Fast and furious: What will the fast tracking of approvals for key drugs mean for China's pharma market?
China has long been a magnet for pharmaceutical multinationals looking to offset flattening growth in established markets
The country offers rapid economic development, a population of around 1.4 billion with limited access to cutting-edge medicine, and changing lifestyles that have raised health expectations. Expanded access to state-funded healthcare, population aging and a growing burden of chronic disease are creating new opportunities for innovative drugs alongside low-cost generics.
Releasing that potential has not been easy, though. Universal healthcare means cutting costs, particularly given China’s recent economic slowdown. One strand of pharmaceutical policy has been to raise standards for locally manufactured generics and drive their uptake through procurement strategies, while bearing down on prices of higher-cost drugs.
These and other moderating factors led IQVIA recently to predict that China’s compound annual growth in pharmaceutical spending would slacken to 3-6% in 2019-2023, compared with 8% in 2013-18.
Nonetheless, long-term prospects remain bright. One reason is a series of regulatory reforms that have significantly altered the market access landscape. They include better patent and data-exclusivity protection for medicines; tariff concessions on imported drugs; and an overhaul of what used to be, for multinationals at least, an intractable system of drug evaluation and approval.
AstraZeneca has shown its appreciation by securing the first approval worldwide for roxadustat, a specialist anaemia treatment developed with FibroGen, in China while the drug was still in Phase III trials in the US and Europe. That is a far cry from the lean years between 2001 and 2016, when only 133 of 433 new drugs approved by the US Food and Drug Administration made it to the Chinese market.
The centerpiece of the drug-approval reforms, which started in August 2015, is a priority-review pathway for innovative and other medicines, such as treatments for children or the elderly, for HIV, tuberculosis, viral hepatitis, rare diseases or malignant tumours.
The National Medical Products Administration’s Center for Drug Evaluation (CDE) recently said new drug applications accepted for priority review were now being processed in an average of 59 working days, compared with evaluation times of up to one or two years pre-reform.
In August 2018 the CDE went as far as publishing a wish list of 48 drugs, many for cancer or rare diseases, that were already approved in the US, EU or Japan, and were urgently needed in China. These products would be eligible for priority review based on existing data, providing there was no evidence of ethnic sensitivity around safety and efficacy.
A more permissive attitude to clinical-trial data from abroad is another key plank of the reforms. Previously pharmaceutical companies had to re-run clinical studies in China, further widening the drug lag with more established markets.
Access to Innovation
The net impact of these changes is that Chinese patients now have access to innovative medicines such as the cancer immunotherapies Opdivo (nivolumab, Bristol-Myers Squibb) and Keytruda (pembrolizumab, Merck); the hepatitis C treatment Epclusa (sofosbuvir/velpatasvir, Gilead); or the human papillomavirus vaccine Gardasil 9 (Merck).
Of course, regulatory approval is only part of the story. Cutting-edge medicines may need to weather deep price cuts if they want to be on the national reimbursement drug list and widely available. Whether universal healthcare can sustain premium-priced western medicine in the long term, even at heavily discounted prices, remains to be seen.
One company grasping the nettle of drug pricing and access is Pfizer, which launched a pay-for-performance programme for its breast cancer drug Ibrance (palbociclib) in collaboration with the People’s Insurance Company of China and MediTrust Health. And even price cuts have their compensations in volume gains, as companies such as Roche found when forced to slash prices as a condition of access to state health insurance.
The Chinese market is undoubtedly opening up, not just at the regulatory level but through distribution trends such as the growing importance of retail pharmacies, private hospitals, drugstores and e-commerce as alternative channels to public hospitals in top-tier cities.
Moreover, China remains the world’s second largest pharmaceutical market with total spending of $137 billion in 2018, according to IQVIA data. That makes it a sizeable opportunity for companies prepared to go the distance. In doing so, they need to bear in mind future competitive dynamics, such as the gathering strength and quality of the local generics industry and China’s long-term ambitions as a hub for pharmaceutical innovation.
With properly informed and tailored strategies, taking into account the pace of regulatory or political change and a diversifying customer base, multinationals can build a commanding presence in a pharmaceutical market that still has much to deliver.
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