Adapting To Changing China Regulations Propels Sanofi But How Far?
Executive Summary
Just months ago, China's category two vaccines sector barely showed signs of life after being hit hard by a quality scandal. It now helps Sanofi deliver double-digit growth, showing what difference adapting to regulatory change can make in China.
Sanofi has had a solid quarter in China, driven by its rebounding vaccines business. The French drug maker’s sales were up by 17%, returning to high double-digit growth.
The strength comes mainly from vaccines sales, especially its five-in-one vaccine Pentaxim, which reported "very strong" growth.
"Growth in our pediatric vaccines of 31% at CER and constant structure reflects strong in-market performance in Europe and China, especially from our AcXim family of pediatrics combination products," said CEO Olivier Brandicourt in the company's second quarter earnings call.
Reconstruct Distribution
Shedding more light on the performance, a spokesperson at Sanofi China attributed the growth to adapting to regulatory changes and establishing a new business model, along with increasing demand.
A vaccines distribution freeze was implemented in 2016 when a mother-daughter team in Jinan, Shandong province was found to have distributed vaccines for over a decade, selling them across the country despite possessing no temperature-controlled facilities,
In the aftermath, the government issued a regulation, ordering the distribution of all vaccines to stop, "posing a great challenge for the delivery and transportation of vaccines", said the company.
Since then, Sanofi's vaccine subsidiary Sanofi Pasteur has sought to reconstruct its channels. The company "adopted new logistics solution in a short period of time, and succeeded in establishing a new business model and distribution system to ensure the timely supply of vaccines to the people in need."
Not only timeliness but stricter requirement for temperature controlling required for both domestic and international players were implemented. After the scandal, safety and smooth transfer are increasingly the top issues, said industry insiders. They are required to store vaccines between 2C to 8C throughout the logistic chains, and constant temperature collection is a must because manufacturers are required by China FDA to keep records.
To that end, Sanofi has resorted to a digit tracing system, using technology by Alibaba's health wing, AliHealth
Meanwhile, China has seen a growing demand for class-two vaccines for pediatric use. That presents opportunities for combination vaccines.
"This [the demand for pediatric vaccines] is leading to greater requirements for the safety and convenience of vaccines. With its advantages, Pentaxim has been widely recognized by parents. As Pentaxim can complement China EPI [essential program for immunization] as well, market demand has grown greatly." said the company.
Helped by the strong demand and quick logistics re-buildup, Sanofi's overall polio/pertussis/HiB vaccines of which Pentaxim is a part grew by 26.3% in emerging markets.
New Reimbursement, Product Launch
In a bid to provide access to high-priced innovative new drugs to patients, the Chinese government recently offered coverage to 44 medicines with large price cuts.
Among those is Renagel / Renvela (sevelamer) from Sanofi, with an indication for hyperphosphatemia among adults with chronic kidney diseases (CKD) in China. The treatment is now covered at CNY243 for a bottle of 30 80mg tablets, a reduction of 35.8% from CNY378.
Overall emerging markets sales are €10m while in China the occurrence rate for audit CKD patients on dialysis is roughly 0.1%, or 700,00 people, said the company.
In May, the Shanghai-based Sanofi China also launched a Genzyme rare disease treatment, Myozyme (alglucosidase alfa) in the market. Indicated for Pompe disease, a rare disease estimated to affect two out of 100,000 people in China, the product sales amounted to €33m in the quarter, up 23%.
Despite the estimated rare disease patient population, China hasn't had national financial aid and incentives for orphan drug development, posing challenges to such drugs in the country. Local government such as Shanghai meanwhile has set up its first special fund for lysosomal storage diseases including Gaucher disease and Pompe disease.
Still, Sanofi’s biggest selling drug, Lantus (insulin glargine) seems to be slowing down in emerging markets in the quarter, after a double-digit decline in the US market. The long-lasting insulin grew 5.5% in the quarter, compared to 9.6% for the first three months.
The group's emerging market sales is €2.6bn for the quarter and €5.17bn in the 1H.
The company's total sales increased by 2.4% in emerging markets in 2016 to €9.59bn and less than 1% in China to €2.04bn in the 12 months.
From the editors of PharmAsia News