Archive for the ‘Healthcare & Pharmaceuticals’ Category.
Published: 23 Jun 2009 22:50:37 PST
Published: 22 Jul 2009 17:19:23 PST
* Hep B drugs have blockbuster potential
* $24.5 bln market to possibly triple by 2013
(Recasts, adds details on priority drug list)
NEW YORK, July 22 – China’s $124 billion plan to
provide basic health coverage for the vast majority of its 1.3
billion citizens by 2011 is creating opportunities for large
drugmakers, a specialist on China’s pharmaceutical market
said.
With sluggish growth in the United States and Europe, many
large pharmaceutical companies are expanding sales forces,
distribution channels and research operations in China to tap
into the country’s robust drug market, Mandy Chui, a consultant
with IMS Health Inc, said in an interview this week.
Chui said China’s drug market is expected to expand at
about 22 percent annually over the next five years.
“We see companies continuing to invest in China,” Chui
said. “For companies, (China’s growth) is certainly a good
story to tell to the Street, right?”
Chui, based in New York, is the China expert at IMS Health.
IMS provides market data on the pharmaceutical and healthcare
industries, and is headquartered in Norwalk, Connecticut.
She said that China’s aging population, adoption in parts
of the country of Western lifestyles and rapid urbanization in
certain areas are giving rise to hypertension, obesity and
other diseases.
That, Chui said, positions China to become the world’s
third largest pharmaceutical market by 2013. It currently ranks
No. 5. The $24.5 billion market is expected to swell to $68
billion to $78 billion by 2013, she said, leaving it behind
only the United States and Japan.
“It’s like a big wake-up call. If they (large
pharmaceutical companies) are not in there at this point in
time, all of them are not going to grow,” she said.
Chui said European drug makers such as Bayer AG,
AstraZeneca PLC and Sanofi-Aventis SA had taken the lead in the
race for market share in China, and that U.S. drug makers were
eager to catch up.
Pfizer Inc’s Chief Executive Officer Jeff Kindler said in an
interview on Wednesday that China was an increasingly important
priority for Pfizer, the world’s biggest drugmaker.
“Not only is it necessary to be there, we are there,”
Kindler said. Pfizer is aiming to make vaccines a large part of
its effort in China.
Chui said drugs for diseases commonly seen in China, such
as hepatitis B, have blockbuster potential.
An estimated 30 million Chinese have active infections
caused by hepatitis B. The virus can lead to cirrhosis of the
liver and liver cancer.
Some pharmaceutical companies are gearing up to treat
hepatitis B, which kills more than 300,000 Chinese each year,
Chui said.
Bristol-Myers Squibb Co’s hepatitis B drug Baraclude,
introduced in 2006, leads the hepatitis B market in China, Chui
said.
Other drug companies in that market include GlaxoSmithKline
PLC and Schering-Plough.
Chui said that no pharmaceutical companies operating in
China, including Chinese drugmakers, have blockbuster products.
However, she said some could achieve that status within five to
10 years. A blockbuster drug typically has sales of $1 billion
or more a year.
BRANDS VS GENERICS
Branded drugs are favored over generics at large city
hospitals in China — even generics of brands that have lost
patent protection — because the quality of brands is often
seen as being better, Chui said.
However, elsewhere in China, especially in rural areas,
generics are favored over more expensive brand name drugs from
the United States, Europe and Japan.
Chinese companies, for example, are anxious to produce a
generic form of Baraclude once patent protection expires, Chui
said, adding that more than 30 companies had submitted
applications to make the generic version of the drug.
Chui said she had been told by industry sources that patent
protection on the drug would expire in 2011.
Asked about Baraclude’s patent, Bristol-Myers spokesman
Brian Henry said, “We have patents in force and patents pending
in China (for Baraclude). We do not comment about potential
competitors.”
Chui said China plans to pare down its list of 400-plus
“essential” drugs, which are given priority in all medical
facilities, to between 200 to 300, “with a tendency to remove
more-expensive branded drugs.”
The list is expected to be complete sometime this year, she
said.
Multinational companies have 30 percent of China’s
pharmaceutical market, while local companies have 70 percent,
according to Chui. “Five years from now, I don’t see any
substantial change (to that ratio),” she said.
Top-selling drugs in China made by multinationals include
blood-clot preventer Plavix, ulcer drug Losec, oral diabetes
treatment Glucobay, the Novolin brand of insulin and antibiotic
Avelox.
China’s plans to build 2,000 new county hospitals and
upgrade 30,000 township medical centers.
Chui said expanding its medical infrastructure would
benefit manufacturers of medical devices and vaccines and
companies specializing in medical imaging, diagnostics and
electronic medical records.
Sanofi-aventis yesterday said it would inject US$90 million to expand its manufacturing facility in Beijing.
The world’s fourth-biggest drug maker will see a significant increase in its output of the insulin medicine, Lantus SoloSTAR, after the expansion is completed in 2012.
This latest investment followed a US$94-million investment in Shenzhen in 2007 to establish a plant to produce Vaxigrip, a vaccine for influenza. The first phase of the project is now completed, and the production line will be operational in 2012.
“As the first multinational health-care company to establish an office in China, we remain convinced of the strategic importance of the Chinese market,” said Christopher A. Viehbacher, CEO of Sanofi-aventis.
The two investments combined together make Sanofi-aventis the biggest investor in China’s pharmaceutical field, according to the company.
China now has 40 million people suffering from diabetes, according to latest statistics by the International Diabetes Federation.
The French drug maker is also investing US$39.4 million to build a new facility in Hangzhou, capital of Zhejiang Province. The new factory is set to be completed by 2012.
(Shanghai Daily April 22, 2009)
To many investors who are reeling under the impact of the global financial crisis, pharmaceutical stocks looked like a safe bet. But after a spurt earlier this year, pharmaceutical shares have lagged the market during the latest rally.
Pharmaceutical shares lose luster [CFP]
The benchmark Shanghai Composite Index has gained 3.97 percent, or 96.88 points, from April 7, a day after the government released its 850-billion-yuan healthcare reform plan. It closed at 2536.06 points yesterday, from 2439.18 points on April 7. The Shenzhen Component Index too jumped 5.33 percent from 9232.26 to 9724.58 points.
But, most of the 100-plus drug companies listed on the Shanghai and Shenzhen bourses actually headed down. They include some big brands such as Tonghua Dongbao, Zhejiang Hisun, Huahai Pharmaceutical, Yunnan Baiyao and Tongrentang.
However, analysts said the sector was a promising bet despite the gap between investor expectations and market performance of pharmaceutical companies. “The draft of the healthcare reform blueprint was released last October and its short-term impact on drug companies’ shares was amply reflected in the sharp surge late last year and early this year,” said Wei Xutao, an analyst at Sinolink Securities.
The pharmaceutical sector had always been seen as recession-proof. And, the sector got a further boost with the reform plan, which was expected to make drugs more widely available under an improved government subsidy scheme.
![Pharmaceutical shares lose luster [CFP]](/Image/2009060622545375.jpg "Pharmaceutical shares lose luster [CFP]")
Pharmaceutical shares lose luster [CFP]
But, the final version of the reform guidelines changed little from the earlier draft. It failed to further stimulate investor interest in the sector, Wei said.
From Jan 4 to March 30, the medicine index, a combined index of pharmaceutical firms on the Shenzhen bourse had risen a total of 23.7 percent, from 621.98 points to 769.37 points. During the period, the benchmark Shanghai Composite Index surged 30.34 percent.
“The uncertainty over what medicines (of which company) would be included in the catalogue has caused uncertainties in the minds of investors, leading them to adopt a wait and watch attitude,” said Zhang Zhen, analyst, Hong Yuan Securities.
Feng Jiming, a Beijing stock investor, said the medical reform scheme was a good one. “But, I wonder how these general policies would be implemented; that makes it difficult to predict its precise impact on the pharmaceutical sector,” he said.
The reform scheme includes a new essential medicines catalogue and a catalogue outlining which basic drugs should first be considered for use. It says essential drugs should be produced and distributed under government control.
The reform plan calls for government to regulate the pricing system of medicines, with particular control on the prices of essential drugs listed in the catalogue. “Some investors worry that the strict supervision could force producers to cut prices, resulting in a profit drop,” Zhang added.
Zhang and others agreed that not all pharmaceutical firms would benefit from the reform thrust.
This round of healthcare reform focuses on a centralized purchasing mechanism, which is expected to benefit the large State-owned drug makers, said Zhou Rui, an analyst at China Jianyin Investment Securities.
He also predicted that the large players would seek to rapidly expand their production capacity by acquiring those small and medium-sized producers who are left out of the scheme.
Zhou said that he was particularly bullish about the big traditional Chinese medicine (TCM) companies, because half of the medicines in the new essential medicines catalogue will be TCMs, which are affordable and easily available to a great number of patients in China.
Tongrentang and Yunnan Baiyao were among those companies favored by stock analysts. The latest annual report of the Beijing-based Tongrentang showed that its sales revenue was 2.94 billion yuan in 2008, up 9 percent from 2007, with net profit jumping 10 percent to 260 million yuan. Tongrentang’s share price has risen steadily in the past week to close at 16.74 yuan apiece yesterday. Meanwhile, Kunming-based Yunnan Baiyao slid from 36.39 yuan apiece to 35.95 yuan.
“The shares of both the companies are expected to rebound after the basic medicine catalogue is released,” said Zhou.
Tongrentang specializes in medicines that treat a wide range of internal problems and Yunnan Baiyao is well known for its trauma treatment drug.
Demand for medicines has been resilient despite economic ups and downs. The pharmaceutical sector is more promising in China than other marketplaces, given the nation’s robust economy, said Sinolink’s Wei.
Lu Linquan, secretary of the board at Shenzhen-listed Northeast Pharmaceutical said that regulations regarding centralized purchases and optimized distribution chains would help trim costs. So, price control will not affect the profit margin of companies.
Feng bought pharmaceutical shares of companies late last year. “I will hold them, not only because I am confident about their potential but also because I cannot sell them at the current prices,” the 50-year-old Beijinger said.
(China Daily April 16, 2009)
The world’s third largest pharmaceutical company Novartis Group will invest heavily in Chinese market through its innovated drugs arm despite the global recession.
The Swiss drug giant will put money into overall strength enhancement in China, including sectors of research and development (R
The world’s ninth largest medicine company Eli Lilly and Company (Lilly) decided to stick to its core strategy of focusing on research and development (R
Pharmaceutical companies have to adopt a target-market and flexible pricing approach to increase their revenue as emerging economies grow, according to a report from financial consulting firm PricewaterhouseCoopers (PwC).
PwC said that medicine producers need to differentiate their prices in order to capture rising opportunities in developing countries such as China, in its report Pharma 2020: Marketing the future.
The population of high-net worth individuals in the BRIC economies (Brazil, Russia, India and China) rose by 19.4 percent between 2006 and 2007, compared with an increase of just 3.7 percent in Europe and 4.2 percent in the US.
“Much of the explosive growth in the middle class will come from China and other emerging economies. It is estimated that over 200 million households in China will earn over 40,000 yuan a year by 2025,” said PwC Hong Kong consumer and industrial products leader Richard Sun.
He added that China’s urban consumer market will then be worth almost as much as the Japanese consumer market is worth today.
“Expenditure on private healthcare and medicine by urban Chinese consumers, as a result, is expected to record double digit growth a year for the coming 20 years,” said Sun.
Pharmaceutical companies have been cautious about using differential pricing, fearing that it encourages arbitrage between countries with higher and lower prices for the same medicinesc. But any organization that wants to benefit from the increase in mass affluence will have to tailor its products, services and prices to the needs of the new consumers from the emerging economies, said the report.
“We predict that, by 2020, most pharmaceutical companies will use differential pricing, based on variations in income, to increase sales in developing countries. They will minimize the risk of parallel trading by branding and packaging the same medicines differently for rich and poor markets, and tracking them using e-tagging technologies,” Sun said.
PwC also said in its report that, apart from the pricing strategy, the pharmaceutical industry’s sales force of the future will be dramatically smaller, more agile and will require new skills, including an education in science or health, greater understanding of specific complex diseases and the ability to negotiate with powerful firms and medical specialists.
Salespeople will no longer focus just on selling products but also on better management of health outcomes through a full complement of services, including health screenings, compliance programs and nutritional advice.
“The pharmaceutical companies that succeed in demonstrating value will be rewarded with a longer period of exclusivity, stronger financial health and greater loyalty to their brands,” Sun said.
He added that they will need to restructure their marketing functions accordingly, by appointing key account managers who will be responsible for collaborating with healthcare stakeholders to shape the information doctors receive and to provide hard proof that a product really is safer, more effective or more economical than its rivals before they add it to the formulary.
(China Daily April 13, 2009)
Drug maker GlaxoSmithKline (GSK) expects to maintain its fast pace of growth in China with additional investments for development of new medicines and vaccines, according to Amy Huang, vice-president and China director.
“GSK does not intend to cut its budget for China this year. We will on the contrary, invest more for developing new medicines,” said Huang.
In 2008, GSK achieved a 12 percent growth in sales in emerging markets. China outperformed the others with a 22 percent increase in sales, while the global numbers fell by 3 percent.
GSK has more than 20 medical projects in China under or to be under clinical research, and the China R
Drug maker Northeast Pharmaceutical Group Co said yesterday that it expects net profit in the first quarter to more than triple from a year earlier on escalating vitamin supplement prices, the mainstay of its business.
The forecast comes close on the heels of its six-fold jump in net income for 2008.
Net profit in the first quarter is expected to surge by 300 percent to 350 percent from a year earlier to 120 million yuan, or 0.36 yuan per share, on booming sales and improved profitability, the Shenzhen-listed firm said.
The country’s biggest Vitamin C supplement exporter made a net profit of 29 million yuan in the first quarter of last year.
“The strong performance in the first quarter is in line with our expectations as Vitamin C supplement prices witnessed a 15 percent to 20 percent year-on-year growth during the period,” TX Investment Consulting Co said in a research note.
Northeast Pharmaceutical, which produces antibiotics, vitamins and cardiovascular medicines, said the sales revenue and gross profit margin of Vitamin C products are expected to witness a significant growth in the first quarter.
“While the raw medicine segment is likely to maintain a sound growth, its injections business is also expected to benefit from the country’s medical reforms,” TX Investment said.
The company will also benefit after its new injections plants and Vitamin C processing projects are completed, said TX Investment, which has an ‘overweight’ rating on Northeast Pharmaceutical.
The company’s shares rose 3.57 percent to close at 20.3 yuan in Shenzhen trading yesterday.
The drug maker said in February that it would issue bonds worth 600 million yuan to repay bank loans and increase its working capital.
Northeast Pharmaceutical, which also makes anti-AIDS medicines, late last month reported a 653 percent surge in 2008 net profit as the prices of Vitamin C supplements soared last year and profit margins jumped.
Its net income rose to 358 million yuan, or 1.16 yuan per share, while its sales grew 24 percent from a year earlier to 4.61 billion yuan.
The sales revenue from Vitamin C supplements touched 1 billion yuan last year, accounting for half of the company’s raw medicine ingredients business, while the profit margin hit 47 percent, up a whopping 196 percent from a year earlier.
The rising Vitamin supplements prices last year has also seen another domestic drug and food additive maker Zhejiang NHU Co’s net profit skyrocket 16-fold in 2008.
(China Daily April 2, 2009)
Beijing Tongrentang Co, a traditional Chinese medicine producer and retailer, has posted an 11 percent increase in 2008 net profit despite falling overseas sales, chiefly in Hong Kong.
The Hong Kong-listed Tongrentang reported yesterday that profits had risen to 416 million yuan, on sales of 2.94 billion yuan, up 8.69 percent from 2007. In comparison, the company’s profits for 2007 rose 29 percent over the previous year.
Analysts said the company would see “sustainable growth” in profit this year, boosted by a government commitment to strengthen the domestic healthcare industry and a potential market opportunity in the newly-developed supplementary drugs category of medicines.
Although Tongrentang was the largest exporter of Chinese medicine by sales revenue last year, its overseas sales dropped 18.64 percent to 167.07 million yuan, largely due to a fall in demand and price increases arising from the appreciation of the renminbi.
“The corporate business growth is mainly due to the higher profit margin in supplementary medicines that Tongrentang developed,” Peng Haizhu, medical analyst at Huatai Securities, told China Daily.
Second- and third-tier medicine categories saw 15 percent growth last year, and its best selling product, Liuweidihuangwan, posted sales worth 326 million yuan, or 11.08 percent of the total.
Cost savings efforts, coupled with the decline in raw material costs, combined to increase net profitability by 1.06 percentage points from 2007’s 41 percent.
The company also enhanced its supervision and management of distributors last year to ensure timely payments.
Tongrentang said sales growth this year would be higher than 5 percent. Huatai Securities said the company’s profit growth is likely to be 20 percent.
(China Daily March 25, 2009)
