PAR and the massive market of.....

PAR and the massive market of...China


INTRODUCTION

Fellow Paradigmers, while we wait for the next lot of news, and there is a whole heap of it coming, check out TheOne's recent comprehensive summary of what's to come: https://hotcopper.com.au/threads/ann-paradigm-agm-presentation.5060335/page-85?post_id=41461895

While on one of my recent research stints on our wonderful PAR, I came across some interesting data involving China. Now there isn’t much data available but there is at least one fairly rigorous and in depth study that was conducted a few years ago (2012). For the full link see the references section below.Please enjoy some interesting facts and summation that I present to you tonight.


BROADLY SPEAKING

Firstly lets go broad and then we'll zoom in. China is some 50 times our population. They are changing and in a large way, I heard a stat a couple of years ago that went like this..."5 years ago China's middle class was 50 million, in 5 years from now it will be 500 million".In 2020 China's economy will be bigger than the USA and will come in at an estimated and mind boggling 38 Trillion GDP in the year 2025 ¹ ...that's not far away.



_{China, the landscape is changing, not just in terms of the city skylines...whole industries are modernising and that includes the Bio Pharma Scene too.}


We know the USA is currently the biggest Pharma market in the world but did you know China has now crept up to be the second largest? It's a market we cannot ignore. Not only that, guess what the growth of their pharmaceutical market is on an annual basis?

3% ?

Hmmm wait... no Mozzarc always builds this up, it'll be high...10% !?



Answer? 22%...

Check out reference 1 in the reference section which is taken from a report issued by Australian BioTech and the Aust Govt.Have a read of this extract from the same report:


"Improving China’s healthcare system – particularly for the rural population – is an important goal of the country’s 12th Five-Year Plan for National Economic and Social Development (FYP), through measures such as expanding insurance schemes, increasing reimbursement for critical illness, and even pilot programs for single disease payments – all of which further contribute to increasing affordability for patients." ¹


Now keep in mind the rural reference, this will feature again later in my post...The report goes on to specifically mention an affliction that PAR have already identified and patents exist, namely COPD. Respiratory problems are on the rise in China, The World Health Organization says, in China,


"Chronic respiratory diseases are the second leading cause of death and the prevalence of COPD in men and women in China is not very different"¹


COPD? For the link between this disease and PAR I need to take you back to the old days of our prospectus from 2015...I know there are a few of you that haven't read this one...here is an extract to save you some time:







More Big Pharma deals are getting done that are emanating from China,


"The KPMG report, Demystifying Chinese Investment in Australian Healthcare, says $2.55 billion was invested in Australia in 2015, $1.35 billion in 2016 and $1.58 billion in 2017 through several very large deals."²


Figure 1 below depicts the rate of growth of expenditure and whats predicted in 2020 ³



_{Figure 1 - Increasing Health expenditure in China and it aint stopping any time soon.}



In another study, albeit much smaller sample size (250 patients), the breakdown of treatments for OA were as follows (Figure 2 below) ⁴ .

_{Figure 2 - Breakdown of medication categories experienced in the study of 250 patients in 2017.}


Note 'Glucosmine' (see second last row in Figure 2 above) is a Monosacchriide and I presume this is taken orally so bio availability and thus effectiveness I'm guessing is low to zero. It's basically a sugar and according to Arthritis Australia⁵ "their effectiveness remains unclear", no doubt there is a good placebo effect but when more objective data is done like the MRI scans that we presented as part of our Trial II, well it's a different story.


OA IN CHINA


_{PAR one day in China, a possibility?}


Ok now let's focus in some more and investigate OA specifically in China. As I mentioned, there isn't a whole lot of data on this but there was one good sized study involving some 17,000 odd people. It was found that the average incidence rate in this sample was 8.1%.⁶ Interestingly the report found that the incidence of OA was higher in rural areas. The report speculated that this was the case due to the higher incidence of manual labour out in the villages compared to the cities and more developed areas.

Oh very well good and interesting Mr Mozzarc but c’mon buddy, what’s the chances of our little Aussie PAR addressing and infiltrating the Chinese market? Actually the chances are quite good, we certainly aren’t trail blazers in this region but our path to success could be meteoric (don't worry, no rockets pics here) if we manage to penetrate the huge Chinese market. Doing business in China is always best with a local partner, it would be dilutionary to some extent but it's much safer and easier...it's another hurdle to cross later on.

I have also mentioned Sirtex in the past and compared it to us, new guys, read this one: https://hotcopper.com.au/threads/comparing-srx-to-par.4702845/ SRX’s was certainly a comparative story to us though much smaller and in no way near the success or the depth of applications that we can boast.Sirtex was finally taken over...by whom?⁷


Australia's Sirtex picks $1.4 billion Chinese bid over Varian offer


Want more evidence that we could one day be present in China? I simply and eloquently direct you to PAR’s own announcement back in March 2019:

“Patents granted for BMEL and respiratory diseases in Australia, China and New Zealand”

And further in 2019 7th November:


_{Figure 3 - PAR declaring China is one target market they have patented.}


Paul himself specifically mentioned it in the AGM earlier this month calling out China as a PAR patent covered jurisdiction.In PAR setting this up through their patent coverage a while back , it’s a clue for us shareholders.

I have one more clue for you, this one just came to me quite late as I was doing the final edit for this post....I present to you MPS in China...


MPS IN CHINA

Now as most of us know this is a very very rare disease affecting 3.5 births per 100,000...it makes me estimate the numbers to be may be around 530 new cases per year...so perhaps there are 6500 or so in total today of any age...Now I thought to myself that finding them wouldn't that be easy, scattered across a country with some 1.4 Billion folk! But look at this headline⁸ :

_{Figure 4 - Now there is a headline for you, Biomarin, definitely the leader in this space (MPS treatments in terms of Enzyme replacement) already in China.}


Trust me, If Biomarin has a market there for MPS....you know we do too. I do hope we work with them one day..they are truly the leaders in this space and our joint pain reduction coupled with their enzyme replacement solution would indeed be a 1 - 2 knockout blow to this horrible but rare disease. As an aside, for those that attended, did you hear Paul R before at the very start of the meeting ask if there were any MPS sufferers in the room? The sympathy that that man had when he asked the question more than added a whole heap of weight in my books as to how genuine a leader we have here...very sympathetic.


NUMBERS

Love the numbers section, yes of course it's speculative, it's just my views, do you own research, come up with your estimates on the back of an envelope and don't be afraid to post them here or to comment...but these are my thoughts....Ok so let’s take a conservative approach. Even at just a quarter of 8% (that's the incidence of OA in China according to the study) of a population greater than 30 years of age would equate to a pretty nutty number of 40 million plus, discounting it again by 50% because I can, that’s still 20 million odd potential patients!

Now I wouldn't say we could charge them the standard $2500 AUD odd for each course, in fact it's prob a whole heap less, maybe only $300? It's still crazy type figures when you multiply that out! I leave it to you to do the maths. Then there is MPS..again...who knows what the true potential may be someday...maybe say ultra conservatively we help just 300 patients...probably we'd charge $15 K AUD for each, that's still a hefty $4.5 Million AUD at some point, per annum. I’m not getting carried away and I’m not even considering a single $ from China when I do my personal calc’s but I am thinking we don't really know the vast potential of this drug if things do work out, it’s maybe a large IF but what IF it happens in the next 3-5 years? I’m not saying IPPS is a panacea but I do feel it’s going to do a lot of good to a lot of people.

Am I still being too optimistic on the numbers? Maybe, maybe not. How many people are using intra articular costericroids? Around 7.8 million in the USA alone.There is no argument that China is stepping up in many areas and bio pharmacy is just one of them, China is on the PAR radar. Paradigmers, I’m not saying it’s a market we will be in tomorrow, next month or even a year from now...it’s a market that we could find ourselves selling into in maybe three years from now.


DISCLAIMERS

Well there are many, who knows when and if we will be present in such huge markets, who knows the hurdles, there well could be challenges we face and all may not go to plan, be prepared, it’s going to be exciting times ahead but these are only my views - DYOR as always..


Finally....

祝所有持有人好运

Zhù suǒyǒu chí yǒu rén hǎo yùn

(Good luck to all holders)



REFERENCES

1) https://www.ausbiotech.org/documents/item/40
2) https://www.*.com.au/this-is-why-chinese-companies-are-suddenly-targeting-australian-healthcare-businesses-2018-2
3) https://ecovis-beijing.com/foreign-investment-in-china-s-health-service-industry/
4) https://www.oarsijournal.com/article/S1063-4584(17)30430-2/fulltext
5) https://arthritisaustralia.com.au/managing-arthritis/living-with-arthritis/complementary-treatments-and-therapies/glucosamine-and-chondroitin/
6) https://onlinelibrary.wiley.com/doi/pdf/10.1002/art.39465
7) https://www.reuters.com/article/us-sirtex-medical-m-a-cdh/australias-sirtex-picks-1-4-billion-chinese-bid-over-varian-offer-idUSKBN1JA10F
8) https://www.biospace.com/article/releases/biomarin-announces-approval-of-vimizim-elosulfase-alfa-in-china-for-treatment-of-morquio-a-syndrome/