Behind the ugly performance brought by the compliance crisis: summary of financial statements of large pharmaceutical enterprises in China

Source: FDC pharmasia news 2013-11-14 Shanghai - unsurprisingly, the sales of large pharmaceutical companies in China hit a wall in the third quarter (Q3), mainly because the large-scale compliance survey affected the marketing activities during this period Overall, the top 10 multinational pharmaceutical companies in China's market reported an average increase of 1% in Q3 sales, while Q2 of these companies increased by 18%, Q3 increased by 24% last year and 23% in 2012 GlaxoSmithKline PLC, in the middle of China's compliance storm, reported a 61% drop in Q3 sales in China If GSK is excluded, the average growth rate of the remaining nine enterprises is only 8% (excluding the products transferred by Pfizer Inc to its joint venture with Zhejiang Hisun Pharmaceutical Co Ltd., the average growth rate is 9%), which is a relatively poor growth figure for such a strong emerging market as China Compared with Q2 data, most enterprises' revenue growth has declined by 6-10% Roche, down 18% from the previous quarter, but still maintains a relatively high year-on-year growth rate (16%); Merck & Co Inc is the biggest victim after GSK, with growth rate down 21% from the previous quarter and sales down 8% from the same period last year Adam Schechter, Merck's executive vice president and President of global human health, told analysts that the potential demand for the Chinese market is still high "In the current situation, the sales of some hospitals have declined," Schechter said It's not just Merck, it's the same with other multinationals " Merck also has to deal with some of the changes in its joint venture with Simcere Pharmaceutical Group The company's coo Renaud sermondade resigned after the company announced its privatization plan Top 10 multinational pharmaceutical companies ranking in sales growth in China * enterprise name growth rate (by fixed foreign exchange) Q3 Q2 Q1 2012 1 Pfizer 8% * 14% 18% 34% 2 AstraZeneca 13% 21% 17% 3 Sanofi 5% 15% 21% 15% 4 Bayer 0% * 12% 29% 23% 5 Roche 16% 34% 20% 27% 6 Merck - 8% 13% 23% 25% 7 Novartis 18% 25% 21% 24% 8 GlaxoSmithKline - 61% 14% 19% 17% 9 Novo Nordisk 7% * * * * 14% 16% 10 Lilly 11% 18% 11% 27% average 1% 18% 20% 23% average after excluding GSK 8% 18% 20% 23% Source: corporate financial report and Asia Pharmaceutical News analysis Note: the growth rate data reflects all businesses of the enterprise in China, except Merck (excluding animal health and OTC businesses), Roche (excluding diagnostic products businesses) and GSK (excluding OTC businesses) *According to IMS Health 2012 hospital data ranking **Excluding the impact of products transferred to the joint venture with Zhejiang Haizheng pharmaceutical industry, the growth rate of Q3 Pfizer in China is 16%, Q2 and Q1 are 22% and 31%, respectively ***Bayer didn't release Q3 data, but said the growth was flat on the earnings conference call ****Novo Nordisk made a one-off distribution adjustment in the quarter, which resulted in sales growth of 15% to 12% in the first nine months The results of different products reveal some truth In such a difficult market environment, different products may present completely different market performance As one of the few companies that published the product breakdown data of Chinese market, AstraZeneca PLC's Q3 business in China grew by 13% in total, reaching US $467 million, with the growth rate down 8% compared with Q2 and 10% last year However, AstraZeneca still reported a 20% increase in its main asthma treatment product, budesonide, and a 15% increase in its gastroesophageal reflux drug, Nexium (esomeprazole) Pumik was listed in China in 1999, and Nexium entered the Chinese market in 2004 Both of them are included in the national health insurance catalogue (ndrl) as class B drugs, which means that the government health insurance fund can pay most of the expenses, and patients only need to pay a small part of the expenses However, AstraZeneca also said its high blood pressure drug Betaloc (metoprolol) had weak growth in the Chinese market In 2004, the company launched Betaloc injection in Chinese market, and in 2005, it launched Betaloc sustained release agent At present, Betaloc of ordinary dosage form has been included in the basic drug list (EDL), that is to say, patients can claim 100% of the drug cost, but the basic drug pricing is very cruel, which brings great pressure to manufacturers Betaloc in the sustained-release formulation was not included in the base drug, but was included in the medical insurance catalog Generic competition also affects the market performance of products to a certain extent The generic competition faced by pumik and Nexium is not big There are only one or two generic varieties in the market, and the original research drug can occupy the leading position However, Betaloc has to face the competition from dozens of generic drugs of various dosage forms It's easy for doctors to switch to the varieties of local manufacturers, especially in the face of questions such as why they need to prescribe expensive drugs and whether they have collected kickbacks Compared with local enterprises in the early stage of compliance survey, some analysts have predicted that these problems faced by multinational enterprises may make major local enterprises occupy more market share However, this seems to have led to a slowdown in the large-scale growth of the entire drug market According to the prescription drug data of more than 700 large hospitals counted by Citibank, sales in August increased only 4.8%, much lower than the growth rate of q211.4% Richard Yeh, Citibank's director of China Medical and health industry research, wrote in an investor memorandum on October 21: "this trend is consistent with what we observed during our visit to China in September The sales activities of both domestic and multinational pharmaceutical enterprises have been affected, and doctors have become more conservative when prescribing drugs As the investigation is still in progress, we expect that the drug sales will continue to face pressure in the next three to six months " Bin Li, managing director of Morgan Stanley in Hong Kong, also wrote in a memorandum on August 5: "given that the Chinese government's investigation of GSK's marketing behavior continues, we note that the marketing behavior of local pharmaceutical companies has become more cautious We believe that this will affect the sales growth of the whole industry, at least in the short term " According to local media reports, 172 listed pharmaceutical companies in China generally face the problem of slow growth in Q3, with sales increasing 13.7% on average, down 2.7% compared with Q2 Only the biotechnology sector showed a rapid growth trend, up 5.9% from the previous quarter The worst time has passed for China's drug market August may be the most difficult month Some enterprises do observe the recovery trend of their market activities "As far as China's market is concerned, there was a slight decline in growth rate in the third quarter, but in the next few months, last month seems to have started to return to normal trend," said Marc dunoyer, AstraZeneca's chief financial officer, in a financial report conference call on October 31 There has been a slow and small decrease in the stock level of many varieties including our products in China, but I don't think it will last too long So there won't be much change between quarters " Sanofi cited IMS data to show that the growth figures of the whole pharmaceutical market in July and August were relatively weak Chris Viehbacher, CEO of Sanofi, said in a financial report conference call on October 30: "but I think, at least within Sanofi, promotion and sales activities are gradually returning to normal I spent a week in China in the middle of October, and I have a personal experience of the market situation there I am very confident that everything will gradually return to normal " Novartis AG is the only company that claims to increase its market share in China, with Q3 growing 18%, ranking first among its peers, but still below q225% and q322% in 2012 Novartis CEO Joseph Jimenez attributed the high growth to the company's emphasis on innovation "Novartis has not been affected," Jimenez said in a conference call on the financial statements on October 22 For the Chinese market, we focus on innovation, and we grew by 18% in the third quarter, which proves everything " "In fact, the latest data I just got a few days ago shows that in terms of the drug market, August was only about 8 percent up," Jimenez said This statistic is about hospital varieties, which can well reflect the situation of the whole market That's a lot lower than the ten percent increase before August "So I think the Chinese market will be affected But the impact will not be permanent Therefore, I believe that we can recover in a few months, and we will see good growth rate data again " Novo Nordisk as, which relies on insulin products for its sales in China, said it may be less affected by the survey Lars Sorensen, CEO of Novo Nordisk, said in the financial report conference call on October 31: "the market change we noticed was that doctors were reluctant to see sales representatives of pharmaceutical companies in the third quarter But doctors will continue to prescribe insulin to treat diabetic patients " Sorensen, however, noted that sales growth at Novelli has slowed He said that because the product can not be reimbursed and the price is more expensive, it belongs to the "more sensitive product line to promotion activities" "We do see some trends and we are optimistic to some extent that things are back to normal," Sorensen said This summer, the Chinese government's investigation into the potential marketing behavior of pharmaceutical companies has become a hot topic, but judging from our factories or operating departments, the government authorities have no intention to continue the investigation We think it's great that everything is going back to normal "