Chinese Pharmaceutical Pushes into US Generics Market
Chinese pharmaceutical companies are proving their place in the US generic drugs market, with a rising number of approvals for copycat medicines almost doubling in the past year.
In 2017, Chinese drugmakers won US Food and Drug Administration approval for 38 generic drugs, cheaper versions of treatments for which patients have expired, up from 22 a year earlier, writes the Financial Times. China’s largest pharmaceutical company, Jiangsu Hengrui Medicine became the lastest to win approval this month, for its generic of anesthetic desflurane.
This reported number of approvals is small in comparison to India, the world’s largest exporter of generic drugs with $16.4 billion of offshore sales in 2016, which last year accounted for 300 of the 927 generic drugs granted US approval. However, the first China-made generic drug was granted US approval in 2007, a decade after India.
Chinese manufacturers have long made low-cost generics for domestic use, but sales in the US are a way to boost their revenues and prove their quality to Chinese patients who place greater trust in imported drugs.
A rise in generics exports contributed to an 8% year-on-year rise in exports of western medicines from China in 2017 to $3.5 billion, even though that figure does include drugs made by multinationals in China.
“From a manufacturing standpoint, many Chinese facilities have approval from the FDA or European drug authorities, so are on the same levels as overseas companies,” said John Lin, a partner at consultancy Roland Berger.
In the past year, Jiangsu Hengrui Medicine has secured half a dozen FDA approvals, including two that the first generic alternatives to existing products and command higher margins than other, later generics.
The company announced that it will release its annual results this month. It predicts that US approvals have helped its overseas revenues grow at “near to double digits” last year, explained Zhang Lianshan, the company’s president of global research and development.
The price difference between a branded drug and a generic one can be significant. According to the US National Average Drug Acquisition Cost database, the cost of a single tablet of Lipitor, a statin that lowers the risk of heart attack, is more than $10 for a $20mg pill, whereas the generic form costs just 6 cents. Prices have fallen in the US generics market in the past year due to consolidation among drug retailers, tightening margins for manufacturers. However, Hengrui believes exports can also boost domestic sales.
“You can generate revenue outside of this country but also you give the Chinese patient’s assurance quality-wise and that’s good for sales in China,” explained Zhang.
As a result, Hengrui is considering assembling its own sales force in the US rather than relying on third parties, as the company seeks to overcome the advantage enjoyed by India where the “environmental costs are lower and wages are lower.”