Multinational drug company sales sluggish to speed up the Chinese market

For many pharmaceutical companies, the situation of persistently increasing sales volume will probably end. The most important issue is the impact of “patent expiration”. Many companies, including pharmaceutical giants such as Pfizer, Johnson & Johnson, and Novartis Pharmaceuticals, all experienced declines in the fourth quarter of 2011 in varying degrees.

Among them, Pfizer’s fourth-quarter profit fell by 50%, the US Johnson & Johnson’s profit dropped by 89%, and Swiss Novartis’ profit dropped by 46% due to the expiration of “Lipitor” patents.

Multiple factors lead to poor performance

For foreign pharmaceutical companies, the second half of 2011 is undoubtedly an eventful event. The expiration of patented medicines and the sequelae of “bridging doors” have caused these companies to fall into sluggish sales.

At the beginning of the new year 2010, Johnson & Johnson entered the bribery door. On April 9 of that year, Johnson & Johnson stated that it agreed to pay a fine of US$70 million and reached a settlement with the U.S. Securities and Exchange Commission and the Federal Ministry of Justice. Both agencies previously accused Johnson and Johnson with bribing doctors in public hospitals in several European countries. Iraq paid kickbacks to related personnel.

Subsequently, Germany's Merck Pharmaceutical Co., Ltd. released its 2010 interim report and also disclosed: “The company received letters from the US Department of Justice and the Securities and Exchange Commission requesting the company to provide operational data in other countries to investigate whether it violated the overseas bribery law.”

After that, more and more foreign drug companies fell into the bribery scandal. GlaxoSmithKline, Pfizer, Bristol-Myers Squibb, AstraZeneca, Eli Lilly and other pharmaceutical giants are among the surveys.

Among them, in February 2011, Pfizer offered its U.S. Department of Justice and the SEC some unpaid money in non-US markets; in April, British pharmaceutical giant GlaxoSmithKline acknowledged the acceptance of the US Department of Justice’s Criminal Fraud Section and SEC investigation.

Jiang Huayang, a research fellow in the pharmaceutical industry at China Investment Advisors, pointed out that among the above-mentioned companies whose net profit has fallen sharply, they are subject to high market access thresholds for pharmaceuticals, high drug development costs, lower than expected market reactions, and high drug patent expirations. The impact of costs.

Pfizer was affected by acquisition-related factors and other one-off items. In addition, the expiration of the Lipitor drug, a hypolipidemic drug, caused widespread sales of generic drugs, resulting in a significant decline in net profit.

Johnson & Johnson spent approximately 2.9 billion U.S. dollars in fees related to litigation and product liability due to frequent "recalls" and litigation in 2011, resulting in a decline in fourth-quarter earnings; and Novartis Pharmaceuticals was subject to restructuring costs and R&D provisions. The company's fourth-quarter net profit also fell sharply, dragged down by continued downward adjustments in drug prices and stronger Swiss francs.

Developing China's generic drugs market

There is no doubt that the expiration of the patented patent Lipitor's patent not only caused its pharmaceutical company Pfizer to suffer a significant decline in sales volume, but also that for the entire pharmaceutical industry, it may be difficult for the pharmaceutical industry to sell up to 13.7 billion yuan in medicine in the future. .

In 2012, it became a disaster year for patented drugs. In the coming months, the expiry of drug patents such as Seroquel, Sunerning, Actos, and Daiwen means that major pharmaceutical companies around the world are facing huge loopholes in sales. .

Among them, Roche's drug Avastin, which was revoked by the U.S. Food and Drug Administration for approval of the use of this drug, together with layoffs in the U.S. and European markets in 2011, caused Roche sales to decline. Taking into account the impact of exchange rate changes, Roche’s fiscal year 2011 revenue was 5.3 billion Swiss francs, which is a decrease of 7% from the 2010 fiscal year.

In this case, for foreign pharmaceutical companies, China, as the world's largest generic market, is undoubtedly quite attractive. However, foreign pharmaceutical companies also face the issue of basic drug bidding.

Obviously, in the face of a huge market temptation, foreign pharmaceutical companies have frequently shot up in the Chinese market and have begun to arrange the Chinese market. “Let someone else copy imitations” is gradually becoming the thinking of foreign drug companies with proprietary drugs.

At the end of 2010, GlaxoSmithKline won 100% of Nanjing Meirui Pharmaceutical Co., Ltd. for 466 million yuan; in February last year, Novartis Pharmaceuticals and Huahai Pharmaceuticals signed a strategic agreement, the main direction of cooperation is patent expired. Drugs; In March, Novartis spent $125 million to acquire an 85% stake in Zhejiang Tianyuan Biology, which was officially approved. For the first time, foreign pharmaceutical companies made significant gains in Chinese vaccine industry mergers and acquisitions; in June, Pfizer and Hisun Pharmaceutical established a joint venture company. With an investment of 295 million U.S. dollars, the new company is positioned to develop patent expired drugs.

Jiang Huayang pointed out that this is because the implementation of the new medical reform policy in China gives more opportunities to foreign pharmaceutical companies. The potential of China's pharmaceutical market segment is huge, including the market for generic drugs, and the advantages of high-tech and high-quality pharmaceuticals for foreign drugs have prompted foreign drugs. Enterprises choose to force the Chinese market.