China’s pharmaceutical market is changing the cage – the future growth is still expected, the 14th Five-Year Plan clearly defines the future development space, and the increment comes from true innovation
On January 30, 2022, the Ministry of Industry and Information Technology and other nine departments jointly issued the “14th Five-Year Plan for the Development of Pharmaceutical Industry” (hereinafter referred to as the “Plan”). By 2025, the main economic indicators will achieve medium-high growth, outstanding innovation achievements in frontier fields, enhanced innovation driving force, significantly improved industrial chain modernization level, further improvement of the medical equipment supply guarantee system, and comprehensive internationalization towards high-end. The “Planning” proposes that during the “14th Five-Year Plan” period, the R&D investment of the whole industry will increase by more than 10% annually; by 2025, the proportion of new sales of innovative products in the incremental operating income of the whole industry will further increase. During the “14th Five-Year Plan” period, the average annual growth rate of the pharmaceutical industry’s operating income and total profit will remain above 8%.
China’s pharmaceutical innovation is divided into three stages: keeping up with the international pace, removing the fake and retaining the real, and going overseas to win the global market. Currently, it is in the throes of eliminating the fake and retaining the real.
Yiou Think Tank believes that China’s pharmaceutical industry can be divided into three stages: the first stage, the rapid development stage of China’s pharmaceutical innovation from 2015 to 2021, keeping up with the international pace; the second stage, from 2021 to the present, the stage of “removing the false and preserving the true” of innovative drugs, a large number of Me-too drugs will be eliminated from the market, and First-in-class innovative drugs will usher in real advantages. This stage is expected to last for 5-10 years; in the third stage, there will be truly innovative drug companies in the world, and they will start to deploy overseas. .
The above three stages should be a gradual process, but in the actual market, there are products that skip the second stage and directly enter the third stage, and the expansion of such products in the international market is not smooth.
The progress in the stage of removing fakes and saving the truth of innovative drugs has led to a large number of Biotech companies facing business challenges in supply chain, market access, sales promotion, payment system, etc.
With the gradual commercialization of clinical pipelines, the target competition among pharmaceutical companies has turned to commercialization competition, and a large number of Biotech companies are facing commercialization challenges. Different from Big Pharma, most Biotech companies lack commercialization experience. After a large number of R&D pipelines are converted into marketed drugs, they face commercial transformation difficulties, especially when they need to compete with many similar products.
Yiou Think Tank believes that the national medical insurance negotiation provides innovative drugs with a fast way to enter the medical insurance catalog, but for homogeneous innovative drugs, they face the embarrassing situation of “halving” the listing price, and when similar competing products enter the medical insurance catalog at the same time. , we all return to the same starting line. That is, after excluding the price war, it will face more intense market competition.
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