Opportunities and Challenges in the Era of Generic Drugs

发布日期:2014-11-13访问次数: 信息来源:menet字号:[ ]

  The global pharmaceutical industry appears to be so profitable overnight. During the five-year period from January 1, 2012 to December 31, 2016, as many as 631 patented drugs shall have expired around the world. The coming of the peak time of such expirations of the patented drugs suggests that those multinational pharmaceutical giants which have developed and controlled such drugs are bidding farewell to a golden time of as long as over 20 years and the golden residuals, which are available in large amounts, are believed to be building up a “city of generic drugs” with a brand-new pattern. The global pharmaceutical industry may undergo changes due to the generic drugs. Would it be possible for China to be upgraded from a big country of generic drugs to a powerful country of generic drugs?
  The Best Opportunities
  It is known to all that in the world today, any type of medicine that had benefited the mankind was created hard and expensively. There’s strict screening process for the R&D of new drugs according to the globally recognized practice. During the lab test stage in the beginning, researchers need to collect nearly 10,000 types of compounds for one-by-one tests and eventually, a new drug would be able to be developed therefrom. It takes 12 to 13 years on average for each type of new medicine to be developed starting from the laboratory tests to the clinical application. According to the data provided by the Pharmaceutical Research and Manufacturers of America, its 29 member multinational companies make a total investment of over US$ 100 billion in the R&D of new drugs every year, accounting for 20.5% of their annual sales revenues, and the average R&D cost of each type of new drug amounts up to US$ 1.2 billion. Another tracking study indicates that pharmaceutical companies can manage to retrieve the cost on only 3 out of every 10 types of drugs and only 1 out of 25,000 compounds makes money.
  That’s why the original new drugs are kept under strict protection by the international patent laws. However, once the patent protection period of certain years expires, other companies may produce generic drugs by copying the reference listed drugs with expired patent protection. The selling prices of the generic drugs, which have no awesomely high R&D cost, are certainly much lower than the reference listed drugs. And the sales volumes and profits of the reference listed drugs usually slump due to such reasons. That is the so-called “cliff moment” of the reference listed drugs.
  As for those companies that command the reference listed drugs, this appears to be a saddening and painful moment. As for those generic drug companies, which have long been expecting this moment, whether or not their wish to pick up a piece of “gold” falling down the cliff together with the patents can be fulfilled depends on if they have been fully prepared and capable enough. As for the ordinary patients, they can enjoy high-quality medical treatment at lower cost thanks to the generic drugs with proven qualities.
  In fact, as early as 2012, Pfizer, the largest pharmaceutical company in the world, began to suffer from the “pains”.
  That was doomed to be a “cliff moment” that would attract global attention. On November 30, 2011, Liptor, a patented drug noted for the largest sales volume in the world, had its patent protection term expired in the US. Liptor, a cholesterol-lowering drug, has been a myth of the time as it is the only star drug with the sales volume having exceeded US$ 100 billion around the world. During the peak time, the drug created a contribution of up to US$ 13 billion to Pfizer’s annual sales volume.
  Even Liptor couldn’t escape the curse of the “patent cliff”. On July 31, 2012, Pfizer released its financial statement in Wall Street, indicating that its net profit in Q2 of the current year had increased by 25%. But in the meantime, it clearly pointed out that such profit growth was due to the significant reductions of the production cost and expenditures on marketing and reorganization, which have helped offset the sharp slump of Liptor’s sales volume as a result of the generic drugs’ competition. In Q2 of 2012, Liptor’s sales volume in the US had slumped by 79% as the amount had fallen from US$ 1.4 billion in the same period of last year down to US$ 296 million. Meanwhile, its global sales volume had fallen down by 53% to US$ 1.22 billion.
  Pfizer is not the only one suffering from such pains. Statistics show that MSD, another giant in the global pharmaceutical industry, suffered from a sharp decrease of nearly 90% in the sales volume of Singulair, one of MSD’s best-selling drugs, within merely 4 weeks since the availability of the first batch of the generic drugs in the market. Singulair has always been one of MSD’s blockbuster drugs and has extensive application in treatment of allergic rhinitis and asthma. In 2011, Singulair’s annual sales volume hit US$ 3.5 billion in the United States and US$ 5 billion in the global market. A Wall Street analyst once predicted that it’d take MSD 2 months to lose up to 90% of its market share. Unexpectedly, the prediction has got proven with merely 1 month.
  In fact, the relevant data indicate that by 2016, there will be the drugs worth US$ 255 billion to expire, and a number of them are blockbuster products like Liptor. Of the Top 20 best-selling prescription drugs, 18 are listed with patent expirations and the global annual sales volumes of these 18 prescription drugs hit US$ 142 billion.
  In comparison with those reference listed drug enterprises that keep struggling against the chills, many generic drug enterprises around the world feel so much inspired by the huge potential profits and are anxious to boost their performance along with the upcoming historic moment.
  China is an absolutely big country of generic drugs as 97% of over 5,000 Chinese pharmaceutical companies mainly focus on the production of generic drugs. Then, have the Chinese pharmaceutical companies prepared themselves facing such superb opportunities in the generic drug market at such best times of generic drugs?
  The Worst Reality
  Regarding two approaches to and common understanding widely shared by the Chinese people as of the issues of seeing doctors and taking medicines, governmental authorities have been striving to guide and transform with, however, little effect along with fatigue. The fact is, the Chinese people tend to go to the hospitals of Grade III-A regardless of the seriousness of their illness and to trust in the imported drugs regardless of the cost. As for drug taking, it’s been widely shared experience and impression among the ordinary people that the imported drugs are more effective than the domestic drugs and the joint ventures’ products are better than the State-run enterprises’ products, even though they have the same active ingredients. Many patients would rather spend more money on the imported drugs than turn to any domestic products.
  Indeed, just as the patients might have experienced, those who are engaged in the pharmaceutical field in China acknowledge that the situation of the domestic drug market has been “rather poor”.
  In fact, in the current Chinese market, the situation of the domestic drugs almost stands for that of the generic drugs, because about 95% of the domestic drugs are generic drugs. China is a veritable big country rather than a powerful country of generic drugs. A common self-assessment shared in China’s pharmaceutical field is that considerable quality discrepancy does exist between part of the Chinese generic drugs and the international advanced level.”
  The so-called generic drugs, although copied from the reference listed drugs, are by no means the cheap copies that merely look like the reference listed drugs, as the various countries impose strict control over the generic drugs. Taking the US as an example, the US FDA demands that a generic drug must satisfy the following conditions in order to be approved: it has the same active ingredients as the reference listed drug, while the inactive ingredients may be different; it has the indications, dosage form, specifications and administration route consistent with the reference listed drug; it is bioequivalent to the reference listed drug; it meets the same quality requirements and it’s subject to the equally strict GMP as of the reference listed drug.
  How about the situation in China? By referring to the quality announcements published by the SFDA in recent years, we can tell that the drugs’ spot checking has had a very low failure rate in China, which is supposed to indicate that the Chinese pharmaceutical products have guaranteed qualities. However,industry sources point out that some generic drugs marketed in China can hardly be comparable to the reference listed drugs and they have even worse clinical performances, as a number of them are “safe but ineffective” or “safe but less effective”.
  The foregoing statement has been evidenced by an “exploratory study” conducted under the “National Appraising Spot-Checking Program” that lasted for 4 years. The study indicates that there is remarkable gap between some generic drugs and the reference listed drugs, which is particularly demonstrated in such key indicators as in vitro dissolution rate and in vivo bioequivalence, which reflect drug equivalence. Researchers have discovered in the in vitro experiments that the generic drugs’ multiple in vitro dissolution curves are considerably inferior to that of the reference listed drugs. The researchers point out that if considerable inferiority exists in the in vitro dissolution curves, you may well imagine how big the in vivo bioavailability difference exists between the generic drugs and the reference listed drugs.
  Regarding such phenomena of “qualified but ineffective drugs”, Du Guanhua, Deputy Director of Institute of Materia Medica, the Chinese Academy of Medical Sciences, pointed out that the problem is mainly due to the fact that the quality standards implemented in China are too low and the technical hurdles are too low in case of technical assessments. As a result, the domestic pharmaceutical companies can easily meet the criteria without having to do any in-depth research. Du said that the quality standards currently in force only impose control on ingredients, contents and external properties, which only reflect one aspect of drugs. The fundamental quality assurance, however, is to ensure that the generic drugs have the equally stable and consistent efficacies as the reference listed drugs. Taking the sample size, which is the simplest issue, as an example, the domestic drug evaluation authorities request a mid-term experiment sample size of 10,000 tablets to be submitted by a pharmaceutical plant. The submission is 100,000 tablets as requested in Japan. That’s why that certain generic drugs in China can only reach the level of chemical equivalence, while bioequivalence, safety equivalence and clinical equivalence are too far to be reachable.
  There’s a strange phenomenon in the Chinese pharmaceutical industry, once a patented drug with low technical content has expired, dozens and even hundreds of other pharmaceutical companies would rush to make simple and even identical duplications. Take antipyretic Analgin, a low-price drug, as an example, there are over 100 manufacturers in China. In order to gain market shares, the pharmaceutical companies tend to bid with malignant offers, and the ultimate price would lower down to a level unaffordable by the enterprises. As for those drugs with high technical content, only a handful of the local pharmaceutical companies dare to try copying.
  According to some insiders in the industry, due to too low a technical hurdle, as far as the generic drugs are concerned, China’s quality level lags behind the US by 40 years, or Japan by 30 years and even India by 10 years.
  Promising Future
  Although the domestic pharmaceutical products are less satisfactory in reality, the inspiring news keeps coming and triggers our anticipation for a promising future of the pharmaceutical industry in China.
  As far as the State level is concerned, the consistence assessment of generic drugs has been launched, indicating another important step taken by the State to comprehensively enhance the quality of generic drugs. That means that the quality consistence assessment shall be carried out by the State as of those generic drugs approved prior to the implementation of the Measures for the Administration of Drug Registration (revised version 2007) against the reference listed drugs in batches. The assessment of those generic drugs which are listed in the National Essential Drug List and have frequent clinical application shall be accomplished before 2015.
  There’s an awesome number of the manufacturers and types of generic drugs in China as currently in the essential drug catalogue, 33,000 approval numbers and over 2,400 pharmaceutical companies are involved in merely 570 types of chemical drugs. Wu Zhen, Deputy Director of the SFDA, said that according to the requirements set forth in the 12th Five-Year Plan of National Drug Safety issued by the State Council, the afore-mentioned assessment shall be carried out seriously and those pharmaceutical products having failed to pass the assessment shall not be permitted for registration any longer and their drug approval documents shall be cancelled. And by then, there must be a number of drugs withdrawing from the market. According to the deployment under the said plan, there should be drastic improvement in China’s drug standard and quality and China’s drug safety guarantee capability should approach as a whole the international advanced level. If everything goes smoothly, the Chinese patients should be able to enjoy the really qualified domestic drugs by then. From the perspectives of the pharmaceutical companies and the market, there’s a soaring tide of generic drugs around the globe, with which a brand-new market pattern is taking shape. On September 13, 2012, Zhejiang Hisun Pharmaceutical Co., Ltd. and Pfizer held a grand ceremony in Hangzhou, declaring the official establishment of Hisun Pfizer Pharmaceutical Co., Ltd., a joint-venture company set up with the contributions from the both parties. Xiao Weihong, CEO of Hisun Pfizer Pharmaceutical Co., Ltd., expressly indicated that the joint-venture company will develop, manufacture and market the drugs with expired patents, including the branded generic drugs, facing both the domestic and global markets. With a total investment of US$ 295 million, Hisun Pfizer Pharmaceutical Co., Ltd. has its registered office and production factory set up in Fuyang, Zhejiang Province. Hisun Pharmaceutical owns 51% of the joint-venture company’s stake and Pfizer owns 49%. Both Hisun and Pfizer put selected products from their respective product lines into the joint venture company. Currently the product portfolio covers a number of therapeutic areas, including oncology, cardiovascular diseases, anti-infection, neurological diseases and immunosuppressive agents.
  Dr. Wu Xiaobin, General Manager of Pfizer China, said that the conclusion of this joint-venture deal with a secondary position of 49% held by Pfizer in the stake is something rare in Pfizer as the No. 1 player in the global pharmaceutical industry and that is sufficient to evidence how much Pfizer is in favor of Hisun and of the Chinese market.
  Coincidently, regardless of whether intentionally or unintentionally, just one day before the ceremony of Hisun Pfizer Pharmaceutical Co., Ltd., MSD, the second largest American pharmaceutical company, and Simcere Pharmaceutical, a Chinese company, jointly declared the commencement of commercial operation of a joint-venture company established by the both parties in China. Although generic drugs are not mentioned in the released message, the insiders in the industry observed that such intentional avoidance might be based on the worries of both MSD and Simcere Pharmaceutical that the term “generic drugs” would probably be misinterpreted as the disreputable drug imitations, whilst the MSD-Simcere joint-venture is targeted at the vast generic drug market in China.
  In fact, the multinational pharmaceutical companies, including Sanofi-Aventis and GSK, have begun to seek business development in the generic drug market, which they used to disregard, and they stare at such generic drug market in the emerging markets including, in particular, China, India, Russia and Brazil. They’ve entered the Chinese market by way of joint-venture, acquisition and business cooperation etc. Even earlier, Novartis, another pharmaceutical giant, declared that it will build the largest generic drug manufacturing base in China in Zhongshan of Guangdong Province. Apparently, as a new mentality widely shared among those reference listed drug companies facing a peak time of patent expirations, it’s wiser to produce generic drugs by the pharmaceutical companies themselves rather than by other companies.
  According to the global authoritative healthcare consulting company IMs’ analysis, by 2015, the ratio held by the emerging market in the global drug sales volume will increase from 12% in 2005 up to 28% and the majority part of such sales volume will come from the generic drugs of the patented drugs.
  At present, the ratio held by the generic drugs in the global drug market has increased from 7% in 2000 to about 15%. It is forecasted that by 2015, the ratio will reach about 50%. And China will become the second largest drug market in the world.
  Some experts observe that in this new round of joint-venture tide, the domestic API manufacturers are aware of the opportunities to help them industrially upgraded to the internationalized manufacturing of generic drugs, while the Chinese pharmaceutical companies should enjoy multiple benefits in terms of learning the advanced management experience and going global via joint-venture projects etc. Just like the Hisun-Pfizer joint-venture company, which is an important step taken by Pfizer to expand its business presence in China, and Hisun seizes the opportunity to explore the international market, while the both parties look forward to a win-win result. Yu Mingde, President of Chinese Pharmaceutical Enterprises Association, said that as for the Chinese pharmaceutical industry, it’s a set route to be upgraded from “producing generic drugs with priority” to the “combination of duplications and innovations” and then to the “independent innovations”, which cannot be accomplished overnight.
  Benefit for Patients
  In fact, the multinational pharmaceutical giants have begun to seek business presence in the generic drug market by lowering down their stance due to the peak time of patent expirations as well as two more other reasons as follows.
  Firstly, it’s been more and more difficult to develop new drugs. In 2010, only 21 new drugs were launched around the world, the lowest since 1997. The new drugs and especially those therapeutic drugs with considerable sales volumes in the past were targeted at those diseases with solid scientific basis. However, the new drugs developed nowadays mostly address the complicated and rare diseases, which tend to have un-discernible pathogenesis and most of them remain un-clarified till now. Moreover, the stringent government regulation over clinical trials even adds to the difficulty in the development of new drugs. Therefore, the bygone practice of giving up the “favored drugs” with expiring patents and turning to the new loves won’t work any longer.
  Another important reason is that out of concerns about the ever increasing medical expenditures, the various countries around the world have promulgated policies to support the development of generic drugs. And patients will benefit the most from the healthy development of the generic drug market.
  The data released in the United States indicate that with the increasing utilization rate of generic drugs, the use of generic drugs has helped save up to over US$ 1 trillion medical expenditure in the United States over the past decades. A report issued by the Generic Pharmaceutical Association points out that in the whole year of 2013, the use of generic drugs has helped save up to US$ 193 billion medical expenditure in the United States, indicating an increase of 22% compared with US$ 158 billion in 2010.In 2002, the use of generic drugs has helped save US$ 60 billion medical expenditure in the United States,less than one-third of the amount saved in 2011.
  The Report also points out that nowadays, the American patients are in favor of using generic drugs rather than patented drugs, which are more expensive. In 2013, 4 billion prescriptions have been issued in the United States and 80% of them are generic drug prescriptions. So high a prescription ratio, however, accounts for only 27% of the total cost of the drug prescriptions. The reason is that the prices of generic drugs are far lower than those of patented drugs.
  India provides even more powerful governmental support to generic drugs, as a governmental policy has been adopted to offer medicines to the public free of charge. From city hospitals to the clinics in countryside, the public doctors in India can prescribe non-patented drugs to all patients free of charge very soon. According to the policy, doctors’ prescriptions to patients shall be limited only to a list of generic drugs and a doctor may incur penalty if he/she prescribes any patented drugs. It is expected that by April 2017, such policy will enable up to 52% of the Indian people to get access to the free drugs worth US$ 5.4 billion.
  In China, the cost control mechanism under the medical insurance program is also in favor of the development of generic drugs. According to the Strategic Research Report of ‘Healthy China 2020’ issued by the Ministry of Health, by 2020, of the drug value procured by the medical institutions at various levels in China, the national enterprises shall have accounted for 80% minimum. In fact, the fulfillment of such requirement does not necessarily rely on the compulsory administrative measures. Instead, with the deepening of a series of medical reforms in terms of economic compensation, reasonable pricing and payment etc. there will be a promising future for generic drugs, according to relevant experts.
  Undoubtedly, the generic drugs will eventually benefit the ordinary patients so long as they are kept under healthy development.



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