A Record-Breaking Deal for a Domestic Weight-Loss Drug:The2 Billion Deal and Its Implications

In the highly competitive field of diabetes and weight loss treatments,a major deal has captured the attention of the global pharmaceutical industry.On the evening of March 24,domestic Chinese pharmaceutical company Federal Pharmaceutical announced an exclusive licensing agreement with multinational pharma giant Novo Nordisk.The deal grants Novo Nordisk the rights to develop,manufacture,and commercialize Federal Pharmaceutical's triple-target GLP-1 drug,UBT251,outside of China.Under the agreement,Federal Pharmaceutical is eligible to receive a200 million upfront payment,up to1.8 billion in potential milestone payments,and tiered sales royalties.This deal is not only a significant financial opportunity for Federal Pharmaceutical but also a strategic move for Novo Nordisk to expand its portfolio in the diabetes and weight loss market.

However,the market's initial reaction was not as optimistic as one might expect.On March 25,when the stock market opened,Federal Pharmaceutical's share price plummeted,closing at HK14.68 per share,a drop of 11.78%,with a current market value of HK26.7 billion.This downturn was unexpected,especially considering the significant deal just announced.The reason behind the stock price decline might be related to Federal Pharmaceutical's 2024 financial results,which were also released.The company's revenue for the period was RMB13.759 billion,a mere 0.14%increase year-over-year,a far cry from the double-digit growth rates of previous years.The company's net profit attributable to shareholders was RMB2.66 billion,a decrease of 1.54%year-over-year,marking the first decline in the past five years.This financial performance overshadowed the excitement of the deal,leading to investor concerns.

In the broader context of domestic Chinese innovation in pharmaceuticals,the GLP-1 target for weight loss drugs has become a hotbed of activity.Companies like Hengrui Medicine and XianweiDa Bio have each packaged three GLP-1 assets and launched them overseas through the NewCo model(establishing new companies).Meanwhile,Chengyi Bio and Hansoh Pharmaceutical have granted the overseas rights to their oral small molecule GLP-1 products to AstraZeneca and Merck,respectively.These deals highlight the growing interest and potential of GLP-1 drugs in the global market.In comparison,Federal Pharmaceutical's deal stands out not only because of the highest upfront payment among similar transactions but also because of the buyer's profile.Novo Nordisk is not a newcomer to the field of diabetes and weight loss treatments;it is a well-established leader with a more focused area of expertise and fewer deals in the Chinese market.

In February of this year,Novo Nordisk filed a claim against Henry Medicine(KBP)for830 million,alleging that KBP had concealed clinical data.KBP,founded by local entrepreneur Huang Zhenhua,had seen a promising start when Novo Nordisk acquired one of its small molecule cardiorenal drugs for up to1.3 billion in October 2023.However,less than a year later,the drug failed in Phase 3 clinical trials.Novo Nordisk subsequently abandoned the drug,taking an800 million loss,which was a significant setback for the company.

The main battleground for GLP-1 drugs has long been dominated by two industry giants:Novo Nordisk and Eli Lilly.Both companies have launched blockbuster products—semaglutide by Novo Nordisk and tirzepatide by Eli Lilly—that have revolutionized the treatment of type 2 diabetes and weight loss.This intense competition has driven the development of GLP-1 drugs from daily to weekly formulations,from injections to oral medications,and from single-target to multi-target products.The focus has been on achieving better glycemic control and weight loss while ensuring drug safety,tolerability,and patient adherence.In 2024,the global sales of semaglutide and tirzepatide reached29.3 billion and16.5 billion,respectively,with semaglutide approaching the level of the world's top-selling drug.However,in terms of future pipeline products,Novo Nordisk appears to be at a disadvantage.

According to Eli Lilly's 2024 financial report,in the weight loss indication,its GLP-1 small molecule oral drug Orforglipron is expected to submit a marketing application in 2025.Additionally,the company's triple-target GLP-1/GIP/GCG receptor agonist Retatrutide will have Phase 3 data readouts.In contrast,Novo Nordisk's future contender against tirzepatide,the combination therapy CagriSema,is not expected to file until the first quarter of 2026.The company's recent Phase 3 clinical data for CagriSema,announced in December 2024 and March 2025,failed to meet expectations,leading to significant drops in its stock price.

The introduction of Federal Pharmaceutical's UBT251,a triple-target GLP-1/GIP/GCG receptor agonist,is a strategic move for Novo Nordisk.Currently,UBT251 has been approved for clinical studies in both China and the United States for the treatment of type 2 diabetes,weight loss,and chronic kidney disease.The Phase 1b clinical trial results in China showed that after 12 weeks of treatment,the highest dose group of UBT251 achieved a weight loss of 15.1%.This promising result positions UBT251 as a potential game-changer in the market and a significant addition to Federal Pharmaceutical's pipeline of innovative drugs.

Federal Pharmaceutical,the seller in this deal,is not a typical biotech startup but a well-established pharmaceutical company.Founded in 1990 and listed on the Hong Kong Stock Exchange in 2007,the company initially focused on antibiotic raw materials and later expanded into antibiotic formulations.In 2010,it began a comprehensive expansion into the insulin field.However,like many other companies in the industry,Federal Pharmaceutical has faced the pressure of centralized drug procurement in recent years.In 2024,the company's revenue from intermediates,raw materials,and formulations was RMB2.66 billion,RMB6.373 billion,and RMB4.728 billion,respectively,with year-over-year changes of 14.8%,-0.4%,and-5.9%.The profit from the formulation segment was halved due to price reductions caused by centralized drug procurement.

In response to these challenges,Federal Pharmaceutical has been actively investing in innovative drugs and exploring new business areas such as animal health,health care(health products,medical devices,and medical aesthetics).The future of UBT251 and its potential commercial value for the company remain uncertain,but this deal marks a significant step forward for Federal Pharmaceutical in its journey to diversify and innovate in the global pharmaceutical market.

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