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AstraZeneca Sees 60% of China Sales From New Drugs in Five Years

AstraZeneca Sees 60% of China Sales From New Drugs in Five Years

(Bloomberg) -- AstraZeneca Plc expects new and innovative treatments to contribute 60% of its China revenue by 2024, up from just a fraction now, as the country’s push to bring novel therapies faster to the market opens up opportunities for the global drugmakers.

Sales from newer drugs will likely overtake what the Cambridge, England-based drugmaker earns from off-patent medicines in the next five years, said Leon Wang, its executive vice president overseeing international markets, in an interview in the eastern Chinese city of Wuxi.

The British drugmaker is riding a push by policymakers to get Chinese patients access to the newest medicines quickly, sometimes even before they are available in the U.S or Europe. After bureaucratic delays denied patients access to many common medicines for decades, Beijing is now on a regulatory mission to ensure China’s 1.4 billion people, who have the highest rates of cancer, diabetes and liver disease in the world, get top-quality health care.

“New drug sales, in terms of proportion, are getting bigger and bigger,” Wang said, “It doesn’t mean off-patent drugs will decline but new products are just growing faster.”

China’s contribution to AstraZeneca’s global revenues has jumped from 5.4% in 2012 to 18% in 2018, according to data compiled by Bloomberg. It has overtaken Europe as the drugmaker’s second-biggest market in the first half of this year, accounting for a fifth of total revenue.

Frontier Market

Last December, the company and its partner FibroGen Inc.’s anemia treatment roxadustat was approved in China before anywhere else in the world, marking the nation’s transformation from a laggard in novel drugs to a frontier market. The first-in-class drug, with potential to exceed $1 billion in sales, was developed in the country.

Wang says more China-developed drugs are on the way as AstraZeneza races to maintain its lead in China amid fierce competition from Roche Holding AG and Pfizer Inc. Local Chinese biotech startups are also closing in, by coming up with patented top-line treatments for a fraction of the price of global pharmaceuticals.

In 2017, AstraZeneca’s lung cancer drug Tagrisso was approved six months after the company applied -- a speed Wang said was “historical” at the time.

“The efforts from the government are very, very obvious,” Wang said. “This will ultimately benefit innovative pharmaceutical industry in the U.S. and Europe.”

Until two years back, navigating China’s tedious drug approval process blocked many prescription medicines from getting in. By its own count, China’s Food and Drug Administration said only a third of the 433 new treatments approved in developed countries reached China between 2001 and 2016.

In October 2017, the drug regulator abolished a rule that had required companies to repeat all drug trials in China before giving its nod. That meant big pharma could roll out blockbuster drugs in China at the same time as the U.S., if not sooner.

China’s population is not just aging rapidly. It has also seen a rising prevalence of obesity, diabetes and inflammatory conditions like asthma and bowel disease triggered by shifts in diet, pollution and heavy workloads.

AstraZeneca Sees 60% of China Sales From New Drugs in Five Years

To cater to these medical needs, the government is expanding its reimbursement list to include more novel drugs. Alongside, it is squeezing the generic drug prices through its bulk buying plan that has slashed prices of 25 drugs by as much as 95% in 11 large Chinese cities through competitive bidding for contracts.

AstraZeneca won the drug supply contract for its lung cancer therapy Iressa by slashing the price more than 70%. Wang said the impact from the bulk purchasing plan is “not as bad as we assumed” and the drugmaker is negotiating to get its novel drugs on the reimbursement list to offset the deep price cuts on generics.

Huge Stakes

“We have a huge stake in China so we put a lot of emphasis in helping the drugs speed up in China,” Wang said.

For global drugmakers, these regulatory reforms present the unprecedented opportunity to profit off a pharmaceutical market expected to be worth $170 billion by 2021, according to health-data firm Iqvia Holdings Inc.

There are eight other new drug projects being developed in China, according to Wang. One is a cancer drug AstraZeneca is co-developing with Hutchison China MediTech Ltd., and there are plans to develop drugs for renal and respiratory disease. It is also seeking approval in China for its immuno-oncology therapy Imfinzi.

A joint venture AstraZeneca set up with the Chinese Future Industry Investment Fund, aimed at drug research, should also generate new therapies which will be launched globally, he said.

“In the next three to five years, I won’t be surprised if you see best-in-class new drugs originate from China, selling in China and also selling outside of China,” Wang said.

To contact Bloomberg News staff for this story: Dong Lyu in Beijing at dlyu3@bloomberg.net;Selina Wang in China at swang533@bloomberg.net

To contact the editors responsible for this story: Rachel Chang at wchang98@bloomberg.net, Bhuma Shrivastava, John Lauerman

©2019 Bloomberg L.P.

With assistance from Bloomberg