China: Pharmaceutical Market Access

China: Pharmaceutical
Market Access
Pacific Bridge Medical

2013 White Paper

www.pacificbridgemedical.com

China:
Pharmaceutical
Regulations

2013 White Paper

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, translated, resold, hosted, or otherwise distributed by any means without explicit permission.
Disclaimer: the information contained in this report is the opinion of Pacific Bridge Medical, 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 accuracy, currency, or applicability of any of the contents in relation to specific situations and
particular circumstances.

Map of China

Copyright © 2013 Pacific Bridge Medical

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3

China has become the 3rd largest
pharma market globally since 2011
China Pharmaceutical Market Size
USD Bn (@exfactory value)

Top 4 Pharmaceutical Markets,
2011 (Estimated)
$310 billion

2. Japan

$102 billion

3. China

$41 billion

4. Germany

CAGR:
21%
(‘03-’11)

1. US

CAGR:
19-22%
(‘11-’15)

$40 billion

Note: IMS data tends to underestimate China’s market

Source: IMS Health, MENET China


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4

The pharma market is still relatively
concentrated in coastal areas,
especially for MNCs
Sales Distribution by Area

Entire
Market
~52%
MNCs
>70%

Top 10
Guangdong
Zhejiang
Jiangsu
Shandong
Liaoning
Shanghai
Beijing
Hubei
Hebei
Henan

Sales
11.6%
7.1%
6.8%
6.4%
5.8%
5.3%
4.5%
4.2%
4.2%
4.0%

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


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5

Multiple government agencies are
responsible for policy-making and for
monitoring the industry
State agencies governing the
pharmaceutical industry in China*
Ministry
of Health

MoHRSS

Regulatory
Division

SFDA

Planning and
Financial Division

Regulatory
Division

Drug Policy and
Essential Drug
Policy Division

Drug
Registration
Division

NDRC

Medical
Insurance
Division

Pricing
Division
Pharmaceuticals
Pricing
Division

• MoHRSS: Ministry of Human
Resources and Social Securities

* This org structure is replicated at
provincial level

• NDRC: National Development
and Reform Commission
• SFDA: State Food and Drug Administration


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6

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

Sales Distribution by Drug Type
-- OTC Market

11%
26%

12%
63%

39%

* Others: small street clinics, etc

49%

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

Sales Distribution by Drug Type
-- Hospital Market
17%
47%
35%

** Others: bio-tech drugs, etc

Source: SFDA Statistics, MOH Statistics, Data Analysis


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7

Key Characteristics of China
Pharmaceutical 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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8

Pharmaceutical 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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9

Pharmaceutical 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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10

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

Hospital
Listing

Physician
Prescribing

Dispensing

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


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11

A series of provisions and guidelines
regulate drug development and
approval 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


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


12

A series of provisions and guidelines
regulate drug development and
approval in China
Traditional
Chinese
Medicines and
Botanical Drugs
• 11 classes

Chemical Drugs
1. Molecule has not been
approved anywhere globally

Biologics
• 15 Classes

2. New route of delivery
which has not been
approved anywhere globally
3. Molecule has been approved overseas but not in
China yet
4. New salts of an
approved molecule
5. New dosage forms of an
approved molecule
6. Generics

• 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


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13

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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14

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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15

Application documents for New
drug 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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16

Data requirements are itemized
according to drug classification
designated by SFDA


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17

For an imported new drug, it takes
approx 36– 42 months from IND
submission to NDA approval
Step 1:
Application for
conducting clinical
trials (IND
Application)

Step 2:
Conducting clinical
trials

Takes 7 - 10 months

(SFDA, NSCPBP)

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

(Applicant)

Step 3:
Application for
imported drug
registration(NDA
Review & Approval)

Takes 7 - 15 months


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(SFDA; NSCPBP)


18

Drug development in China –
IND approvals
IND Approvals in China
2006

2007

2008

2009

2010

N/A

N/A

288

141

N/A

N/A

196

153

Imported Drugs N/A

N/A

N/A

320

308

Total

758

581

804

602

New molecules/ N/A
formulations
(local)
Generics (local) N/A

1,426

Anti-corruption reforms in 2006-2007 began to set more
globalized standard


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19

It takes up to 15 months for a brand
to be prescribed after receiving
SFDA’s approval
Approval of Drug Price

Provincial Bidding

Hospital Listing

4 - 5 months

3 - 5 months

3 - 5 months

• A drug must obtain its approved 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 province where the company is
registered
• Additional 1-2 months to
get price at other provinces
• The process needs to be
carried out at each province individually

• Each Province will select
a few (2-5 suppliers) for
each drug (molecule, dosage form, dose strength) –
the bidding process
• The bidding schedules (a
few times a year) are set by
provincial governments

• Once a product wins bidding 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

• 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


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20

NDRC implemented 2 price-cuts in
2011, which was very unusual
1st price-cut in 2011

2nd price-cut in 2011

• In late March

• In September

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

• 80 molecules

• Infectious, cardiovascular
and circulatory diseases,
antibiotics
• Approx. 20% cut on retail
price


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• Hormones, endocrine
and nervous system
disorders
• Approx. 14% cut on
retail price


21

Drug pricing in China is based on a
combination of free-market and
state- 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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22

Thank You!
Connect with us today.
7315 Wisconsin Avenue, Suite 609E
Bethesda, MD 20814
Click here to contact us about assisting your
company’s access to the China pharmaceutical
market.


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23

China: Pharmaceutical Market Access

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