China: Pharmaceutical Market Access

Pacific Bridge Medical2013 White Paper

China: Pharmaceutical Market Access

www.pacificbridgemedical.com

Pacific Bridge Medical2013 White Paper

China: Pharmaceutical Regulations

Copyright © 2013 Pacific Bridge Medical. All rights reserved. This content is protected by US and International copyright laws and may not be copied, reprinted, published, trans-lated, resold, hosted, or otherwise distributed by any means without explicit permission. Disclaimer: the information contained in this report is the opinion of Pacific Bridge Medi-cal, a subsidiary of Pacific Bridge, Inc. It is provided for general information purposes only, and does not constitute professional advice. We believe the contents to be true and accurate at the date of writing but can give no assurances or warranties regarding the ac-curacy, currency, or applicability of any of the contents in relation to specific situations and particular circumstances.

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Map of China


China has become the 3rd largest pharma market globally since 2011

China Pharmaceutical Market Size

USD Bn (@ex-factory value)

CAGR:21%

(‘03-’11)

CAGR:19-22%(‘11-’15)

Source: IMS Health, MENET China

Top 4 Pharmaceutical Markets, 2011 (Estimated)

1. US $310 billion

2. Japan $102 billion

3. China $41 billion

4. Germany $40 billion

Note: IMS data tends to under-estimate China’s market


The pharma market is still relatively concentrated in coastal areas,especially for MNCs

Sales Distribution by Area

Top 10 SalesGuangdong 11.6%Zhejiang 7.1%Jiangsu 6.8%Shandong 6.4%Liaoning 5.8%Shanghai 5.3%Beijing 4.5%Hubei 4.2%Hebei 4.2%Henan 4.0%

Source: China Association of Pharmaceutical Commerce. ChinaGovernment Statistics, Data Analysis

Entire Market~52%

MNCs>70%


Multiple government agencies areresponsible for policy-making and for monitoring the industry

* This org structure is replicated at provincial level

State agencies governing the pharmaceutical industry in China*

RegulatoryDivision

Ministryof Health MoHRSS NDRC

Planning andFinancial Division

Drug Policy andEssential DrugPolicy Division

SFDA

RegulatoryDivision

DrugRegistration

Division

MedicalInsuranceDivision

PricingDivision

PharmaceuticalsPricing

Division

• MoHRSS: Ministry of Human Resources and Social Securities

• NDRC: National Development and Reform Commission

• SFDA: State Food and Drug Ad-ministration


Hospitals are the main channel of drug dispension.The OTC market is growing faster. TCMs take about 36% market share

Source: SFDA Statistics, MOH Statistics, Data Analysis

Sales Distribution by Channel Sales Distribution by Drug Type -- OTC Market

Sales Distribution by Drug Type -- Hospital Market

11%

26% 63%

12%

49%39%

17%

35%

47%

* Others: small street clinics, etc *** Others: health foods/tonics/ bio-tech drugs, etc

** Others: bio-tech drugs, etc


Key Characteristics of ChinaPharmaceutical Market

China pharma market is growing fast, but it is still a self-pay market

Generics dominate market by volume with lower price, market share of value keeps growing

One product with dozens of manufacturers (for example: 29 Erythropoietin producers)

Typical China Rx “blockbuster” is about USD 100 million in annual sales

The pharma market is still relatively concentrated in coastal areas, especially for MNCs

Hospitals are the main channel of drug dispensing. The hospital market will be shifting to medium and small cities

Rx market represents about 75% market share. The OTC market is growing faster.

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Key Characteristics of ChinaPharmaceutical Market (cont.)

WMs (Western Medicines) represent about 64% market share and TCMs (Traditional Chinese Medicines) take about 36% market share

The level of spending per patient is significantly higher in large hospitals

Low pricing and kickbacks to doctors are the major marketing strategies for most of local companies

Government policy of pricing restrictions. Price cut has significant impact on drug sales

Health insurance reform keeps on going

Drug expenditure per capita in urban areas is much higher than that in rural areas

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Key Characteristics of ChinaPharmaceutical Market (cont.)

Urban and rural areas exhibit slight difference in disease patterns

Higher infectious disease rates in rural areas

With the industry modernization, pollution becoming a serious problem in some areas; Respiratory diseases have high prevalence (even growing in some regions)

Higher cancer and cardiovascular disease rates in urban areas

With income increasing, the price sensitivity is going down; people are more brand selective

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Navigating the market in China is no easy task, as the value chain involves a complex set of stakeholders

Illustration of the business of Rx commercialization in China

Approval of New Drug

(RDL* &)Approval of Drug Price

Tendering& Bidding

HospitalListing

PhysicianPrescribing Dispensing

Key constituents -• Drug manufacturers• Distributors• Central government: various agencies• Provincial governments: various agencies• Hospitals: various classes and levels• KOLs and physicians


A series of provisions and guidelines regulate drug development andapproval in China

Scope of Regulations• Approval for conducting clinical trials (IND)• Approval for new drug manufacturing• Approval for marketing license (NDA)• Registration supplements• Renewal of license

Type of Drugs• New drugs• Generic drugs• Imported drugs


A series of provisions and guidelines regulate drug development andapproval in China

• Also sub-classes within each broad class• Since 2010, Class 6 has been separated out and subject to independent review and approval process under Generic Drugs

TraditionalChinese

Medicines andBotanical Drugs

• 11 classes

Chemical Drugs

1. Molecule has not beenapproved anywhere globally

2. New route of delivery which has not beenapproved anywhere globally

3. Molecule has been ap-proved overseas but not in China yet

4. New salts of an approved molecule

5. New dosage forms of an approved molecule

6. Generics

Biologics

• 15 Classes


Drug Applications

Generic Drug Applications

Generic applications can be used for drugs that already have National Standards in China or are listed in the Chinese Pharmacopoeia

Class 6 of chemical drugs, Class 15 of preventative biological products, Class 15 of therapeutic biological drugs, and Class 9 of traditional Chinese medicine and natural drugs fall into this category

Imported Drug Applications

All drugs manufactured outside China must be registered via the imported drug application, even if they are new drugs.

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Registration Supplements

For changes to already-approved drugs

Total of 33 kinds of supplements

17 of these require the SFDA’s approval

10 situations require approval from the provincial drug authority (PDA), or alternatively can just be filed for record (without approval) with the SFDA

Final 6 situations can be filed for record with the PDA

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Application documents for Newdrug registration

The SFDA has issued a detailed documentation list for chemical drugs, biological products, and traditional Chinese medicine

The SFDA has issued technical guidance for some document sections

Adopted CTD format for submission since 2010

If the products are imported, the SFDA will also accept drugs prepared in accordance with ICH guidelines

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Data requirements are itemizedaccording to drug classificationdesignated by SFDA


For an imported new drug, it takesapprox 36– 42 months from INDsubmission to NDA approval

Step 1:

Application forconducting clinical trials (INDApplication)

Step 2:

Conducting clinical trials

Step 3:

Application for imported drug registration(NDA Review & Approval)

Takes 7 - 10 months

Timeline pending upon the scale of clinical development, which in turn depends on the New Drug Classification

Takes 7 - 15 months

(SFDA, NSCPBP)

(Applicant)

(SFDA; NSCPBP)


Drug development in China –IND approvals

IND Approvals in China

2006 2007 2008 2009 2010New molecules/formulations (local)

N/A N/A N/A 288 141

Generics (local) N/A N/A N/A 196 153

Imported Drugs N/A N/A N/A 320 308

Total 1,426 758 581 804 602

Anti-corruption reforms in 2006-2007 began to set moreglobalized standard


It takes up to 15 months for a brandto be prescribed after receivingSFDA’s approval

Approval of Drug Price Provincial Bidding Hospital Listing

4 - 5 months

• A drug must obtain its ap-proved retail price before entering the bidding process

• If the drug is on the NRDL, its price is set by NDRC• If the drug is not on NDRL, the manufacturer must get its retail price approved by provincial government s (The Pricing Bureau)

• Approx. 3 months to get price approval at the prov-ince where the company is registered

• Additional 1-2 months to get price at other provinces

• The process needs to be carried out at each prov-ince individually

3 - 5 months

• Each Province will select a few (2-5 suppliers) for each drug (molecule, dos-age form, dose strength) – the bidding process

• The bidding schedules (a few times a year) are set by provincial governments

• Whether or not the drug is or not on RDL, bidding process is a MUST before entering hospitals

• Manufacturers need to go through the bidding process province by province

• Each bidding process takes approx. 3 months

3 - 5 months

• Once a product wins bid-ding at a province, it will then need to obtain listing by hospitals

• Hospital Listing is the contract that a hospital has agreed to carry the product


NDRC implemented 2 price-cuts in 2011, which was very unusual

1st price-cut in 2011

• In late March

• 162 molecules and close to 1,300 dosage form specs

• Infectious, cardiovascular and circulatory diseases, antibiotics

• Approx. 20% cut on retail price

2nd price-cut in 2011

• In September

• 80 molecules

• Hormones, endocrine and nervous system disorders

• Approx. 14% cut on retail price


Drug pricing in China is based on a combination of free-market andstate- control mechanisms

Essential Drug List – EDL• Issued by MOH• Mainly old generic drugs• 100% reimbursed by the government• Retail price set by NDRC

List A drugs – NRDL• Issued by MoHRSS• Mainly old generic drugs, over-laps with EDL• 100% reimbursed by the government• Retail price set by NDRC

List B* drugs – NRDL and PRDL • MOHRSS proposes National RDL List B, consisting of innovative and premium-priced drugs• Provinces may substitute 15% of List B to address local need• Retail price set by NDRC and Provincial Pricing Bureau (PB)• Patient’s co-pay ranges 10%-90%


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China: Pharmaceutical Market Access

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Transcript of China: Pharmaceutical Market Access