Biopharma gives up price on 2nd-tier fighting brands in China

While the Chinese Ministry of Health will be able to claim victory for securing heavily discounted pricing and then providing widespread access to important medicines in China, biopharma appears to have, by and large, offered up the required massive discounts for relatively mature brands where pricing has been established in most other markets around the world, a client note from analysts at SVB Leering Research relating to Thursday’s announcement by China's National Health Security Administration (NHSA) on the results from the National Reimbursement Drug List (NRDL) negotiations.

The Chinese government has secured heavily discounted access to breakthrough medicines (that are now regarded as part of the standard of care) for many cancers, many inflammatory, infectious and metabolic diseases and even for certain rare disease indications.

Level of pricing concessions opaque at this point

So far it is not clear exactly what the prices will be by comparison to the US prices, but compared to the existing list prices in China (which are already 25%-35% below US list prices), the newly-negotiated prices appear to be an additional 45%-85% below existing list prices in China. This puts the new pricing in China for widespread reimbursement at ~20%-35% of the US list prices.

The upside from such discounting for established biopharma brands is still unproven, but established participants in the Chinese market are obviously looking to replace rapidly eroding legacy (off-patent) product revenue with incremental sales of their older still-protected brands, via the NRDL listing and subsequent expanded adoption. However, for many brands with significant commercial market sales, the upside from NRDL listing, compared to private market sale, is still unclear.