Novartis, the Swiss pharmaceutical company, plans to submit 50 new drug applications in China over the next few years, as it projects faster Chinese drug approvals which could see the country overtake Europe to become its second-largest market.
China’s pharmaceutical market is undergoing a shake-up as approvals for new drugs accelerate while the government forces lower prices for off-patent branded drugs which have accounted for most of multinationals’ sales in the country.
Novartis expects to submit 50 new drug applications in China by 2023, which will be split roughly evenly between innovative and off-patent drugs, the company’s head of global drug development John Tsai said in an interview.
The company has had 24 drugs approved in China in the past two years, most recently the multiple sclerosis treatment Gilenya in June. “We absolutely think China will be the number two market for us,” said Tsai.
China’s top drug regulator has increased its staff over the past four years and allowed the use of data from overseas drug trials in applications in 2017, allowing multinationals to introduce patented products to the market more quickly.
Faster approvals in China, where drug sales were worth $137 billion (CHF133 billion) last year, according to data provider IQVIA, come as drugmakers look for new sources of growth due to increasing political pressure to lower prices in the US.
No time lag
Previously Novartis had to wait for up to six years to sell its products in China after they had been approved in the US, but the gap was now a matter of months. “The [time] lag is pretty close to gone,” Tsai said.
Gilenya is the company’s second-largest revenue generator at $825 million in the second quarter of this year. China approved the drug in three months.
Beijing approved 54 innovative drugs in 2018, up from just 6 in 2016, according to McKinsey. Multinational companies account for 45 of the drugs approved last year, many of them under a “priority review” system for urgently needed products.
Novartis has had more products submitted or approved via China’s priority review system since 2016 than any other foreign company, according to Citi. But its China revenues are below peers such as AstraZeneca and Pfizer.
The Swiss company will now need to rely increasingly on new drugs in China as its traditional portfolio comes under pressure from China’s state insurance system, which has employed a tough bidding process to lower prices for older drugs.
Its bestselling product in China, cancer drug Gleevec, was the subject of a hit Chinese film endorsed by the country’s drug regulator last year which highlighted how high drugs prices forced patients to illegally import generic versions from India.
Chinese patients often prefer to pay a premium price for branded generics but are increasingly switching to domestically made versions “There’s a loyalty in staying with branded drugs... we think that is going to shift,” said Tsai.
Novartis conducts research on drug candidates in China, which is gradually approaching the US and Europe in research capacity. “The western world still leads in chemical identification, but that will catch up in the next five to ten years,” said Tsai.
Copyright The Financial Times Limited 2019