Launch of K-new drugs in the Chinese market is accelerated

Daewoong's 'Fexuclue' received approval in China…second new P-CAB drug to receive approval following K-Cab

Zaqubo is also in the approval process in China…Last year's pharmaceutical trade deficit with China amounted to KRW 630 billion

Last year's finished pharmaceutical product exports to China 46%↓over 4 years…Import of China's API increased robustly

New drugs developed in Korea are successively entering the Chinese market.

 

Based on their commercial success in the Korean market, new P-CAB (Potassium-Competitive Acid Blocker) drugs for gastroesophageal reflux disease are quickly entering the approximately KRW 3 trillion-worth Chinese market.

 

Fexuclue has become the second P-CAB to enter the Chinese market after K-CAB.

 

Zaqubo is also in the approval process.

 

Improvement is expected in the massive pharmaceutical trade deficit with China, which has exceeded KRW 5 trillion over the past 10 years.

 

Fexuclue Launches in the Chinese Market, following K-CAB...Zaqubo Also Enters Approval Process According to industry sources on September 8, Daewoong Pharmaceutical received product approval for Fexuclue 40mg from China's National Medical Products Administration (NMPA) on September 5.

 

Fexuclue obtained approval in China for the treatment of gastroesophageal reflux disease.

 

Daewoong Pharmaceutical applied for Fexuclue approval in China in June 2023, and obtained the product approval in two years.

 

Fexuclue is a 'P-CAB' gastroesophageal reflux disease treatment developed by Daewoong Pharmaceutical.

 

It was approved as the 34th domestically developed new drug in December 2021.

 

Fexuclue is a new Korean drug that Daewoong Pharmaceutical successfully developed with proprietary technology over 13 years, starting in 2008.

 

P-CAB anti-ulcer drugs work by competitively binding to the proton pump and potassium ions, which are located in the final stage of acid secretion in parietal cells, thereby inhibiting gastric acid secretion.

 

P-CAB new drugs have proven their commercial value in Korea by proven advantages such as a faster onset of action and the ability to be taken regardless of meals, unlike conventional PPI (Proton Pump Inhibitor) class products.

 

According to global market research firm IMS data, the size of China's anti-ulcer drug market is approximately KRW 3 trillion, making it the largest in the world.

 

With its 1.4 billion population adopting more Westernized dietary habits, the number of gastroesophageal reflux disease patients is rapidly increasing, and treatment demand is expected to expand.

 

Daewoong Pharmaceutical projected, "Fexuclue is expected to rapidly increase market share in the Chinese anti-ulcer drug market by improving upon the drawbacks of existing PPIs, such as slow onset of action, short half-life, and the need for pre-meal administration." Fexuclue is highly regarded for its long half-life, which enables sustained acid suppression and provides excellent relief for nocturnal heartburn.

 

Among drugs in the same class, Fexuclue is the only one to have clinically proven its effect in 'alleviating chronic cough' caused by acid reflux.

 

Daewoong Pharmaceutical has set the second half of 2026 as the goal for Fexuclue's launch.

 

The company plans to deploy a full-scale market entry strategy that reflects the characteristics and demand of the local Chinese market.

 

Park Seong-soo, CEO of Daewoong Pharmaceutical, said, "This Chinese product approval will be a very important turning point for Fexuclue's leap to becoming a global blockbuster drug." Park added, "We will strive to ensure that Fexuclue becomes the most trusted treatment option for patients and medical professionals in China, the world's largest anti-ulcer drug market." Fexuclue is the second Korea-developed new P-CAB drug to enter the Chinese market, following K-CAB.

 

In April 2022, HK inno.N's K-CAB was approved in China for the treatment of erosive esophagitis.

 

The local product name was decided as 'Taisinzan (泰欣赞),' meaning 'carrying great joy.' HK inno.N pursued K-CAB's overseas expansion in 2015 by signing a technology export agreement with Chinese pharmaceutical company Luoxin Group and passed the Chinese hurdle in seven years.

 

The agreement with Luoxin Group includes a total of $18.5 million in milestone payments based on upfront payment, clinical development, approval, and commercialization stages.

 

K-CAB has been approved for three indications in China: erosive esophagitis, duodenal ulcer, and Helicobacter pylori eradication therapy.

 

Since January of this year, K-CAB's scope of reimbursement has been expanded with the addition of the duodenal ulcer indication to the China's National Reimbursement Drug List (NRDL).

 

Product photo of K-CAB (left) and Zaqubo (right)

Onconic Therapeutics, a subsidiary of Jeil Pharmaceutical, is also accelerating the entry of its new P-CAB drug, Zaqubo, into the Chinese market.

 

In March 2023, Onconic Therapeutics signed a technology export agreement for Zaqubo with Chinese pharmaceutical company Livzon Pharmaceutical Group.

 

The contract value is up to $127.5 million.

 

Onconic Therapeutics received a non-refundable upfront payment of $15 million and is set to receive up to $112.5 million in technology fees based on development, approval, and commercialization milestones.

 

Livzon Pharmaceutical Group began patient dosing for Zaqubo's Chinese Phase 3 clinical trial at the end of last year and successfully completed the trial last month, submitting a product approval application to the China's National Medical Products Administration.

 

Expectations are high for the success of Korea-developed new P-CAB drugs in the Chinese market, building on their commercial success in the Korean market.

 

In the Korean market, K-CAB's prescription sales surpassed KRW 100 billion in 2021, its third year since launch, and has recorded over KRW 100 billion in prescription sales for four consecutive years.

 

In the first half of this year, its prescription sales increased by 14.0% year-on-year to KRW 104.7 billion, possibly leading to an annual prescription sales of KRW 200 billion.

 

Fexuclue, launched in Korea in July 2022, recorded KRW 12.9 billion in prescription sales in its first year, and its sales soared over six times in two years, reaching KRW 78.8 billion last year.

 

Its prescription amount in the first half of this year was KRW 43.2 billion, a 22.5% increase from the same period last year.

 

Zaqubo, which entered the prescription market in earnest after receiving health insurance reimbursement in October of last year, recorded KRW 17.2 billion in outpatient prescription sales in the first half of this year.

 

Last year's pharmaceutical trade deficit with China amounted to KRW 630B...Expectation for improving 'deficit of KRW 5T over 10 years' If Korea-developed new P-CAB drugs achieve commercial success in China, an improvement in the trade balance with China is also expected.

 

The performance of Korean companies' pharmaceuticals in the Chinese market has been low.

 

According to the Ministry of Food and Drug Safety, the value of pharmaceutical exports to China last year was $407.27 million, less than half of the import value of $865.61 million.

 

Last year's pharmaceutical trade deficit with China amounted to $457.34 million (approximately KRW 630 billion).

 

Pharmaceutical Exports and Imports to China (unit: $1,000, source: MFDS).

 

Light Blue-Exports, Blue-Imports

Over the past 10 years, from 2015 to last year, the total pharmaceutical trade deficit with China reached $3.66939 billion (approximately KRW 5.1 trillion).

 

The pharmaceutical trade deficit with China expanded by $115.78 million over the past 10 years, from $341.56 million in 2014.

 

During this period, pharmaceutical exports to China increased by $299.88 million, from $107.39 million to $407.27 million.

 

However, imports increased by a significantly larger amount, $415.67 million, from $448.94 million to $864.61 million.

 

This sluggish performance in exporting finished pharmaceutical products from Korea, coupled with the accelerated penetration of Chinese raw materials into the Korean market, is identified as a key factor in the worsening trade balance.

 

Last year, the value of finished pharmaceutical product exports to China was $138.98 million.

 

While this represents a 59.7% increase over 10 years from $87.01 million in 2014, it is a 45.8% decrease compared to the $256.44 million recorded in 2020.

 

The slow progress of Korean companies in the Chinese market is pointed out as a reason for the worsening trade balance.

 

In contrast, imports of Chinese active pharmaceutical ingredients (APIs) reached $816.32 million last year, a 110.2% jump from $388.31 million 10 years ago.

 

Finished pharmaceutical product exports to China (unit: $1,000, source: MFDS)

The continuous increase in imports from China is analyzed to be due to Korean pharmaceutical companies' preference for cheaper imported APIs for cost reduction.

 

In 2014, China was the 6th largest country of origin for pharmaceutical imports, but it has now jumped to the 3rd position last year.

 

In 2014, China was the second-largest country in terms of pharmaceutical exports, following Japan, but it fell to 9th place last year.

 

An industry official said, "The continuous decrease in the cost structure of finished pharmaceutical products due to the government's sustained drug price reduction policy inevitably leads to a higher demand for cheaper imported APIs for cost reduction," and added, "If Korean companies' efforts into entering the Chinese finished pharmaceutical product market are initiated, an improvement in the trade balance can be expected."