Top 10 Companies in the Hospital Pharmaceutical Market in China

The Top 10 Companies in the Hospital Pharmaceutical Market in China

Executive Summary

Industry overview

• China has maintained impressive economic growth in terms year-on-year (Y-o-Y) GDP growth rate over the last decade. In 2009, the Chinese pharmaceutical market recorded robust sales of $26.1bn at a Y-o-Y growth of 28.5%.
• The recent healthcare reforms (2009) that focus on public health services, medical treatment, medical insurance and drug supply for both urban and rural residents could favor the mid-to lower-end drug producers, whereas the high cost drug companies could be adversely affected. The reform could reduce the profit margins in the drug distribution sector which in turn will benefit hospitals as a result of monetary funding by the government.
• The Chinese pharmaceutical market is highly competitive and fragmented with the top 10 players accounting for 16.4 % of the total sales in 2009. Pfizer had the largest market share at 2.5%, followed by AstraZeneca (2.1%) and Bayer (1.9%). Seven out of the top ten companies were multinational foreign companies, whilst the remaining three were domestic companies, contributing to cumulative 2009 sales of $3.2bn and $.1.1bn respectively.
• General anti-infectives and alimentary tract and metabolism remained the leading therapeutic areas in China with 2009 sales of $7bn and $3.3bn at a Y-o-Y growth of 24.4% and 30.7% respectively. Cardiovascular drugs and various (mainly traditional Chinese medicines) therapy area formed the other major segment registering 2009 sales of $3.1bn and $2.8bn respectively.

Pfizer

• Pfizer led the Chinese hospital pharmaceutical market in 2009, posting $641m in sales at Y-o-Y growth of 30.8%. Its anti-infectives and cardiovascular market presence in recent years has primarily been driven by the performances of Sulperazon (an antibacterial drug) and Lipitor (a statin), respectively, while its strength in the antineoplastics segment was fuelled by Pharmorubicin (epirubicin), a chemotherapy drug.
• Pfizer’s therapeutic focus is underscored by a strong presence in the general anti-infectives, cardiovascular and antineoplastic segments. The musculo-skeletal system area registered the highest Y-o-Y growth rate of 46.5% in 2009 with Cerebrex (celecoxib), Dynastat (parecoxib) and Enbrel (etanercept) being key contributors to revenue.
• Establishing partnerships with international or domestic companies is one of Pfizer's strategies to grow in the Chinese hospital pharmaceutical market. Pfizer has also invested in several R&D activities along with its focus on expanding in Chinese market through mergers and acquisitions.
• In October 2009, China's Ministry of Commerce approved the company's pending acquisition of Wyeth and the ministry's decision required Pfizer's commitment to divest certain animal health assets in China.

AstraZeneca

• AstraZeneca has established partnership with fifteen hospitals, seven universities and research institutions, and eight CROs (Contract Research Organizations) in China, enabling the firm to benefit from the lucrative Chinese market.
• AstraZeneca was the second largest player in the Chinese hospital pharmaceutical market in 2009, generating $537m in sales, a Y-o-Y growth of 31.4%. Alimentary tract and metabolic drugs constituted the largest share (2009 sales – $164m), followed by cardiovascular disorder drugs (2009 sales – $102m) for the company.
• Losec, a proton pump inhibitor, registered the highest sales of $112m in 2009 at a Y-o-Y growth of 30.3%. Diprivan (propofol), a general anesthetic, and Nexium (esomeprazole) were the second and third highest selling drugs for AstraZeneca, with 2009 sales of $64m and $52m, respectively.
• AstraZeneca's Nexium, Crestor, Symbicort and Seloken XR have been included in the third edition of China’s National Reimbursable Drugs List (NRDL) which was published by the Ministry of Human Resources and Social Security (MHRSS) in November 2009. The new list is expected to be operational at the provincial and hospital level by the second half of 2010. AstraZeneca's revenues coming from these drugs are set to increase after the reimbursement lists become effective.

Bayer

• Bayer was the third largest player in 2009, registering sales worth $487m in the Chinese hospital pharmaceutical market. Bayer’s strong presence in this market has been largely attributed to the strong sales performance of its well-established products such as Glucobay (acarbose), Avelox (moxifloxacin) and Adalat (nifedipine).
• Bayer’s therapeutic focus has diversified considerably due to the 2006 acquisition of Schering, with the portfolio now spread across more than thirteen therapy areas. Alimentary tract and metabolism was the highest selling therapy area registering sales worth $119m followed by general anti-infectives with 2009 sales of $99m.
• Bayer signed an agreement with the People's Liberation Army General Hospital (301 Hospital) in Beijing in July 2010, with an immediate aim to conduct research focusing on gynecological disorders (endometriosis and uterine fibroids) and later to widen the research portfolio to other therapeutic areas.
• Bayer acquired the exclusive Chinese rights to Bioton's recombinant human insulin SciLin for $43m. Given the facts that China has a vast diabetic population (around 40m) and insulin is one of the fastest growing segments of the Chinese diabetics market, the product in-licensing is set to drive Bayer's growth in the Chinese market.

Sanofi-Aventis

• Sanofi-Aventis was the fourth biggest player in the Chinese hospital pharmaceutical market in 2009, posting $461m in sales, with a market share of 1.8%. The company had the strongest presence in the blood and blood-forming organs therapy area compared to any other pharmaceutical company in the Chinese market, registering 2009 sales of $151m.
• The firm has several competitive pharmaceutical products covering the major therapeutic areas such as cardiovascular (Aprovel/Co-Aprovel), CNS (Stilnox), diabetes (Lantus), oncology (Taxotere, Eloxatin) and internal medicine (Essentiale), whilst its top selling product is the antiplatelet drug, Plavix.
• Sanofi-Aventis signed an agreement with Minsheng Pharmaceutical Group to form a new consumer healthcare joint venture focusing on vitamins and mineral supplements in January 2010. Through this venture, Sanofi-Aventis is set to boost its revenues in the coming years, given that vitamins and mineral supplements is the largest consumer healthcare segment in China and Minsheng already has a strong presence in this sector.
• Sanofi-Aventis invested $90m in its manufacturing facility in China to build production lines for SoloSTAR, the prefilled injection pen used to administer Lantus (insulin glargine). With an expected capacity of up to 50 million units, this investment will allow Sanofi-Aventis to build its presence in the medical devices and diabetes sector.

Roche

• Roche has operated in China since 1994 as Shanghai Roche Pharmaceuticals, which is a joint venture with Sunve Pharmaceuticals of Shanghai. Shanghai Roche has grown as the fifth largest pharmaceutical company in China with 2009 sales of $419m and a Y-o-Y growth of 29.4% over 2008.
• The strong performance of its blockbuster products: CellCept, Xeloda and Mabthera resulted in the antineoplastic and immunomodulating agents therapy area achieving sales of $286m in 2009.
• Analysis of Roche’s R&D pipeline illustrates that the company’s core therapeutic focus remains oncology, where the company is studying its marketed oncology products like Avastin, Xeloda and Tarceva for new indications.

Js Yangzijiang Fty

• Js Yangzijiang Fty is a domestic Chinese pharmaceutical company with 2009 sales worth $367m, and Y-o-Y growth of 23.6%.
• The anti-infective drugs, contributing to cumulative sales of $195m represented the largest therapy area for Js Yangzijiang Fty, driven by its top three selling anti-infectives: Zuo Ke, Fa ke and Ren Su. Alimentary tract and metabolism drugs and diagnostics agents represented the second and the third largest therapy areas with 2009 sales of $69m and $37m respectively.
• The company's top 10 products captured a market share of 78.4%, achieving 2009 sales worth $288m. Six of the top ten brands were general anti-infectives (Zuo ke, Fa ke, Ren su, Fan lin, Tinidazole, and Qi pu), with Zuo ke being the highest selling drug in 2009 with sales reaching $84m.
• With 2009 sales worth $32m, Yangzijiang's anti-infective product Fa ke experienced the highest Y-o-Y sales growth of 60.4% over 2008, reaching fourth position in the company's top 10 products list.

Merck & Co.

• Merck & Co. operates in China through fully owned subsidiary Merck Sharp & Dohme (MSD), as it does throughout Asia. The company's therapeutic focus includes anti-inflammatory, antifungal and dermatological, cardiovascular, gastrointestinal, neurological, respiratory, ophthalmology segments.
• In March 2010, Merck's Zocor (simvastatin), a cholesterol lowering drug became the first novel drug produced by a foreign pharmaceutical company to be included in China's essential drug list. The retail price of the drug will be reduced by 50% so that the drug will become more affordable for most Chinese patients.
• Merck has a very strong presence in the genitourinary and sexual health segment, registering 2009 sales of $53m. The sales in this segment were mainly driven by Proscar (finasteride), used for the treatment of benign prostatic hyperplasia. This segment is expected to further strengthen with the launch of its infertility drugs, micronized progesterone and human chorionic gonadotrophin, which are currently in Phase III stage.
• Merck & Co signed an agreement (July 2010) with Sinopharm to establish a vaccine joint venture focusing on marketing human papillomavirus (HPV) vaccines and other selected vaccine products in China. No HPV vaccines have been approved in China to date, and Merck's vaccine is currently undergoing clinical trials in the country.

Kelun Pharmaceutical

• Kelun Pharmaceutical is a domestic Chinese company, owning 16 subsidiaries within and outside Sichuan Province. Kelun Pharmaceutical achieved 56.8% growth over 2008 - the highest rate of growth across all pharmaceutical companies in China.
• Kelun’s therapeutic focus is underscored by its strong presence in the hospital solutions segment which posted 2009 sales of $245m. Kelun is one of the largest manufacturers of IV solutions, with a market share over 20%.
• Sodium chloride injections marketed at different concentrations (0.9%, 3% and 5% solutions), remains the highest selling drug category for the company, posting a strong 2009 sales of $90m with a Y-o-Y growth of 61.4%.

Shandong Qilu

• Shandong Qilu Pharmaceutical is a domestic pharmaceutical company operating in China, which has therapeutic focus in areas including oncology, infectious diseases, cardiovascular diseases, CNS disorders, respiratory disorders and ophthalmologic diseases.
• The company was the ninth biggest player in 2009, registering sales worth $339m in the Chinese hospital pharmaceutical market. Shandong Qilu’s robust presence has been largely attributed to the strong sales performance of its well-established CNS product Shen jie, which contributed to 2009 sales of $116m, capturing 34.3% of the company's revenues.
• Shandong Qilu has a very strong presence in the CNS therapy area, which generated sales of $125m (more than one third of the company's cumulative 2009 sales of $339m.

GlaxoSmithKline (GSK)

• GSK has actively invested in China since the 1980s and is now the tenth largest company operating in China with 2009 sales of $337m. A breakdown of GSK’s 2009 revenues by therapy area highlights the dominance of its anti-infective drugs which generated sales of $161m driven by the strong performance of Heptodin (lamivudine), Hepsera (adefovir dipivoxil) and Zinacef (cefuroxime).
• The company has introduced prescription medicines in many therapeutic areas including: hepatitis, HIV/AIDS, diabetes, asthma, depression and oncology. OTC medicines for cold, pain, arthritis, rhinitis and dermatological diseases are also marketed by GSK along with vaccines for preventing hepatitis (A & B), varicella, measles, mumps, rubella, influenza, tetanus, and pertussis in China.
• GSK entered a deal with Chinese biotech company Jiangsu Walvax in January 2010 to develop and manufacture pediatric vaccines for use in China. GSK is seeking to expand its presence in China with this joint venture by manufacturing vaccines for measles, mumps, and rubella (MMR) and potentially other pediatric vaccines.
• Drapolene, GSK's dermatology product indicated for nappy rash was successfully launched in China in August 2010. Launch activities were held in China's three main cities: Beijing, Shanghai and Guangzhou, which together cover the north, east and south areas of the country, enhancing the company's market presence in China.