GlaxoSmithKline's price reduction drugs have great mystery, short time or hard to wash

Source: GlaxoSmithKline, a British pharmaceutical giant, suffered from a bribery scandal in 2013 on April 13, 2016 In the face of high price fines, credit crisis and the decline of market share, the company began to wash the white road GlaxoSmithKline is trying to rebuild market confidence by cutting the number of drug representatives, cutting the price of some drugs, and even abandoning patent applications in some countries Especially in the Chinese market, GlaxoSmithKline has cut the price of some drugs by 20% - 30% However, for the above measures, some institutions and insiders have raised doubts Judging from the price reducing drugs chosen by the company, the market share is relatively small, and foreign drugs have generally entered the price reduction channel, so it is said that the sincerity is insufficient GlaxoSmithKline took the lead in cutting prices in China recently, GlaxoSmithKline announced that it would stop applying for drug patents in low-income countries to help the world's poorest people buy generic drugs of GlaxoSmithKline at affordable prices GlaxoSmithKline said it would do so in low-income and least developed countries, some 85 of them 51 countries, such as Vietnam, Cameroon and Sri Lanka, belong to low and middle-income countries, and GSK will still apply for patents, in order to provide licenses to manufacturers of cheap generic drugs in exchange for a small amount of patent fees It is not common for pharmaceutical companies that spend a lot of money to develop new drugs to give up patent application Looking at the Chinese market, GlaxoSmithKline is using a similar approach to revive its declining performance as a result of the bribery scandal Last year, for three hepatitis B virus resistant star products: hepodin, hewili and Werder, GlaxoSmithKline implemented price reduction, with an average price reduction of 20% - 30%, becoming the first foreign drug enterprise to make substantial price reduction in China In response to the price reduction, GlaxoSmithKline said: "this is to further improve the access of Chinese patients to innovative drugs By taking practical actions, we hope to better meet the needs of Chinese hepatitis patients." "GlaxoSmithKline's strategy is to trade price for quantity and regain the market," the head of GlaxoSmithKline continued in an interview with Beijing business daily GlaxoSmithKline's revenue in China plummeted 61% in the third quarter of 2013 after the bribery incident "GlaxoSmithKline's clear goal is to reduce prices in exchange for shrinking market share GlaxoSmithKline needs to show sincerity to win the government's support and recover the lost share The best way to achieve this is to reduce the drug price, which also meets the requirements of China's drug price authorities " Said the person After the price for volume measure, although Herve gisserot, general manager of GlaxoSmithKline China, said that China's sales would resume growth in 2016, the growth would reach double digits from 2017 But industry insiders are skeptical of GlaxoSmithKline's earnings forecast, which has not been completely out of the shadow of the scandal The reason is that although China is the second largest drug market in the world, its growth rate is also slowing down Until now, China's market has maintained an annual growth rate of 15%, but the third-party agencies predict that the annual growth rate of sales in China's market is only 6% - 9% in 2016-2020 There is a great deal of mystery in reducing the price of drugs, such as giving up patents and lowering the price of drugs, which seems to ignore profits at all In fact, there is a great mystery in the industry First of all, pharmaceutical companies are very concerned about drug patents Some industry insiders said that although GSK has abandoned the application for drug patent in some countries, in fact, for these least developed countries, it can hardly afford the expensive original research drugs, and the proportion of actual sales in GSK's overall revenue is very low So for GlaxoSmithKline, the impact on revenue or profits is minimal In other words, GlaxoSmithKline used this approach to "please" the markets of the least developed countries without compromising profits and incomes Secondly, in the Chinese market, it is the first to reduce the price of several core drugs In the eyes of the insiders, this approach seems to be "selfless", but it has other plans For example, hepaticine is the largest sales product among the three drugs After entering China in 1999, it quickly became the most popular Western medicine product for the treatment of hepatitis B in China Before the global patent expired in September 2006, the annual sales of hepaticine in China was nearly 700 million yuan The drug is also one of the drugs named in GlaxoSmithKline's current bribery scandal for the benefit of bribery Although the drug had been sold well before, its current business situation in China is not satisfactory: GlaxoSmithKline specifically pointed out in the second quarter of 2015 that the drug's sales in China fell by 26% Before GlaxoSmithKline did not introduce respiratory varieties and other varieties on a large scale, Hedin was the company's main source of income in China, and ranked first in the hepatitis B antiviral market for a long time But later, with more varieties entering China, the proportion of this variety in GlaxoSmithKline China decreased, and it was also surpassed by broadside of Bristol Myers Squibb in the whole market GlaxoSmithKline's initiative to reduce prices to show innovation is seen by outsiders as a way for the company to reduce profits in exchange for the market However, some industry insiders remind that the reason why GSK can keep the price of relevant drugs down is due to the compression of GSK's operating cost In March this year, GlaxoSmithKline laid off more than 100 marketing personnel, many of whom were high-level personnel such as regional managers Hard to clean in a short time since 2013, the medical representative was punished with a "sky high price" of 3 billion yuan for suspected bribery After the fine, GlaxoSmithKline made a series of adjustments to the company's sales business: it announced the cancellation of the individual sales indicators of medical representatives, and the compensation will be linked to the quality of services provided to doctors, professional knowledge and the overall performance of the company's business, rather than the number of drugs prescribed by doctors; the bonus of medical representatives will no longer be linked to the sales, and the number will also be reduced, From 40% of the previous salary to 25% GlaxoSmithKline hopes to reshape its corporate image through these means But GlaxoSmithKline still faces a long way to go Although it has been two years since the bribery in China, the British company has been in constant trouble in China recently First of all, on October 13 last year, ran Jinfa, a hepatitis B patient, sued Guangzhou Huadu District People's Hospital, Tianjin Pharmaceutical Research Institute Pharmaceutical Co., Ltd and GlaxoSmithKline (Tianjin) Co., Ltd for medical disputes A court session was held in Huadu District People's court to hear the case GlaxoSmithKline's second liver drug, hewili, was found to have an adverse effect of causing osteomalacia After that, GSK Tianjin factory failed to pass the drug flight inspection, resulting in the withdrawal of the EU GMP certificate and the inability to export Sanwei to Europe In addition, industry insiders pointed out that with the cancellation of individual pricing and the implementation of drug price negotiation mechanism, China's new round of drug price reform has triggered more competition from local generic drug manufacturers, which has led to the decline of sales or growth of many multinational drug companies in China in the last quarter The days when multinational enterprises and patent manufacturers can make money with their eyes closed have passed They need to reduce their prices to regain market share In the future, the price reduction of foreign drugs in China will become a trend This means that GlaxoSmithKline will still face greater competition in the future when the price reduction tide comes.