whyPD-1Are drugs relatively cheaper in China? According to Frost & Sullivan's forecast, by2030In [year], China globallyPD-1The market share of the product will gradually climb. Why? The reason why pembrolizumab has not been included in medical insurance and is very expensive, yet it is still selling well in China, is what?
Frost & SullivanFrost & SullivanWang Yu, Project Manager of Life Sciences Business Unit in Greater China at Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan'), replied Bloomberg In an interview, China'sPD-1/L1The reasons why drug prices are much lower than those in the United States include:1) Per capita consumption capacity is itself lower than that of the United States;2The patient population in China is much larger than that in the United States, and pharmaceutical companies also choose slightly lower pricing when considering pricing to penetrate a larger proportion of patients;3) When drugs enter China's medical insurance system, they need to be reduced in price through medical insurance negotiations.
Wang Yu pointed out that at the global level, especially in developed regions,PD-1/L1The penetration has reached a relatively high level, and the remaining permeable space is limited; in China, there are still significant untapped areas among cancer patients.PD-1/L1The space for drug penetration, so in ChinaPD-1/L1The market's share globally will gradually climb.
In addition, the main reason why pembrolizumab is selling very well in China is its good brand reputation. In the subconscious of the Chinese public, 'imported products' are associated with 'better quality.' Moreover, for Chinese people, it is an unshirkable responsibility to spend money on treating their family members' illnesses, and families are often willing to spend more money on purchasing imported medicines.
*Click "Read the Original Article" at the end of this text to read the full report.
Bloomberg
Q
Why are PD-1 drugs much cheaper in China than in the US, and why are there more options in China?
a) There are many reasons why PD-1/L1 drugs are cheaper in China. Generally speaking, drugs are inherently cheaper in China due to lower affordability of the general public. The annual per capita disposable income in China is just over 50,000 USD compared to over 500,000 USD in the US. It is a tenfold difference.
b) Moreover, the patient pool in China is absolutely huge for all these PD-1 companies. Penetrating a higher percentage of patients is financially more attractive than penetrating a lower percentage of patients but charging products cheaper.
c) Finally, over 95% of Chinese citizens are covered by the national basic medical insurance. The basic insurance reimburses on average 70% of the expenses for drugs in Class B category, which four Chinese PD-1 drugs are in. Meanwhile, the national insurance fund is under heavy burden and controlling drug prices is a must. Therefore, PD-1 drugs that entered the national reimbursement drug list all had surprisingly large price drops during their negotiations with the insurance committee.
d) Regarding your second question, there is no clear answer to that. Corporations determine their product pipelines based on their own strategic reasons. Keytruda has been a promising product since its clinical trials and has been a hot-selling product since its commercialization in 2014. My guess is that all these Chinese corporations saw this ten years ago and considered PD-1 a great opportunity.
Q
Frost & Sullivan estimates that China's market share in the global PD-1 market will rise over the years towards 2030. Why is this the case?
a) Regarding the global market, one thing worth mentioning is that the PD-1 markets in developed regions account for the majority of the global PD-1 market share. It is known that Keytruda and Opdivo's key patents will expire in 2028, and a large number of generic drugs may flood in with much lower prices. At the same time, the penetration of PD-1 drugs in developed regions is already relatively high, and there is less room for further penetration compared to China around 2028. With lower prices and relatively stable sales volumes, the market size in terms of revenue is forecasted to start declining around 2028.
b) For China, although there are many players in this market, there is still room for further penetration. The price is already low and can be expected to remain stable for many years. Therefore, the market size in terms of revenue is forecasted to continue to rise, leading to a growth in China's share in the long term.
c) In summary, the China market share is growing because the Chinese PD-1 market has a larger room for further penetration compared to markets in developed countries.
Q
Keytruda retains about a fifth of the PD-1 market share in China today according to PDB's sample hospital data, despite no insurance coverage and relatively high prices in the country, how could they achieve that?
a) Brand name: Both MSD's brand name and Keytruda are convenient for penetration into hospitals. 'Imported products' are often associated with 'better quality' in the public consciousness.
b) Willingness to pay: This is more of my personal view. In terms of culture, the bond within a family is very strong in China. A family can put in everything or even borrow a loan for a sick family member. To be more specific, even though disposable income is low in China, families in China are often willing to spend a relatively high percentage of their disposable income to pay a premium price for drugs with a better brand name.
*This interview was published in Bloomberg Reporter: For Hong Jinsan Original title: China's Drug Price Negotiations Offer a Glimpse into the Future for Companies in the US >> .
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