Health & Beauty

China and India are both big producers of generic drugs. After years of development, China's pharmaceutical production capacity ranks first in the world, the consumption structure is mainly domestic, and the market share of international trade is small. According to the data of China Chamber of Commerce for the Import and Export of Medicines and Health Products (hereinafter referred to as the Chamber of Commerce for Medical Insurance), China's total export of preparations in 2020 will be 4.93 billion dollars, of which the amount of preparations exported to the United States will be 680 million dollars. India is the world's largest exporter of generic drugs, with obvious international advantages. According to the data of India Drug Export Promotion Association, the total export of Indian generic drugs from 2020 to 2021 will be 18.85 billion US dollars, of which about 30% will be exported to the United States.

The United States is the world's largest generic drug market, and the largest market for the export of Chinese and Indian preparations is the United States. As far as the US market is concerned, the internationalization of generic drugs in China and India is different in terms of industrial development logic, first generic drugs and patent challenges.

Actively expand the American market

In the 1970s, the Indian government successively introduced a series of policies, such as "canceling pharmaceutical and chemical patents", "restricting the shares of foreign enterprises", "increasing tariffs to restrict imports", etc., to restrict the development of transnational pharmaceutical enterprises in India and promote the rapid development of domestic pharmaceutical enterprises. In particular, India's strong imitation policy has directly promoted the take-off of the country's generic drug industry. With the rapid growth of generic drug enterprises, the competition in the Indian pharmaceutical market has intensified, and the government has imposed strict restrictions on drug prices, India became one of the countries with the lowest drug prices in the world in the 1980s. In order to survive and develop, some Indian enterprises actively plan to go to sea. It coincided with the introduction of the Drug Price Competition and Patent Period Recovery Act (also known as the Hatch Waxman Act) in 1984, which opened the golden age of generic drug development in the United States. In the same year, India's Sipra Company began to explore the American market. Indian pharmaceutical enterprises attach great importance to resource integration. As more and more Indian pharmaceutical enterprises go to the United States in groups and catch up with the policy dividend of the great development of the American generic drug market, Indian generic drugs have a strong development momentum.

After the reform and opening up, China's pharmaceutical industry has developed rapidly. At the initial stage, the strategy of "market for technology" made international trade pharmaceutical enterprises develop rapidly in China. With the rapid economic growth and the gradual expansion of the scale of medical and health expenditure, China's generic drug industry has entered a low level of repeated rapid and brutal growth stage. The "relying on medicine to support medicine" has promoted the high price of drugs, prompting the industry to form a tendency of "marketing is king". The quality level of domestic generic drugs is uneven, but enterprises can rely on flexible sales methods to dig gold in the domestic market. At that time, domestic pharmaceutical enterprises had no driving force to "go global". From 2000 to 2015, many leading pharmaceutical enterprises gradually tried to seek the development of international trade market. After July 2015, the national drug regulatory authority issued a series of policies and measures to encourage new drug research and development, and strengthened the connection between China's drug regulatory regulations and the international market, creating more possibilities for domestic pharmaceutical enterprises to expand the U.S. market. Compared with India, Chinese pharmaceutical enterprises have long relied on the dividend of the domestic market and entered the American market late, so more opportunities need to be further explored in the international trade market.

Accelerate the approval of preparations

Indian pharmaceutical enterprises are familiar with the regulatory regulations and market rules of the United States, especially in the production of documents and document management. To some extent, they even exceed the local pharmaceutical enterprises in the United States. Therefore, the number of generic drugs submitted for approval in the United States is far ahead of China. From 2010 to 2019, the number of generic drug registration applications (ANDA) approved by Indian pharmaceutical enterprises accounted for more than 35% of the total number approved by the US Food and Drug Administration (FDA). The total number of ANDA approved by India Sun Pharmaceutical alone has exceeded 400. Indian pharmaceutical enterprises have formed a rich product pipeline in the United States, and the sales of generic drugs in the United States market has become the main source of income for Indian pharmaceutical enterprises.

Chinese enterprises started late. In 2007, Nevirapine of Huahai Pharmaceutical became the first Chinese preparation variety certified by FDA, and Chinese pharmaceutical enterprises officially opened the road to expand the U.S. market. According to the data of the Medical Insurance Chamber of Commerce, from 2006 to 2010, only 6 Chinese pharmaceutical enterprises were successfully registered in the United States ANDA; From 2010 to 2014, the annual average number of Chinese preparations approved in the United States was only about 20. Since 2015, the number has grown rapidly. In 2020, Chinese pharmaceutical enterprises will receive more than 80 ANDA approvals in the United States. Although the number has increased rapidly, the approved dosage forms are relatively simple, mainly oral preparations and injections. At present, the Chinese pharmaceutical enterprise with the largest number of ANDA approvals in the United States is Huahai Pharmaceutical. As of April 6, 2022, the enterprise has obtained 74 ANDA numbers in total.

At present, FDA has greatly increased the cost of generic drug declaration. At the same time, with the intensification of competition in the generic drug market in the United States and the decline in the price of generic drugs, Indian enterprises applying for generic drugs in the United States are also transforming to the direction of fewer and better. Chinese enterprises should learn to increase generic drugs approved in the United States at the lowest cost.

The first generic drug becomes the main direction

As the general generic drug market in the United States has become a red sea, many international trade enterprises have turned their attention to the first generic drug. FDA generally gives priority to the evaluation of the first generic drug. The price of the first generic drug can reach about 70% of the price of the original drug, and the first generic drug that successfully challenges the patent will also have a 180 day market monopoly period. In 2001, Prozac tablets with a dosage of 40mg developed by Dr. Reddy of Indian pharmaceutical industry became the first imitative drug that Indian enterprises harvested in the United States. With rich experience in drug imitation and familiarity with American regulations, Indian pharmaceutical enterprises have been continuously challenging new drug patents and competing for the first imitation in the United States, with many successes. Taking Dr. Reddy as an example, as of the end of March 2018, 63 of the 107 ANDA projects under review had undergone patent challenges, and 30 were the first to submit.

In 2014, Prasugrel of East Sunshine Pharmaceutical became the first generic drug approved in the United States in China. In 2017, Huahai Pharmaceutical's paroxetine capsule became the first domestic generic drug that successfully challenged PIV patents in the United States. According to the statistics of the Chamber of Commerce for Medical Insurance, a total of 46 enterprises were approved 95 first generic drugs in the United States in 2019. Among them, Indian pharmaceutical enterprises have obtained more than 30 first imitations, accounting for nearly one third of the total; Only Xuantai Pharmaceutical, a Chinese pharmaceutical enterprise, obtained the first imitation of posaconazole enteric coated tablets.

"All the martial arts in the world are fast but not broken." Only by winning the first imitation can we get rich returns in the American market. With the continuous promotion of the consistency evaluation of generic drugs, the strength of Chinese enterprises in developing generic drugs in accordance with the unified technical standards of the International Coordinating Committee on Human Drug Registration Technology and the global evaluation system is growing. It is believed that the first generic drugs with high barriers to R&D and production in the future will also become the main development direction of Chinese pharmaceutical enterprises in the US market.

Carry out international M&A and capital operation

The reason why Indian generic drug companies can develop into international giants is inseparable from their active mergers and acquisitions. Indian pharmaceutical enterprises, through continuous mergers and acquisitions, have increased the number of ANDA approvals, rapidly expanded the scale of generic drugs, formed rich product pipelines, and gradually established strong market barriers. Take Sun Pharmaceutical as an example. Since the first acquisition of the API production base of Knol Pharma, a multinational pharmaceutical company, in 1996, Sun Pharmaceutical has acquired 16 companies, including 5 acquisitions involving the U.S. market. At present, the company has become the largest Indian generic drug company in the United States.

The mergers and acquisitions of Chinese generic pharmaceutical enterprises overseas are relatively conservative. Since 2016, Chinese pharmaceutical enterprises have begun to implement overseas mergers and acquisitions on a large scale. In 2016, Huahai Pharmaceutical acquired Charlotte Factory in the United States; In the same year, Humanwell Pharmaceutical acquired Epic Pharma with 529 million US dollars, and relied on this acquisition to obtain a number of ANDA approvals. In 2017, Fosun Pharma successfully acquired Indian pharmaceutical company Gland Pharma at a cost of US $1.091 billion. It is reported that by 2020, Gland Pharma of Fosun Pharmaceutical Holding and its partners have more than 260 ANDAs in the United States.

International M&A is an accelerator for the international development of enterprises, and also an important factor for Indian pharmaceutical enterprises to open the gap with their Chinese counterparts in the American market.

Create a local industrial chain ecology

The generic drugs will eventually be listed and profitable in the US market, involving R&D, international registration, certification, market access and marketing system. Indian pharmaceutical enterprises are familiar with FDA rules, have fast R&D speed, strong declaration ability, many clinical institutions meeting FDA requirements, and relatively low labor costs and hospital bed expenses. Indian enterprises have operated in the American market for many years, and have a full understanding of the sales rules of American generic drugs. Some mainstream distributors are also familiar with Indian managers. Indian enterprises have formed an industrial ecosystem with complete R&D, production and sales in the United States, which paves the way for Indian companies' products from development to commercialization. Taking Dr. Reddy as an example, he has taken root in the United States for many years, formed a complete industrial chain, and also has a relatively perfect sales system. His products can be quickly put on the market after being approved in the United States.

Internationalization does not work overnight. China's pharmaceutical enterprises still have a long way to go from the approval of ANDA to the realization of commercial profits. How to choose the sales mode for the approved products and how to quickly solve the various regulatory problems faced after the listing are all problems that need to be solved step by step for Chinese pharmaceutical enterprises that have not yet formed a sales system in the US market.