Western Medicine Preparation Exportation of Chinese Pharmaceutical Enterprises to the U.S.(2)

Future competition to be intensified as FDA encourages generic drug application

FDA received a total of 1,306 generic drug applications and approved 767 ANDAs in 2017. It is observed that FDA has been encouraging generic drug application in recent years, and continued to speed up review of generic drug ANDAs, with most of the approved products being competitive products of existing similar generic drugs.

In the future with many competitive products existing at the same time, the competition will be intensified on the U.S. market, the market prices will be driven down by new entrants, and the price falling of generic drugs will become a general trend, which has been shown from the waxing and waning of the generic drug prescription volume and sales proportion in the past 5 years: the generic drug prescription volume gradually increased from 86.5% to 90.3%, however, on the contrary, the generic drug market sales reduced from 28.7% to 23%, from 2013 to 2017. Many factors were involved therein, however, the price falling of generic drugs was undoubtedly an important factor thereof.

2 first generics + 1 variety succeeding in patent challenge

The competition intensification is inevitable in most of generic drug variety fields that latecomers continue to enter, however, varieties that are first generic or succeed in patent challenge can enjoy a period of market exclusivity according to the current policy of the U.S. market, thus to obtain considerable profits.

The drug that is approved as the first generic may be marketed on the patent expiration date of the corresponding original drug, and has a 180-day period of market exclusivity, while a generic drug that succeeds in patent challenge may also obtain a period of market exclusivity. Under either circumstance, the generic drug with a period of market exclusivity will have predominant market pricing power and sales expectation.

The first generic: Cyclophosphamide for Injection as per the USP produced by Hengrui Medicine was approved by FDA in November 2014 to be formally marketed in the U.S. The overseas income of Hengrui Medicine reached RMB 637 million in 2017, which was mainly contributed to by this first generic approved on the U.S. market. The ANDA of Henrui Medicine’s Desflurane for Inhalation was approved by FDA this February, which would be the 2nd first generic of the company marketed in the U.S. following cyclophosphamide. The approval of those two first generics is of special significance to the future growth of international performance of Hengrui Medicine.

Besides the above two first generics, Huahai Pharmaceutical’s Paroxetine Capsules was formally approved by FDA on August 21, 2017, to become China’s first generic drug succeeding in PIV challenge. The approval of Paroxetine Capsules through patent challenge and the first generic qualification thereof obtained on the U.S. market would not only earn considerable profits for Huahai, but also provide important technical support for the marketing of Huahai’s subsequent products.

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