What does China’s open policy mean to pharma multinationals?

What does China s

Multinationals (MNCs) were thrilled by China’s recent policies on opening up the domestic pharmaceutical market to the world, notes The Pharma Letter’s local correspondent, Wang Fangqing, in her latest report from the ChinaBio partnering forum held recently in Suzhou. Examples include faster approval processes to imported novel drugs, the acceptance of foreign clinical data, and the encouragement to Chinese hospitals to participate in global multi-site clinical studies. Sophie Sun, head of strategy and transformation China at the German pharma Merck, said at ChinaBio that these new polices will allow MNCs to be more active. “The access to the vast China market has always been a challenge for foreign pharma companies. With China being more open, life for MNCs surely will get easier,” she said.

But giving MNCs a good time is not the reason for China to open up its market. Rather, the Chinese government’s ultimate goal is to nurture local innovative startups, said Jun Bao, chief business officer at Beijing-based Shenogen, a startup for cancer therapies. “The China government clearly wants more competition among pharma companies,” he said. Dr Bao gave hepatitis C drugs as an example. China in 2017 gave the nod to three HCV drugs – Gilead Sciences’ Sovaldi (sofosbuvir), Bristol-Myers Squibb’s combination therapy Daklinza (daclatasvir)/ Sunvepra (asunaprevir), and Johnson & Johnson’s Olysio (simeprevir). Four other drugs, including AbbVie’s Maviret (glecaprevir/pibrentasvir), are waiting for the China Food and Drug Administration’s (CFDA) approval. 

Government wants competition on pricing and innovation

“Novel drugs are never affordable for Chinese patients, and the China government wants to change it by introducing fierce competition,” Dr Bao said. A price war is not the only thing the Chinese government wants to see. Competition on research capability will push hard on Chinese domestic innovation. As Dr Bao put it, “all pharmas in China will have to compete at the same level, no matter [if] it’s a local startup like us, a state-owned big pharma or a multinational,” he said. Zaiqi Wang, site head of Roche China agreed, saying: “New policies set a high bar to Chinese companies. Generics are certainly out, and I believe China will be a hotbed for R&D.”

For foreign companies, more Chinese startups with strong research capability does not necessarily mean more competition, but partnerships as well, said Ben Thorner, senior vice president at Merck &Co’s MSD unit. “When it comes to partnerships, we want to look into companies focusing on how to address diseases in a more innovative way. It doesn’t even have to be a novel drug. A new combine therapy, for example, could also something innovative,” Mr Thorner said. MSD is an early investor in Beijing-based startup BeiGene, which is also a China partner for MSD. Thorner said the reason it chose to work with BeiGene is that the company “was doing something really terrific.” BeiGene has three novel chemical candidates and one monoclonal antibody (Mab) in clinical studies, targeting various cancers.

Now that China promised to import more drugs, is it still necessary for foreign pharmas to build manufacturing facilities in China? On paper, the answer is no. However, with an actual facility in China, a foreign pharma can expect many hidden benefits, said Justin Wang, managing director at LEK Consulting, a London, UK-based consulting firm. “A manufacturing site shows your commitment to the city, which will help you forge a better relationship with the local government. Therefore, your drugs will likely to be covered by the local drug reimbursement scheme,” Mr Wang said.

China has a layered drug reimbursement system – the national level, the provincial level and local city level. Having drugs covered by any of the levels will be a great success for pharmas doing businesses in China. Foreign-made drugs may find it easier to get the drugs into China, but surely not the reimbursement list. Renaud Gabay, general manager at Abbott’s established pharmaceuticals business in China, offered some insights.

“Shortlisted by the national levelis only the beginning, because the real fight is at the provincial level, which involves a lot of strategies,” Mr Gabay said. For example, which province you want to go to first? The wealthy Zhejiang province, or the Jiangsu province where Chinese local pharmas have a strong presence? “You need to choose wisely to maximize the possibility for your treatments to get into the provincial reimbursement scheme,” he noted.  The good news, he added, is that “Chinese authorities really want more treatments for its patients.” 

Source : thepharmaletter

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