Sharing of current situation and development trend of life science industry

What is life science?

In the agricultural era, people solved the problems of human beings and food; In the industrial era, people have solved the problems of human beings, molecules and atoms; In the information age, people have solved the problems of informatization and digitalization; In the life era of the 21st century, people need to solve the relationship between human and gene.

The 21st century is the century of life; The life era will integrate the physical world and the information world to build a new life world. Like a small mobile phone containing at least 8 Nobel prizes (screen, lithium battery, storage, motherboard, heat dissipation), life science is the epitome of all human scientific research disciplines.

First of all, the history of life has existed for 4 billion years. The life that exists today has evolved and iterated along the DNA line from the original life body 4 billion years ago, and the future life body has also been recorded in the current genetic genome.

The history of human genetic research has only been more than 170 years so far, from the Mendel pea experiment in 1853 to Darwin's "Origin of Species" in 1859, Avery, Macleod and McCarty confirmed that genetic factors are DNA rather than protein, and the famous double helix structure of DNA proposed by Watson and Rick in 1953.

Until 2003, scientists from six countries, including China, jointly released the results of the Human Genome Project, and obtained all human genetic information (genome) containing 3.2 billion base pairs, 30000 genetic genomes that can be translated into proteins. Various genetic genes and their combinations record information about the structure of life from the past, present and future.

The emergence of genetic engineering technology has made people see a clearer new picture of life, and has also changed people's cognitive radius of life science.

Since Mendel's law of inheritance in the second half of the 19th century, human beings have completed the description of the whole genome in 170 years. Research results on the structure and function of genes have emerged in endlessly. Life science research has entered the era of genes. The discovery of genomes is only a beginning. But people can stand at this starting point, based on genes, and rethink why life can present complex differentiation behavior. Why can we evolve such complex advanced functions as eyes? Why can life defend against all kinds of infectious diseases?

People hope to reveal the secrets of the long 4 billion year evolution process and clarify the overall picture of life science. This project has just begun. Before and after the BC, due to natural disasters and wild animal attacks, the average life expectancy of human beings was 20 years. By 1800, due to the low level of science and technology, life was difficult, and there was no effective treatment for diseases. The average life expectancy of human beings was less than 40 years.

By 2020, with the improvement of scientific and technological level and effective treatment of diseases, human life expectancy has leaped, with the average human life expectancy reaching 70 years. In the near future, people's lives will enter an era of prevention first. Life science can also solve food shortages and environmental problems. The life science industry helps mankind achieve the eternal pursuit of health, longevity, happiness and beauty.

02 Overview of China's life sciences in 2021

The above figure shows some relevant data in China's life science field in 2021.

The scale of China's health industry continued to grow. As the aging of China's population further intensifies, and the attention and investment of the government and the public to health continue to increase, according to the statistics of the white paper on health industry, China's health industry reached 10 trillion yuan in 2021.

Among them, the market size related to drugs is about 2.9 trillion yuan, the market size of medical devices and diagnostics is about 1 trillion yuan, and the market size of medical services, digital medicine and pan-health is about 6.1 trillion yuan.

The aging of population structure is intensifying. According to the data of the Statistical Bulletin of the National Economic and Social Development of the People's Republic of China in 2021 issued by the National Bureau of Statistics, the natural growth rate of China's population in 2021 was only 0.34 ‰, down 1.11 ‰ from 2020.

In 2021, China's population aged 60 and above has reached 270 million, accounting for 18.9% of the total population, up 0.2% from 2020; The population aged 65 and above is more than 200 million, accounting for 14.2% of the country's total population, up 0.7% from 2020, and the aging of China's population is further aggravated. Therefore, the increasing aging of China's social population structure is still one of the most important core drivers of China's health industry.

China's big health industry tends to develop healthily in the capital market, the valuation system has changed, and the investment is generally more rational. According to statistics, the financing amount of China's big health sector in 2020 was 223.65 billion yuan, and that in 2021 was 252.28 billion yuan, up 12.8% year on year.

In 2020, there will be 1538 financing projects in China's big health sector. 1831 in 2021, up 19.05% year on year. In the A-share market, the number of IPOs of scientific innovation board health care companies in 2021 was 37, 24 in the first half and 13 in the second half. In the Hong Kong stock market, there will be 34 companies listed in the big health industry in 2021. On the whole, in the capital market, the big health industry showed steady growth.

03 Trends in life science in 2022

The trend of life science industry in 2022 is mainly divided into three levels: national policy, capital market and industrial structure.

At the policy level, centralized procurement of drugs and high-value medical consumables has entered a new stage of normalization and institutionalization; The implementation of DRG/DIP payment mode reform was accelerated; The state actively guides the national strategy to cope with population aging.

At the level of the capital market, the secondary market has begun to return to rationality, and the reconstruction of the valuation system is conducive to the sound development of the industry; Investors prefer the early stage, and high-potential start-ups are more likely to be favored by capital; From the primary participation of US dollar investors to the current currency holding and waiting, RMB capital has risen strongly in the past two years.

To sum up, the policy level and the capital market have led to changes in the industrial structure. In terms of industrial structure, the new generation of health industry companies entered the stage of commercialization; Digitalization and intellectualization are profoundly affecting the development of the industry.

In recent years, AI and various digital tools have gradually penetrated into all aspects of the health industry, showing great potential to break through bottlenecks and reduce costs and increase efficiency in many fields. With the continuous expansion and improvement of digitalization and intelligence in the whole health industry, many traditional technologies and business models in the whole big health industry are facing the possibility of reconstruction.

In terms of AI enabling new drug research and development, with the rapid development of deep learning ability and artificial intelligence technology, as well as the significant improvement of computing power, AI is making great progress in new drug research and development, and showing amazing potential.

Taking protein structure prediction as an example, DeepMind's AlphaFold2 has predicted more than 350000 protein structures, covering 98.5% of human proteome and 20 biological protein structures.

The global top 20 multinational pharmaceutical enterprises have a large number of layouts in the field of Al. A large number of domestic and foreign enterprises, including Novartis, Pfizer, GSK, AstraZeneca, Sanofi and Fosun Pharmaceutical, have tried to develop AI new drugs in succession, expecting to improve the efficiency of new drug research and development by leaps and bounds. At the same time, Internet giants including Alibaba have also accelerated their deployment in this field.

Digital diagnosis accelerates and empowers traditional diagnosis, and digital therapy becomes a powerful supplement to traditional treatment technology. Surgical robots have been more widely used in clinical surgery. Traditional hospitals are undergoing more and more thorough digital transformation. Medical treatment and consumption are moving closer to the overall trend of integration.

04 2022 Trends in medicine and biotechnology

The year 2021 is a year of frequent achievements in innovative drugs in China, and many biopharmaceutical enterprises such as Zejing Biological, Yasheng Pharmaceutical and Kangfang Biological ushered in the first commercial new drugs.

The types and indications of approved drugs in China are also gradually diversified. ADC drugs, cell therapy drugs and COVID-19 neutralizing antibody combination therapy independently developed by Chinese local enterprises have been listed in succession, and many Chinese Biotech companies have begun to realize scale revenue.

In the next few years, you will also witness the large-scale commercialization of AI medicine industry, cell therapy, ADC, synthetic biology and other high-tech tracks. The following trends need to be focused on:

The regulatory environment was tightened, and the pharmaceutical industry was transformed into an innovation-driven one. Since 2021, the country has issued a large number of new laws and regulations and new policies in many fields, such as medical services, medicine and equipment, medical security, marketing supervision, etc. "Measures for the Administration of Changes in the Post-Marketing of Drugs (for Trial Implementation)", "Drug Administration Law", "Opinions of the General Office of the State Council on Promoting the Normalization and Institutionalization of Centralized and Volume Procurement of Drugs", and has carried out strict law enforcement on the medical and pharmaceutical industry and key regulatory areas.

Driven by a number of national policies, the entire pharmaceutical industry has undergone major changes, and domestic pharmaceutical enterprises have gradually changed to innovation-driven, and the value space of "me-to innovative drugs" and generic drugs has been greatly compressed.

The regulatory standards for listing on the Science and Technology Innovation Board have gradually become clearer. In addition to the above-mentioned A-share and Hong Kong shares, there were 30+life science companies listed last year respectively. At the same time, 17 biopharmaceutical companies terminated the IPO of the science and technology innovation board due to lack of core technology and independent intellectual property rights.

In 2021, the State Drug Administration approved 83 new drugs. Among them, there are 51 domestic new drugs and 32 imported new drugs. The number of new drugs has reached a record high.

The cutting-edge technology accelerates the innovation of the pharmaceutical industry, and AI drug R&D improves the success rate and reduces the development cycle. The AI pharmaceutical industry has ushered in a period of value fulfillment. The continuous breakthroughs in AI technology, the continuous breakthroughs in deep learning algorithms and the substantial improvement in computing power have made everyone feel the shock power of AI. For example, protein structure prediction.

Looking around the world, the top 20 pharmaceutical companies have increased their distribution in the AI field. At present, AI drug research and development is still in the initial stage, and there are certain breakthroughs in all stages and links of drug research and development, and there are rich applications in fields such as basic research, drug targets, biochemical activities, and clinical trials. Among them, target discovery and compound synthesis are the most representative, which is also the focus of the use of artificial intelligence technology in the field of new drug research and development. However, in combination with the traditional pharmaceutical industry, greater breakthroughs are needed.

Third, local pharmaceutical enterprises should accelerate their international layout. In 2021, the volume of large-value overseas M&A transactions in the domestic pharmaceutical industry decreased significantly, but the cross-border license-in and license-out transactions remained extremely hot. According to public information statistics, in 2021, the total number of license-in transactions of Chinese pharmaceutical enterprises was about 130.

At the same time, there were 30 license out transactions among domestic pharmaceutical enterprises, with a total amount of more than US $13.3 billion, covering multiple disease fields such as autoimmunity, tumor, COVID-19, and pulmonary fibrosis. The proportion of tumor is the largest, about 80%.

New players with different roles focus on China's innovation and restructure the pharmaceutical industry. With the guidance of policies and the screening of the capital market, the new drug R&D business of traditional pharmaceutical enterprises has transformed into an innovation-driven industry. Traditional pharmaceutical enterprises have been the main force of the pharmaceutical industry for a long time. At present, they are facing multiple challenges such as the normalization of domestic centralized procurement, the priority review and approval of innovative drugs, and the clinical demand-driven pharmaceutical research and development, and are gradually transforming to the direction of innovative drugs.

Since 2021, the major domestic pharmaceutical enterprises have collectively arranged the primary market investment field (Hengrui Pharmaceutical, Fosun Pharmaceutical, Baiji Shenzhou, Xinda Biological), actively tested the primary market investment field, explored the early targets in the fields of biomedicine and medical health, and TMT capital has deeply arranged the investment in the pharmaceutical field.

Some companies and funds focusing on the science and technology field, such as Alibaba Health, ByteDance, Gaorong Capital, Source Code Capital and other institutions, have also deployed in the pharmaceutical field. AI and drug R&D, as a field with huge market imagination, are constantly pursued by technology and capital.

05 AliCloud services in the field of life sciences

Finally, let's talk about Alibaba Cloud's service capabilities. Alibaba Cloud is the third largest cloud service provider in the world and the first in the Asia-Pacific region. It provides elastic, stable, secure and inclusive cloud computing services to more than 4 million customers in 27 regions in the world.

Alibaba Cloud has been actively engaged in the field of life science in recent years. For example, the public service platform jointly built with GHDDI provides free services for universities and research institutions in the field of life science around the world; We also work with various ISV partners to jointly create various scenario-based life science solutions to provide a full set of services for AI pharmaceutical, gene sequencing and other customers.

What life science needs to do is not to be elitist, but to be inclusive. We hope that through Alibaba Cloud's ability to accumulate in the IaaS and PaaS layers for many years, we can provide assistance to customers in the life science industry, and make the diagnosis, detection and treatment technology of life health become an inclusive service, so that everyone can afford to develop innovative drugs through scientific and technological means, and strive for more possibilities for every life.