策肯定了网售处方药的合法性，但全生命周期责任追溯制度和医保支付系统对接等问题仍有待解决。未来，只有重视合规，医药电商企业才能在行业的“风口”中快速、稳健地前行。
   

• Reform on Medical Insurance Payment Model
  医保支付方式改革
  
  In April 2022, the National Healthcare Security Administration issued a notice to select some provincial medical insurance information platforms for testing the DRG/DIP payment method. By the end of June 2022, some new areas were to be selected to carry out the DRG/DIP payment method reform and try out the DRG/DIP function module of the national unified medical insurance information platform; by the end of November 2022, the DRG/DIP function module will be implemented nationwide.
  2022年4月，国家医疗保障局办公室发布了一项通知，选择部分省级医保信息平台测试DRG/DIP支付方式；2022年6月底前，又选择部分地区开展DRG/DIP支付方式改革，试用全国统一医保信息平台DRG/DIP功能模块；2022年11月底前， DRG/DIP功能模块将在全国落地应用。
  
  The “DRG Payment” refers to payment according to diagnosis-related groups. In other words, patients are divided into groups with similar clinical symptoms and resource consumption according to factors such as disease diagnosis, disease severity, and treatment methods. On this basis, the medical insurance shall pay according to the corresponding payment standard. The “DIP Payment” refers to the payment by diagnosis-intervention packet. Under the total budget mechanism, the point value is calculated according to the total annual medical insurance payment, the proportion of medical insurance payment and the total value of each medical institution’s case, so as to form a payment standard and realize standardized payment for each case of medical institutions. Compared with the traditional payment by project, DRG/DIP payment is a more scientific and refined medical insurance payment mode, which can help hospitals pay attention to clinical development while managing expenses, and provide higher quality services for the insured with limited medical insurance funds, thus improving the efficiency of medical insurance fund use.
  所谓DRG付费，即按疾病诊断相关分组付费。也就是说，按照疾病诊断、病情严重程度、治疗方法等因素，把患者分入临床病症与资源消耗相似的诊断相关组。在此基础上，医保按照相应的付费标准进行支付。所谓DIP付费，即按病种分值付费，在总额预算机制下，根据年度医保支付总额、医保支付比例及各医疗机构病例的总分值计算点值，形成支付标准，对医疗机构每一病例实现标准化支付。与传统按项目付费相比，DRG/DIP付费是一种更科学、更精细的医保支付模式，能够帮助医院在进行费用管理的同时，兼顾临床发展，用有限的医保基金为参保人购买更高质量的服务，从而提高医保基金使用效率。
   

• Early Access Programs in Trial Areas
  试点地区先行项目
  
  Apart from the above national trends, Hainan Boao Town and Great Bay Area have individually adopted rules to allow the early access programs. Under the current national regulations, it takes at least three to five years for foreign advanced innovative drugs and medical devices to enter the domestic market, the special rules in these regions simplified the import approval process and customs clearance record process, shortened the time for the access approval and import of foreign drugs and medical devices, thus allow domestic patients to conveniently access the foreign drugs and medical devices.
  除上述国家层面的趋势外，海南博鳌和大湾区已单独制定规则，允许开展先行项目。根据现行国家层面的法规，外国先进创新药物和医疗器械正式上市进入国内市场至少需要三到五年时间，这些地区的特殊规则简化了进口审批流程和通关记录流程，缩短了外国药品和医疗器械的准入和进口时间，从而允许国内患者方便地使用外国药物和医疗设备。

• MAH and its CMO
  上市许可持有人及其委托生产企业
  
  With the Drug Administration Law of the People’s Republic of China establishing the Marketing Authorization Holder (“MAH”) policy in 2019, the government authorities further promulgated a series of notices and rules to drive the focus of drug product quality control on the MAH. Among others, it is expected that in the near future, only the MAH or an enterprise with a drug distribution license is eligible to sell drugs in China, and the contracted manufacturer is no longer eligible to be engaged to sell the drug products on behalf of the MAH. This may have an impact to many multi-national drug companies as they may need to design a new trade route for their imported drug products being packaged and labelled in China.
  自2019年开始实施的《中华人民共和国药品管理法（2019修订）》从法律层面确立了药品上市许可持有人（MAH）制度以来，政府部门进一步颁布了一系列通知和规则，将药品质量监管的重点放在药品上市许可持有人身上。不久的将来，预计只有药品上市许可持有人或具有药品经营许可证的企业有资格在中国境内销售药品，受托生产商不再有资格代表药品上市许可持有人受托销售药品。这可能会对许多跨国制药公司产生影响，可能需要为此就其原先在中国分包装和贴标的进口药品设计一条新的贸易路径。
   

• Central procurement and MAH’ social credit evaluation system
  集中采购和上市许可持有人的信用评价制度
  
  Also, after the nationwide pilot program for conducting centralized drug procurement was adopted in 2019, the centralized volume-based drug procurement is now conducted in a normalized and institutionalized manner. Under such national trend, most of the drug products will be traded through this centralized procurement manner and therefore the MAH shall strictly observe the requirements imposed by the centralized drug procurement agencies, which are the representatives of the public hospitals. Specifically, the industry implements a social credit system to assess the social credits of MAHs, and the MAHs with a negative social credit record may receive a disciplinary treatment of disbarment from participating in the bidding of the centralized drug procurement. After the implementation of such social creditworthy system, the MAH may face a higher risk control requirement on the compliance governance of its agencies and vendors.
  此外，自2019年开始实施全国药品集中采购试点后，药品集中带量采购现已常态化、制度化。在这种趋势下，大多数药品将通过集中采购方式进行交易。因此，药品上市许可持有人应严格遵守作为公立医院代表的药品集中采购机构的要求。特别地，医药行业实行信用评价制度来评价药品上市许可持有人的信用，具有失信记录的药品上市许可持有人可能会被限制或中止参与药品集中采购的挂网、投标资格等的处置。在实施这一信用评价制度后，对药品上市许可持有人如何合规管理其代理机构和供应商提出了更高的风险控制要求。