China Post Securities released a research report stating that PROTAC (Proteolysis Targeting Chimera) possesses excellent mechanistic advantages, though the overall industry remains in an early-stage development phase. While target development in oncology is well-defined, competition is intensifying, whereas the oral autoimmune drug market—particularly in dermatology—remains relatively untapped with significant growth potential. The report attributes the lack of widespread industry prosperity largely to the limited number of companies with top-tier development capabilities, emphasizing that technological barriers and execution efficiency are key factors to consider.

Key insights from China Post Securities include:

1. **PROTAC's Advantages and Current Stage**: PROTAC leverages a bifunctional small molecule to bring target proteins into proximity with E3 ubiquitin ligases, enabling degradation via the ubiquitin-proteasome system (UPS). This theoretically allows targeting of "undruggable" proteins, overcoming drug resistance, and offering high selectivity with low doses. However, approximately 80% of clinical-stage PROTACs focus on cancer, reflecting oncology's dominance. The industry's early-stage status is evident in the prioritization of commercial efficiency (e.g., ARV-471) over optimized molecular design, contributing to mixed Phase 3 efficacy results.

2. **Autoimmune PROTAC's Untapped Potential**: Unlike oncology, the autoimmune market—especially for oral therapies—presents a "blue ocean" opportunity. For instance, psoriasis, a $27 billion market in 2023, saw oral drugs account for just 9% ($2.5 billion). Projections (e.g., Takeda’s U.S. estimates) suggest oral therapies could capture 33% market share by 2034. PROTAC’s potential lies in addressing unmet needs with biological-like efficacy and safety.

3. **Critical Success Factors**: - **Technological Barriers**: Maximizing PROTAC’s potential requires targeting clinically and genetically validated pathways, particularly those resistant to other modalities. Identifying ligands for challenging proteins demands elite expertise, explaining the scarcity of leading developers. - **Execution Efficiency**: Limited target options heighten early-stage competition, making clinical development efficiency decisive.

**Related Stocks**: BEIGENE (06160), HENGRUI PHARMA (01276), Haisco Pharmaceutical (002653.SZ), CSPC PHARMA (01093), SIMCERE PHARMA (02096).

**Risks**: R&D failures, heightened competition, geopolitical uncertainties, and policy changes.