This document provides a market entry strategy for a biosimilar drug called Bevacizumab in China. It summarizes the Chinese oncology drug market, key competitors, regulatory approval process, pricing and reimbursement systems. It also provides a cost analysis and break even calculation for Bevacizumab. The total Chinese cancer drug market is worth $10.5 billion annually and colon cancer represents $1.78 billion of that market. Approval for a new drug takes 18-26 months and involves domestic clinical trials and quality testing. Pricing of oncology drugs is regulated by the government.

1. MARKET ENTRY STRATEGY
IN TO DRAGON
SUBMITTED BY
SAIKUMAR
AKHIL
SANDEEP
VENKANNA

2. CONTENTS
 MARKET SEGMENT
 Country
 Therapeutic category
 Market value size and growth
 CATEGORY COMPETITOR RANKINGS
 Market leader
 Competitor #2
 Competitor #3
 FINANCIAL RESOURCES NEEDED
 TIME NEEDED
 KSF’S NEEDED
ksf #1
ksf #2
ksf #3

3. China pharmaceutical value chain:

4. Obstacles generic/Biosimilars products have to overcome
1.Governament Mandatory lower price than originals squeeze profit margins
Anti substitution laws /barriers
Brand name patent exceeding regulations
2. Physicians Low price is key to patients,not prescribers
Doubt about therapeutic merit
Political pressure
3. Pharmacist Lower price means lower profits
May not have substitution rights
4. Patients When reimbursement is full price is not an issue
Ethical pharmaceuticals possess high brand image
5. Segment rivalry Price erosion
extreme market co modification
6. Segment image Negative image of imitators
Isolated counterfeiting cases have tarnished industry image

5.  Incidence – Total number of patients diagnosed with the disease within the current year
 Prevalence – Total number of patients currently with the disease.
 Active Disease – Total number of patients that have been diagnosed within the current years as well as those that
were previously diagnosed but now have recurrent disease
 Drug-Treated Patients – Number of patients treated within the current year
Incidence 12,558
Prevalence 75,919
Active Disease 20,047
Total Drug Treated Patients 17,641
1st Line 8,796
2nd Line 5,112
3rd Line 3,733
COLORECTAL CANCERS CASES

6. THERAPEUTIC SEGMENTS IN CHINA CANCER MARKET
17%
15%
12%
11%
12%
15%
18%
PERCENTAGE
COLON CANCER
GASTRIC CANCER
LIVER CANCER
LUNG CANCER
LEUKEMIA
BREAST CANCER
OTHERS
Top drugs in cancer market

8. China oncology market value 10.5 US Billion $ in 2014 , The colon cancer is about 1.78 US billion $ growing with the CAG
of 9 %

9. Key success factors
• Approximately 97 percent of China’s total cancer patients are over 40 years old. For people over the age of
65, those living in urban areas show an incidence rate that’s notably higher than their rural counterparts
• By 2030, China’s population over the age of 60 is forecast to rise to 342 million. By 2050, the number of
elderly people in China will increase to 440 million, 31 percent of the total population by 2050.

10.  This rapid rise has be attributed to factors such as changing lifestyles and dietary patterns, increasing consumption of
tobacco, heavy smoking and several other proximate causes
 The market for oncology drugs in China is dominated by players such as
1. Jiang Su Heng Rui Medicine Co. Ltd
2. Qilu Pharmaceuticals Co. Ltd
3. Roche Holding AG.
MAJOR OBSTACLES IN CHINESE PHARMA MARKET
 The company that submits the drug for review must be a domestic company in China
The drug must also be manufactured in China
Finally, the drug must be an innovative drug

11. China's approval procedures for new drugs

12. Regulatory regime and policies
• The China State Food and Drug Administration (SFDA) is the national supervising authority for the pharmaceutical sector.
• Industrial-related are the following three
 Department for Drug Registration
 Department of Drug Safety & Inspection
 Department of Drug market Compliance
• Drug registration in China is a complicated and time-consuming process, involving a number of regulatory bodies at
various levels of government, and at various regional levels.
•
• Drug approval applications could be sent directly to the central SFDA prior to 2002, but the applications are now initially
reviewed by provincial and municipal authorities, and then passed to the SFDA for approval.

13.  The entire approval procedure generally takes between 18 and 26 months.12 Domestic clinical trials are mandatory for
all drugs which are new to the Chinese market required by the Good Clinical Practice (GCP) guidelines.
 If a drug has not been approved in China or anywhere else, permission for the trial must be granted by the SFDA and the
MOH, and it normally takes 12 months for the trial process
 Once the clinical trials have been completed, the product must undergo a quality test. The manufacturer should provide
enough product samples to conduct three complete tests.
 Manufacturers should be prepared for unexpected questions and test results; a large number of Chinese test laboratories
are not rigorously controlled. The quality test should take around three months

14.  This system demands that foreign drug manufacturers partner with or acquire Chinese companies that are qualified for a
Drug License. This is just one of a number of regulatory hurdles that foreign companies will encounter en route to a China
market entry.
 On 25 April 2011, the SFDA issued final notice on mandatory Good Manufacturing Practice (GMP) inspections for all
pharmaceutical companies doing business in China, whether with manufacturing operations in China or abroad
Advertising
 The Department of Drug Market Compliance of the SFDA is in charge of the central regulation of pharmaceutical
advertising. Pharmaceutical advertisements must be approved by this department, as well as by the local authorities in the
provinces or municipalities where they are to be broadcast or published.
 According to the research by AC Nielsen, the pharmaceuticals industry is one of the highest spenders on advertising in
China. However China is cracking down on pharmaceutical advertising after a string of complaints from the public.

15. CURRENT PRICING SYSTEM IN CHINA

16. Pricing
Overall control of drug prices is the responsibility of the NDRC, whose pricing policy is based on the control of profit
levels and sales discounts within the industry.
Prices of drugs on the EDL are set by the government, while most other drug prices are set after negotiations between the
government and manufacturers.
Some 300 drugs have been identified as critical for common illnesses and diseases, and should be made available to all
patients. For drugs on the list, prices are fixed and no commission is paid for their prescription.
Prices for these drugs have come down by 30 percent to 50 percent, which has reduced the cost of inpatient and outpatient
care.

17. Reimbursement
• Under the basic insurance scheme, Category A and Category B medicines receive full and partial reimbursement,
respectively.
• Category A comprises basic, lower-priced drugs (including many essential generics), while Category B is made up of a
core group of higher-priced, less frequently used drugs, and up to 15 percent of its content can be modified by local
governments according to need.
• The 2015 edition of the China National Basic Medical Insurance included a total of 2,151 medicines, of which 1,140 were
Western medicines including 349 Category A medicines and 791 Category B medicines

18. PRODUCT SPECIFICATIONS – BEVAC-BIOSIMILAR
 Bevacizumab is a humanized monoclonal antibody. It inhibits angiogenesis (the formation of new blood
vessels) by blocking the action of vascular endothelial growth factor A (VEGF-A).
 Bevacizumab can therefore slow the growth of new blood vessels in tumours and is used to treat various
cancers, including colorectal, lung, breast, glioblastoma, kidney and ovarian.
 The originator product, Roche’s Avastin (bevacizumab), was approved by the US Food and Drug
Administration (FDA) in February 2004 and by the European Medicines Agency (EMA) in January 2005

19. PRODUCT COST ANALYSIS
CATEGORY FIXED VARIABLE TOTAL
OPERATING
EXPENSES
RAW MATERIAL 47000 47000
OPERATING
OVERHEAD
750000 750000
DIRECT LABOUR 1380000 1380000
DIRECT ADMIN. 356000
SOCIAL 510000 510000
SUB TOTAL 2293000 750000 3043000
 Operating costs of a manufacturing plant 300000 US $ per year
Unit price 50.00 US $
Unit variable 10.00 US $

20. Non operating expenses Fixed cost Variable cost Total cost
Product development 213000 213000
Import taxes 23000 23000
Distribution 150000 150000
Advertising 189000 189000
Promotion 67000 67000
Sales force 432000 75000 507000
Marketing 139000 139000
M.research 90000 90000
Disease management 110000 25000 135000
Customer service 47000 47000
Post marketing
surveillance
39000 39000
Product samples 50000 50000
General & administration
(G&A)
70000 70000
Sub total 1446000 273000 1719000
Total expenses 3739000 1023000 4762000

21. Break Even point
• Break even units = $ 300000
$50.00-$10.00
“Revenue = 7500 units * $50.00 = $375000”
(variable cost= 7500 units * $10.00= $75000
Fixed cost =$300000 )
= 7500 units per year