Since 2023, shares in the pharmaceutical industry have fallen ten points, underperforming the Shanghai and Shenzhen 300 by almost 5.54 percentage points and lagging behind 23 other industries. Such a decline in the pharmaceutical sector is naturally related to the recent anti-corruption campaign in Thunderbolt. After all, as we all know, A-shares are a very emotional market. The pharmaceutical funds that were once stars are no longer in glory. According to the fund holdings in 2023Q2, the pharmaceutical sector holdings of the entire fund are only 7.7%, which is almost a historical low.

But what is gratifying is that the biopharmaceutical sector is large enough.

Even in the gloomy year of 2023, we can still dig out stones of hope from disappointment. For example, this year the GLP-1 drug semaglutide exploded out of the industry, attracting market attention. In addition to drug research and development, since this type of drug is similar to insulin and is currently generally administered through injection, the “periphery” of the injection pen has also become very popular.

1. Revolutionary drug delivery method

The injection pen is a revolutionary new drug delivery method that combines drugs and devices into one. Its full name is pen injection drug delivery device. Compared with traditional glass syringes, injection pumps and other devices, the advantages of injection pens are prominent and obvious. It can safely and conveniently inject quantitative amounts independently, greatly improving patient compliance, so it is very suitable for the needs of patients such as diabetes who require long-term medication.

Injection pens are used in many fields

Source: Hanerxi Medical WeChat public account, “Research Report on Factors Influencing Insulin Production Capacity Guarantee and Production Expansion Cycle Assessment”, etc., Debon Research Institute.

Since insulin giant Novo Nordisk launched the world’s first injection pen in 1985, pen injectors have quickly become the most mainstream drug delivery solution for diabetic patients in the world. Currently, more than 70% of the diabetic population in China use injection pens for drug delivery. Less than 30% still use insulin pumps. Among injection pens, according to the Hengzhou Bozhi report, 81.69% (in 2021) are repeatable styles, which is much higher than the market share of disposable injection pens.

Although the injection pen is simple to administer, the pen itself is not simple and has high technical barriers. From tool design to injection molding assembly, there are more than 40,000 patents in the injection pen process, and there are more than 1,500 core structure patents, most of which are in the hands of about 10 multinational giants. This also makes the market share of injection pens very concentrated. The major insulin manufacturers Novo Nordisk, Eli Lilly and Sanofi are also major injection pen manufacturers. The three companies together account for more than 80% of the market share. Although other companies were interested in making breakthroughs in this area, due to the exaggerated patent density, they ultimately failed to shake the status of the aforementioned oligarchs.

2. Application areas are rapidly expanding

In fact, the application areas of injection pens are far beyond insulin. Other drugs such as GLP-1, growth hormone, and monoclonal antibodies can also be administered in this way. Compared with the diabetes-insulin market, which has a relatively stable base, other downstream spaces for injection pens are even more attractive.

Scope of application of injection pens Source: Chinese Diabetes Magazine, official websites of various companies, Changjiang Securities Research Institute

The most noteworthy one is naturally GLP-1.

With two super indications for diabetes and obesity, global pharmaceutical companies are pursuing GLP-1. Novo Nordisk’s star product, simeglutide, contributed US$11.346 billion in revenue in 2022, accounting for nearly half of Novo Nordisk’s total revenue for the year. In particular, revenue from the weight loss field, which has unlimited potential, increased by 84%, the fastest growth rate among all businesses. Its stock price has been rising in the past year, and it has surpassed luxury goods oligarch LVMH to become the company with the highest market value in Europe.

The opening of this indication has greatly increased the number of people suitable for injection pens. China Economic Intelligence predicts that the global market size of injection pens will grow from US$4.83 billion to US$6.49 billion in the five years from 2023 to 2028, with a CAGR of about 5.2%. In the future, if subdivisions such as growth hormone and beauty injections can be further opened up, the downstream of injection pens will be even more fascinating.

Global injection pen market sales (100 million U.S. dollars)

Source: Globalnfo Research, Novo Nordisk annual report, China Economic Intelligence, “China’s Insulin Injection Pen Industry Situation Analysis and Prospects Report”, Changjiang Securities Research Institute

In fact, even if we don’t talk about other indications, domestic diabetic patients alone have given the injection pen industry the foundation for a leap forward. At present, more than 50% of type 2 diabetes patients in mature countries and regions receive insulin treatment, while this proportion in China is only 11.1%. Correspondingly, the penetration rate of insulin pens in China is bound to be low. With the large-scale counterattack of self-owned brand insulin after the implementation of centralized insulin procurement last year, the domestic insulin pen industry is also expected to usher in good development opportunities.

3. Domestic manufacturers are ready to take off

Although the injection pen business has great potential, due to the patent barriers we mentioned earlier, this market still seems to be dominated by giants. In 2022, Guangno and Nordisk produced 750 million injection pens. Of course, due to the relatively precise manufacturing process of injection pens, many manufacturers also choose OEM. This has also created Ypsomed, a global core OEM manufacturer of injection pens. From 2015 to 2022, Yps OEM injection pen revenue will increase from 120 million CHF to 310 million CHF, and this year’s revenue growth rate is expected to be around 25%.

Moreover, injection pens do not currently need to face the strong impact of centralized purchasing like insulin.

It can be seen from the performance of Ganli Pharmaceutical (603087) that the centralized purchasing prices of many of its insulin products have dropped by about 60%, resulting in the company’s total revenue falling by 52.6% in 2022, and the net profit attributable to the parent company has dropped by 130.25%. Turn a loss. At the same time, although Gan & Lee Pharmaceutical’s medical device business (mainly injection pens – Xiulin pens) also experienced a certain degree of revenue contraction, Gan & Lee Pharmaceutical explained in its annual report that it was due to exchange rate changes and reduced export orders caused by international political tensions. . In fact, the gross profit margin of the product itself is still sustainable, and even increased by 13.37% compared with the previous year. It is obviously still temporarily immune to centralized purchasing.

Ganli Pharmaceutical Xiulin pen sales (100 million yuan)

Source: Ganli Pharmaceutical Prospectus, Ganli Pharmaceutical Announcement, Ganli Pharmaceutical Annual Report,, China Merchants Securities Research Institute

4. The new generation of injection pens is the decisive point

Of course, the future decisive point for injection pens can also lie in the iteration of the product itself.

According to the principle, injection pens can be divided into two types: mechanical and intelligent. The intelligent method can not only set the metering and autonomous injection in advance, further improving the convenience of drug administration, but also help patients record their medication.

This brings far more meaning than the literal word “smart” can reflect.

In fact, poor compliance with diagnosis and treatment has always been the primary problem plaguing China’s poor diabetes control rate. One-third of domestic patients miss injections or at least do not follow doctor’s instructions. Many patients attribute the direct reason to forgetting to take insulin or not. Or don’t know how much to hit. With a smart injection pen, it can help patients manage their medication, at least to a certain extent.

In fact, smart injection pens have begun to enter the market from concept. In 2022, Novo Nordisk launched a smart insulin injection pen in China, and the first domestic smart insulin injection pen developed by Kailian Medical was also successfully approved for marketing.

With the rapid increase in the volume of domestic brand insulin under large-scale centralized procurement, combined with the boom in other application fields such as GLP-1, the domestic injection pen market has a large room for imagination. However, if manufacturers want to compete with multinational giants, they may still need to make a lot of efforts to bypass patent barriers and master independent technologies.