News China forces insulin price cuts resulting in pullback for...

China forces insulin price cuts resulting in pullback for global pharma players

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Xinhua, a Chinese news channel, commented on the price cut on insulin which was brought on by China’s volume-based procurement (VBP) program. An over 45% discount on insulin products had to be given by companies to find a place in Chinese public hospitals, which is projected to save China over a billion in medical expenses next year.

The VBP scheme provides large contracts to Chinese public hospitals for insulin companies that adhere to price cuts. The procurement scheme has cover until 2022, amounting to over 200 million doses.

Healthcare groups have divided the insulin drug into four categories which include insulin analogs, basal, and quick-acting.

As China forces price cuts on insulin, international companies like Sanofi, Eli Lilly, and Novo Nordisk saw a decline in their revenues as a result of their respective insulin products; Lantus, Humalog, and Novolog. These three companies held over 70% of the 120 million patients in the Chinese market before this scheme. Insulins are the top drug for diabetes in the country.

Of the three companies, Eli Lily cut its insulin prices the most and lost no market share as a result. The company had to reduce its insulin price by about 75% in this process and price of Humalog Mix25 is now $2.96.

Lantus and Humalog were able to hold onto their respective market shares as well, after an over 65% price cut was implemented by their companies.

Novo Nordisk also cut its insulin cost, however, it was not enough to retain its top position in the Chinese market and it expects to see a 3% drop in global sales.

As the price cut on insulin is enforced in China, domestic companies are expected to benefit by gaining a collective market position of close to 30%.

The VBP scheme has affected Big Pharma significantly and it is expected that other drugs, such as antibody medicine, may be the next to come under the VBP umbrella. While the scheme was tested first in 2018, large molecule medicine had not been targeted before this.

Danish company Novo has seen significant success in China with growth in insulin sales over 10% amounting to almost $1.5 billion. The company is currently hard at work bringing GLP-1 drugs to the Chinese market this year.

The U.S. has also seen lower prices of insulin after heavy public outcry.

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