The COVID-19 pandemic swept across the globe. Although the pharmaceutical and medical industries faced many challenges during the pandemic, with the domestic situation stabilizing and the overseas pandemic still spreading, more perspectives view this pandemic as a long-term opportunity for the industry. However, the currently visible market changes mainly focus on short-term incremental areas after the outbreak, such as test kits and protective products.

　　Currently, there are continuous positive developments in the research and development of domestic COVID-19 vaccines, but there is no latest news on the development of specific drugs for COVID-19. After the pandemic has somewhat "activated" the pharmaceutical industry globally, can biopharmaceutical innovation show new development trends in the future? In this global competition involving enterprises worldwide, can domestic pharmaceutical companies overtake on curves and achieve "leading" positions?

　　Short-term Incremental Opportunities

　　Dr. Tang Jian, a returning pharmaceutical entrepreneur and biopharmaceutical R&D expert, told the Daily Economic News reporter that the current impact of the pandemic on the pharmaceutical industry mainly lies in two short-term incremental opportunities: nucleic acid and antibody test kits, and protective products. In the long run, the impact of COVID-19 on the overall environment will be reflected in increased societal attention to the medical and pharmaceutical industries, further expansion and enrichment of public medical resources, expansion and improvement of the medical system, attracting social resources into the medical field, and possibly some concentration towards telemedicine and other internet-based medical services.

　　"Due to the high attention from governments worldwide, the development of COVID-19 vaccines has made relatively good progress. Infectious disease outbreaks are time-sensitive, so pharmaceutical companies take a cautious approach to developing drugs for the pandemic. The SARS virus that suddenly appeared in 2003 still has no specific drug because almost no pharmaceutical companies developed targeted drugs. The situation is similar for COVID-19; companies observe and evaluate the possible duration of the pandemic, the demand intensity for specific drugs, and the time and financial costs required for development. It is not ruled out that companies engaged in antiviral research may immediately start research on drugs targeting the coronavirus or conduct improvement research on existing drugs. However, starting entirely new specific drug development for COVID-19 is likely very difficult," said Tang Jian.

　　In the early stages of the pandemic, due to production capacity constraints, there was a significant shortage of protective products such as medical masks and protective clothing, and there was also a large gap in daily-use protective masks and test kits. However, with the continuous increase in production capacity and the layout of protective product production lines by many non-medical device manufacturers such as Foxconn and BYD, the situation has been effectively alleviated. The supply capacity of nucleic acid testing companies is also continuously improving.

　　Tang Jian stated that the current pandemic has brought short-term incremental opportunities for nucleic acid test kits, antibody test kits, and protective products. As the domestic pandemic gradually stabilizes, many test kit manufacturers and protective product producers are turning their attention to overseas markets. He believes that companies with domestic and international registrations, high automation levels, and diversified protective product pipelines have better development prospects in the future industry.

　　Long-term Innovation Opportunities: Internet and Artificial Intelligence

　　A report by Ernst & Young (China) Corporate Consulting points out that in the medium to long term, the pandemic is subtly influencing the pharmaceutical and medical industries, potentially leading to changes in industry development priorities and business model reshaping.

　　Ernst & Young believes that from the government's perspective, due to the significant impact of this pandemic, the pain points of traditional healthcare have been fully exposed, such as scarce and uneven medical resources and possible limitations on medical services. It is expected that the government will pay more attention to the development of the pharmaceutical and health industry after the pandemic. From the current policy direction, innovative medical systems and insurance payment models aimed at grassroots levels, such as hierarchical diagnosis and treatment, medical consortiums, family doctor systems, and community first diagnosis, will gain rare development opportunities.

　　At the hospital end, information technology reform is expected to develop rapidly. Ernst & Young states that since the construction of internet hospitals was still in its early stages, internet hospitals played a very important role during this pandemic. "Promising future policies include deploying internet diagnosis and consultation services, relaxing regulations on online prescription sales, and possibly including medical insurance payments in the internet hospital system. These will become important forces driving internet hospitals to achieve an ecological closed loop. We believe the internet will deeply integrate into hospital processes in the future, building hospitals and medical consortiums into true internet hospitals that can not only perform simple consultations but also offer functions such as joint consultations, report interpretation, and online medical insurance settlement."

　　Regarding the development opportunities brought by internet healthcare in the post-pandemic period, a research report by Soochow Securities points out that internet healthcare will accelerate prescription outflow and promote the accelerated integration of the pharmacy industry. The report states that currently, China's pharmaceutical retail market accounts for about 23.5% of the entire pharmaceutical terminal market, which still has a large gap compared to developed countries. Due to policy guidance to reduce the proportion of drugs in hospitals, prescription outflow maintains a stable outflow annually. Data shows that from 2010 to 2018, the drug proportion in public hospitals dropped from 41.8% to 28.7%, and drug revenue growth slowed from 16.3% to 1.4%. "We believe the trend of prescription outflow is set, and post-pandemic internet plus medical insurance policies will further accelerate this process, benefiting chain pharmacies."

　　On the other hand, during this pandemic, the "AI + drug development" track has gained increasing attention. In January this year, Alibaba Cloud announced free access to all AI computing power for global public research institutions to accelerate new drug and vaccine development for COVID-19; in February, the Ministry of Industry and Information Technology issued a proposal to leverage artificial intelligence, optimize AI algorithms and computing power, and assist virus gene sequencing, vaccine and drug development, protein screening, and other drug research efforts.

　　Regarding the use of AI in drug development, Tang Jian pointed out that current trends mostly remain at the news report level, with no concrete results yet. AI companies themselves are not drug developers but can cooperate with pharmaceutical companies to help improve drug development efficiency.

　　Besides potentially playing a role in new drug and vaccine R&D centers, the Ernst & Young report points out that AI can also effectively shorten the time to issue diagnostic reports in auxiliary diagnostic systems, assist diagnosis and treatment, and literature searches. It also plays an important role in reducing cross-infection and event warnings. However, Ernst & Young also mentioned that AI's impact during the pandemic remains limited and has not completely eliminated the pandemic's effects on hospital operations and patient visits.

　　Pharmaceutical R&D: Still Recommended to Focus on Strength Areas

　　Although the global spread of COVID-19 has disrupted people's lives and economic order worldwide, the highly anticipated new drug development field currently seems powerless to reverse the situation. A statistic by Sina Medicine in May this year showed that in the first four months of 2020, there were 139 cooperation deals related to COVID-19 drug development. Among these, 55% were non-government-led, with funding mainly from enterprises.

　　Among these 139 cooperations, about 56% were in early R&D stages, about 9.3% in clinical trial stages, and the rest in "production supply," "services," "sponsorship," etc. So far, except for occasional good news about COVID-19 vaccines, the development of specific drugs remains a "long road."

　　Tang Jian told the Daily Economic News reporter that due to the time-sensitive nature of the pandemic and the lengthy new drug development process, no specific SARS drug has appeared to date. Domestic investment institutions are more adept at investing in "model" projects, and investment in industries including drug development has slowed since 2018.

　　Tang Jian believes that the possible directions for new drug development related to COVID-19 are mainly teams with a background in coronavirus research conducting renewed studies; or conducting research on new indications for old drugs. Starting entirely new special drug development may have a "low probability of success."

　　"Although everyone is very concerned about the pandemic, what hasn't changed is that cardiovascular and cerebrovascular diseases, diabetes, and major cancers still rank as the top priorities in our country. The number of patients is very large, and the demand for drugs is also very high. Before the pandemic, most companies developed drugs around these indications, and they will continue to do so after the pandemic. For example, hypertension affects two to three hundred million patients nationwide, diabetes has over one hundred million patients, and the dreaded cancers—these disease areas are full of expectations for new drugs, and companies will still focus on these."

　　He stated, "The pharmaceutical industry still cannot meet the people's demand for good, high-quality medicine; this contradiction has always existed. But we are not just watching helplessly without trying to solve it. Each pharmaceutical company will adapt to market and macro-environment changes based on their own situation. Companies must have strong adaptability, adapt to the big environment, and focus on their own strengths and expertise. They need a clear understanding of what they can and cannot do, and should not recklessly chase trends and lose their original strengths. Companies must have their own specialties and patience. The pharmaceutical industry is a high-investment, long-cycle industry, and companies must adapt to this rule."

　　"Pharmaceutical development will maintain its original pace. Capable companies that have previously worked on antibiotics or have particularly strong R&D and financial strength may try to develop COVID-19 drugs. But for more small and medium-sized enterprises, they will continue doing what they were originally doing because the pandemic will eventually pass. For example, our company continues to focus on diabetes and cancer, as more patients domestically and internationally are still expecting continuous new drug developments in these fields," said Tang Jian.

　　Regarding whether the traditional Chinese medicine industry, which performed outstandingly during the pandemic, can use this opportunity to go abroad and enter the high-end markets in Europe and America, Tang Jian believes that because the evaluation systems of traditional Chinese medicine and Western medicine are not yet compatible, it is difficult to see traditional Chinese medicine truly enter the European and American markets in the short to medium term.