Foreign pharma faces changing landscape
Print Edition
Multinational drug companies need to be more aware of the rapidly changing market in China and adjust their prices and products accordingly, a new study by consultancy Ernst & Young recommended.
“Companies will need to take a closer look at local regulations when introducing new medicines,” said Sharry Wu, a partner of EY China’s advisory services.
Pharmaceutical consultancy IQVIA estimates that China’s drug market will be valued at between US$140 billion and US$170 billion by 2023. Last year, the US$137 billion market held 11.4 percent of global sales.
A centralized bulk procurement program operated by the China National Medical Product Administration began in 11 cities last November in an attempt to drive down prices for generic drugs.
EY said it expects more multinational companies to enter the bidding for the second round of bulk procurement in the next few months.
Shirley Zhou, director of EY China’s advisory services, said innovative drugs that command high premiums in first- and second-tier cities may require more flexible pricing to ensure sales. Multinational drug companies may need to pay more attention to lower tier cities, she added.
Some pharma firms have already reduced the size of their sales teams in larger cities, switching their focus to smaller locales.
The best-selling products of foreign drug companies are often off-patent drugs, which in some cases comprise about 80 percent of sales. Those companies face competition from generic drug makers that make and sell the same medicine at lower cost.
In response to the government’s determination to cut drug prices and save on health insurance costs, overseas drug companies must lower their operational costs and ensure compliance at all levels, Wu said.
Many of those drug makers are already moving early stage research and development into China. Earlier this month, German drug company Boehringer Ingelheim entered into a collaboration with Shanghai East Hospital to conduct early stage clinical trials for cancer drugs.
Zhang Wei, head of medicine at Boehringer Ingelheim China, said the two parties complement each other in terms of project management and research capability.
Li Jin, director of oncology at the hospital, said that multicenter trials are crucial for new drugs to reach the domestic market faster.
“It will also improve the research and development capability of local staff and be good for patients,” he said of the tie-up.
Clinical trials at multiple locations covering a wider demographic are viewed as a more comprehensive way to evaluate drugs. Previously, such research was carried out in China only after second- and third-phase clinical trials overseas.
Including China in early-stage trials may mean that new drugs will be available in China at almost the same time as overseas markets.
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