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After just a few years of vigorous development, innovative drugs in China have greatly demonstrated the innovative potential of China's pharmaceutical industry. According to GBI data, at present, about 60-70 local biotechnology companies in China have carried out long-term clinical research and development and commercial development layout in the international trade market dominated by Europe and the United States, including Baekje, Xinda, Rongchang, Junshi and Nuocheng Jianhua. International experience shows that without the support of the international market, it is difficult for a high-value innovative drug in any country to achieve economies of scale and grow.

How can China's biotechnology international trade enterprises go abroad, integrate into the world's cutting-edge technology, master the rules of the international game, and participate in international competition? We may have a long way to go, and there is much to learn.

This paper attempts to discuss the direction of China's biotechnology enterprises going to sea. In combination with the recent failure of Cinda in the US FDA application, the author puts forward some experiences and hopes to bring some inspiration.

First, the strategy of China's biotechnology enterprises going to sea is to avoid homogeneous competition, first of all clinical advantages, and then price advantages.

Today, the world is still short of small molecule antiviral drugs like hepatitis C, which can cure some diseases, have high clinical value, and have significant clinical differentiation of innovative drugs, especially innovative drugs to address human needs. Breakthrough innovative drugs are like rare substances. The scarcer they are, the higher their value will be, and the more expensive they will be.

According to an FDA report1, the efficacy of traditional small molecule drugs is limited at present. We still have unsatisfied treatment needs in many fields, and the effective cure rate of many diseases is low, so we need to create breakthrough technological innovation through research and development. For example, the ineffective cure rate in depression is 38%, asthma is 40%, abnormal heart rate is 40%, diabetes is 43%, migraine is 48%, arthritis is 50%, osteoporosis is 52%, senile dementia is 70%, and tumor is 75%. These diseases can not be cured and seriously affect the lives of patients, endanger lives and affect human health.

Second, China's biotechnology enterprises take the road of internationalization, and the price advantage is also very important.

Today, the world is facing the common challenge of rapidly rising medical and health expenditure, and the United States is no exception. Since the middle of 2000, the contradiction between the rapid emergence of medical technology and the payment of limited medical resources in European and American countries has become obvious.

The 2019 OECD report predicts that in the next 15 years, the growth rate of healthcare expenditure in almost every OECD country will exceed the GDP growth rate, and the proportion of OECD healthcare expenditure in GDP will increase from an average of 8.8% in 2019 to an average of 10.2% in 2030.

The United States is a powerful country with innovative drugs and the most advanced medical technology in the world. It is also the country with the largest proportion of medical and health expenditure in GDP, which will be 16.9% in 2018 and 20% in 2030. The rapid rise of medical and health expenditure has caused huge payment pressure on the medical systems of various countries. In addition, since 2020, the COVID-19 epidemic has continued to recur, exacerbating the global economic downturn and straining medical resources. While the world is embracing medical innovation technology, governments are worried about the high cost. Especially for breakthrough innovative drugs, the expensive payment has become a global cost control problem.

Reducing the pressure of medical insurance payment and the burden of patients is a common challenge. In recent years, European and American countries have adopted innovative access methods to obtain better results for innovative drugs with expensive breakthrough treatment, short marketing time and efficacy to be further proved, mostly for rare diseases and tumors. For example, for innovative drugs that are urgently needed in clinical practice, the risk sharing medical insurance payment model is used to conduct price reduction evaluation and reimbursement decisions based on real world data. Some are based on curative effect payment agreements, while others are based on financial risk sharing, such as volume price linked agreements.

Therefore, as long as it is a high-quality innovative drug and is urgently needed in clinical practice, it is hard to imagine which international market will reject a breakthrough innovation, which will benefit local patients greatly. With the price advantage of drugs, that is, based on the clinical advantage, the price advantage can maximize the competitive advantage of products.

Third, winning the domestic market is the foundation of internationalization. Only when you are strong enough can you withstand the changes in the world.

1. The performance of the local market will have a linkage reaction in the international market.

In today's highly information-based era of the global Internet, the global pharmaceutical market has become more interconnected, with drug quality standards and drug prices linked. For example, in formulating the price of new drugs in their own countries, governments began to adopt the reference price of the global market in addition to the pharmacoeconomic evaluation. In addition, in the Nordic region, through the national alliance, the drug economics evaluation standards have also been linked, and the medical insurance payment standards have been unified through joint negotiations.

For example, FINOSE is an HTA cooperation network between Finland, Norway and Sweden. In fact, cooperation means that these three institutions will write joint evaluation reports for newly marketed drugs, including relevant clinical and health economic evaluations. If there is a joint relative effectiveness evaluation report available from EUnetHTA, it can be used as the basis for FINOSE's joint health economic analysis.

Therefore, the research and development progress of each new technology in any market, the level of competition and homogeneity of the same kind, the quality of clinical trials, the discussion of data quality and statistical methods, and the negotiated price of medical insurance will all attract attention and produce effects in the international market.

In the past two years, due to the initial stage of the development of innovative drugs, under the same target and mechanism R&D mode led by license in, innovative drugs have been developed at a low level. Homogeneous competition and crowded R&D track have triggered many discussions and reflections in the industry. These discussions will have a global effect through information transmission, which will inevitably bring about concern and lack of confidence in the external market.

2. In the local market, there is no sub standard according to the highest international standard.

Any enterprise with a plan to go to sea, in terms of the concept of drug research and development, can not be discounted or bothered in the international market unless it is 100% comprehensive, objective and excellent in the local market according to the highest international standards, because there is only one scientific standard, no sub standard. Only by following a higher standard, and only a good medicine that has been refined for many times, can it travel thousands of miles.

3. Local innovative ecological top-level design is the greatest confidence in innovation breakthrough and internationalization.

In the future, the international competition strategy of enterprises in the world must be the dual advantages of clinical and price competition. First, what needs to be solved urgently is to increase the government's investment in basic research on new targets and mechanisms, and implement the innovation incentive mechanism. It is not enough to rely solely on the passion and ability of R&D and innovation of enterprises. The market and technology are limited in driving policy changes. Second, it is not enough to rely on the efforts of various ministries alone, and there is no industry development goal and strategy at the top level of the country; Without joint efforts between policies, it is difficult to coordinate various policies among ministries, and it is challenging to jointly support the development of innovative drugs.

4. The lower the local price, the better. The price advantage should be reasonable.

On the basis of clinical advantages, the price is lower than that of competing products, and at the same time, the enterprise has sufficient profits to invest in more innovative drug research and development. Because new products enter the international market at a low price, sometimes the third-party regulators and the society have doubts about the product quality and efficacy, which is not the most reasonable price strategy.

5. Higher standard international clinical trials require more returns and R&D investment.

After two rounds of medical insurance negotiations, combined with the fierce competition of similar drugs, some innovative drugs have been continuously reduced in price and corporate profits have been shrinking. For example, the price of similar PD-1 drugs in China is much lower than that of similar international drugs. Taking Bazaar and Oedivo as examples, the price of Bazaar in China is only 18.07% of the international price in the main European market (calculated by unit price/mg), and the annual treatment cost is 9.33%, 10.72%, 9.00% and 11.57% of the same indications (urothelial carcinoma, non small cell lung cancer) in Germany, Japan, Switzerland and France.

Third party data shows that every time an international multi center clinical trial of new indications is added, the enterprise needs to increase the R&D investment of about 200 million to 300 million dollars. Especially in the international trade market, it costs a lot to carry out head to head clinical trial comparison. It will be difficult for these fledgling local start-ups to develop in the low price mode. How to catch up in such a lasting marathon is worth thinking deeply!

Fourth, we should always pay attention to the characteristics of the international market and the complexity of regulatory trends to turn challenges into opportunities.

When paying attention to and discussing the Cinda case, most of them reported that the failure was a profound learning opportunity for Chinese enterprises on the road of internationalization. The author believed that in addition to improving their own R&D level and understanding the local policy orientation, the characteristics of the game rules and the trend of regulatory requirements are also important. Take the United States as an example:

1. As a major global pharmaceutical innovation country, the United States has more incentive and protection policies for indigenous innovative drugs than any other country.

In the late 1980s, the United States gradually replaced Europe as the world's leading innovative drug country, which is why 57% of the approved new drugs come from the United States every year. In 2020, 15 of the world's best selling blockbuster drugs will come from American pharmaceutical companies. At the same time, the sales revenue of the local market in the United States accounted for at least 50% of the 15 blockbuster drugs. The sales of several blockbuster drugs in the United States reached more than 80%, and the profit of the American market was far higher than that of other markets.

2. An important measure of innovation protection in the United States is to allow enterprises to set their own prices, strictly implement the patent protection system, and give innovative drugs a longer life cycle of price protection.

However, in recent years, the US government has also been plagued by high prescription drug costs, and calls for reform have continued. The price of prescription drugs in the United States has increased 4-5 times in the past 10 years (including the price rise to deal with inflation), and the per capita drug consumption in the United States is twice that of OECD countries. The prices of some life-saving drugs, such as Xiumeile and hepatitis C drugs (such as Bingtongsha), are higher than those in other countries.

For this reason, the US government is under pressure, especially the elderly in the US are facing the pressure of increasing prices and drug fees of medicare prescription drugs year by year. To this end, the US federal government has received a number of different reform plans, including the suggestion that the US government intervene in the part of Medicare Part D that has been sold for a long time in the market, carry out price negotiations with pharmaceutical enterprises, limit Medicare's cap on out of pocket cost, cancel drug rebates, and reduce the list price. Long term suggestions also include taking international reference prices, referring to European drug prices, introducing pharmacoeconomic evaluation, reforming the U.S. patent system, reducing excessive patent protection standards, reducing the monopoly period of the patented drug market, promoting market competition, encouraging imitation and other measures.

3. The drug price reform plan of the United States has not been introduced for a long time. One of the important reasons is that some members of Congress in the United States proposed excessive negotiations to reduce prices, which is detrimental to the development of enterprises.

A presidential executive order to reform drug prices in the United States, proposed by President Trump in 2020 and repeatedly supported by President Biden, allows Medicare to negotiate with drug companies on behalf of the government to reduce drug prices. The original plan was to form a bill by the end of 2021, but the final reform plan has not been released until last year, except for the new version revised in October.

According to an article published in "Forefront" Understanding The New Price Reform Deal "on November 4, 2021, The article mentioned that the US drug price reform draft has not been included in the President BidensBuild Back Better Agenda. There is an important statement in the article “In response to the concerns of some members of Congress about the impact drug price negotiation could have on the pharmaceutical industry，the new agreement’s negotiation provisions are narrower in ways that will decrease the potential impact of the negotiated agreement”。

The article specifically mentioned that, out of the protection of American innovation, some members of the United States Congress proposed that excessive negotiation and price reduction would be detrimental to the development of enterprises. At the same time, protective measures should be taken for innovative drugs that have just come into the market to avoid negotiation and price reduction at the early stage of development. For example, it is suggested that small molecule drugs can be included in the negotiation only after 9 years of marketing and biological drugs 12 years of marketing. The key drugs in the negotiation should focus on the drugs that have been sold in the market for decades, with large sales, no competing products or few competing products (such as Humira, Revlimid as post exclusivity drugs).

The article believes that the more moderate price reduction measures after the content of the plan is a compromise from the pressure of all parties in the United States. Among them, the voice from the drug R&D community calling for protection of R&D and innovation is also very high. For example, the American Pharmaceutical Research, Development and Manufacturing Association (PhRMA), which represents the world's advanced R&D pharmaceutical enterprises, mentioned that:

“PhRMA concluded that H.R.3“could have devastating impacts on American patients，jobs and medical innovation.”

But PhRMA continues to criticize the scaled-down negotiated agreement on the grounds that“it will upend the same innovative ecosystem that brought us lifesaving vaccines”for COVID-19，threatening that it will leave“many patients facing a future with less access to medicines and fewer new treatments.”

As the revised scheme (Scaled down version) is changed to a more moderate price reduction measure, the overall drug reduction brought by the article summary will be greatly reduced (the number of drugs included in the negotiation will be reduced).

Fifth, some enlightenment

Although for many years, the price support of the US innovative drug policy has been considered as an important reason directly leading to the affordability of drugs, which is often criticized by the US public. The result of the price paid by the American public for innovation is that it pays 2-3 times higher prices than similar drugs in other developed markets. However, because it is a market