context: Stronger pharma R&D and domestic generics of innovative originals are part of Beijing’s affordable universal healthcare aim and plan to become a ‘global pharma powerhouse.' Centralised procurement of drugs and medical consumables has significantly cut prices and encouraged domestic producers in previously foreign-dominated markets.
Centralised procurement has driven foreign originals to 'a patent cliff', reports Sailing Health. Previously, off-patent foreign originals could safely retain their dominant position in the Chinese market. The reasons were their perceived higher quality and the underdeveloped domestic generics market.
Now fierce competition in centralised procurement has within its first year, according to China Health Insurance Research Association 中国医疗保险研究会,
- significantly decreased procurement of unselected foreign originals while boosting procurement of selected generics
- eliminated excessive markups
- weeded out low-quality generic drugs
- standardised dosages
In the first five procurement rounds, foreign original producer bids only won between a 10 and 32 percent share of all individual tenders. Bidding prices of 22 off-patent originals (including those from Bayer, Pfizer, Sanofi) dropped on average by more than 43 percent.
PRC’s shifting pharma policy landscape poses new challenges for foreign original producers, notes Yu Lihua 俞丽华 Cytiva Greater China regional lead. As off-patent originals now enter cost-competitive territory more quickly, innovation cycles have to keep up. Marketing capabilities also need to improve and be more efficient now that foreign brand names alone no longer guarantee sales. To accommodate these challenges, Yu recommends that multinationals overhaul their strategies for the Chinese market, especially in the areas of innovation R&D, end-of-patent drug divestment, suitable marketing models and shift their focus from being 'product-centric' to being more 'patient-centric'.