Hengrui Pharma's Cancer Therapies: Regulatory Crossroads and Oncology Market Dominance

The journey of Hengrui Pharma's breakthrough combination therapy for hepatocellular carcinoma (HCC)—camrelizumab (a PD-1 inhibitor) and rivoceranib (a VEGFR inhibitor)—has been marked by both triumph and tribulation. While the FDA's second rejection in 2025 due to unresolved manufacturing issues at its Suzhou facility has cast a shadow over its U.S. prospects, the therapy's stellar clinical results and robust domestic market position in China position Hengrui as a compelling investment opportunity. This article explores how Hengrui's strategic resilience and the explosive growth of China's oncology market could outweigh regulatory hurdles and unlock global potential.

The Regulatory Crossroads: FDA Rejection and Manufacturing Challenges

The FDA's latest Complete Response Letter (CRL) for Hengrui's HCC combination stems from persistent manufacturing deficiencies identified during inspections of its Suzhou plant. Issues such as data integrity lapses, microbiological contamination risks, and raw material handling inconsistencies have stalled progress since 2024. While these challenges are operational rather than clinical—Hengrui's Phase 3 trial demonstrated a median overall survival of 23.8 months (vs. 15.2 months for Bayer's Nexavar)—they underscore the high regulatory bar for international approvals.

Hengrui's response has been proactive: it has resubmitted data addressing prior concerns and is engaging with the FDA to resolve new issues raised in January 2025. However, the path to U.S. approval remains uncertain. This delay highlights a critical divergence: while the FDA's scrutiny focuses on manufacturing, the therapy's efficacy is undisputed, and it has already secured first-line approval in China (Jan 2023), where HCC is the most common liver cancer.

Domestic Dominance: China's Growing Oncology Market

The FDA setback has had little impact on Hengrui's domestic standing. China's liver cancer drug market, projected to grow at a 20.6% CAGR from 2025 to 2030, is a goldmine. HCC therapies account for 37.4% of liver cancer drug sales, and Hengrui's combination therapy is a market leader, backed by strong clinical data and early regulatory wins.

Key drivers of this growth include:
- Rising HCC incidence: Chronic hepatitis B infections, a major risk factor, affect over 90 million Chinese, fueling demand for advanced therapies.
- Innovation shift: Hengrui's transition from generics to novel therapies has boosted revenue. Its innovative drugs (including camrelizumab) contributed over 6.6 billion RMB in sales in 2024 alone.
- Policy tailwinds: Government initiatives like the National Centralized Drug Procurement (NCDP) are expanding access to cost-effective treatments, with Hengrui's therapies positioned to capitalize on such programs.

The Global Playbook: Beyond the U.S. Market

While the FDA's door remains ajar, Hengrui is pivoting to other markets. Notably, Elevar Therapeutics plans to submit the combination to the European Medicines Agency (EMA) in September 2025, where regulatory standards may be more lenient. Europe's HCC market, projected to hit USD 480.8 million by 2030, offers a lucrative alternative.

Moreover, rivoceranib—unaffected by the FDA's camrelizumab manufacturing concerns—could be submitted alone in Europe, broadening its commercial potential. In Asia, India's fast-growing oncology market (projected to hit USD 480.8 million by 2030) presents another opportunity.

Investment Thesis: Why Hengrui Still Presents a Compelling Opportunity

Despite the FDA's hurdles, Hengrui's strategic resilience and domestic market strength make it a compelling buy:

1. Clinical Efficacy: The combination's 36% reduction in mortality risk in HCC patients is unmatched by competitors like Roche's Tecentriq-bevacizumab or AstraZeneca's Imfinzi-Imjudo.
2. China's Market Leadership: With 61.8% of its liver cancer sales derived from targeted therapies, Hengrui is well-positioned to capture the USD 707.9 million China HCC market by 2030.
3. Global Diversification: Europe and Asia offer pathways to offset U.S. delays, while partnerships like Elevar's USD 600 million deal signal global confidence in the therapy's value.
4. Valuation: At a trailing P/E of 15.2x (vs. 22x for peer Innovent Biologics), Hengrui is undervalued given its pipeline depth and operational focus on resolving manufacturing issues.

Risks and Considerations

• Manufacturing Resolution Timeline: Delays beyond 2025 could strain investor confidence.
• Competitor Pressure: Roche and BMS are advancing rival therapies, though Hengrui's data edge provides a moat.
• Regulatory Variability: EMA approval is not guaranteed, though its standards may be more favorable than the FDA's.

Conclusion

Hengrui Pharma's FDA stumble is a speed bump, not a roadblock. Its leadership in China's booming oncology market, coupled with global diversification strategies, positions it to capitalize on a USD 1.77 billion global HCC market by 2033. Investors who prioritize long-term growth over short-term regulatory noise will find Hengrui a compelling play on one of the most promising sectors in healthcare. The time to act is now—before the market catches up to its potential.