How can Chinese pharmaceutical enterprises break away from the "mire" and go out of the international model

[market analysis of chinapharma.com] the global competition of Western pharmaceutical preparations is like a race Chinese "participating" enterprises have made progress, and the overall competitiveness is not satisfactory For some well funded pharmaceutical enterprises, going abroad for investment and M & A is a shortcut to internationalization Meng Dongping, vice president of China Chamber of Commerce for the import and export of health care products, still remembers the embarrassing scene five years ago In 2012, Meng Dongping led a team of domestic pharmaceutical companies to visit Russia A Russian businessman complained to her, hoping to import more and higher quality drugs from China At that time, the Chinese local preparations in the global drug market In 2012, the total number of Chinese pharmaceutical companies approved in the US generic drug application (anda) was only 11 Now, when Meng Dongping leads the team to visit again, he is no longer worried about the recurrence of embarrassment So far, there are nearly 100 preparations of more than 80 Chinese preparation enterprises, which have been sold in the European and American markets, and more than 200 products have been registered and are being registered With the frequent warm wind of encouraging the export policy of preparations, the voice of China's local preparations export is growing louder However, in the international market competition, China's local preparation enterprises suffer from the enemy: the product competition is not the European and American enterprises, the low-end product competition is not the Indian enterprises, more importantly, their own strength is not hard Whether China's local preparations can eventually broaden the journey of the global market, get out of the mire of low-speed growth, and enhance their success in drug production, innovative R & D, M & A and other "moves" still need to go through more tests In the process of international division of labor and cooperation, Chinese pharmaceutical enterprises have been at the bottom of the value chain for a long time, consuming domestic energy and making the most profits in foreign pharmaceutical enterprises In the four links of the pharmaceutical value chain, Chinese pharmaceutical enterprises have certain advantages only in the production and manufacturing links "It's not really international, it's just an output of trade." Meng Dongping pointed out Due to the low threshold of the industry, a large number of enterprises rushed in From 2009 to 2016, the number of enterprises engaged in the export of pharmaceutical products increased by 63% in seven years As a result, there is a serious overcapacity of API, the ability of export negotiation is weakened, domestic enterprises fight at home and abroad, and customers bargain around "It's a bit like the rare earth industry in the past, where our own enterprises compete with their own enterprises and make the market a mess It's unprofitable." Wang Xuegong, vice president of China Pharmaceutical Management Association, said It is understood that the average export profit of China's chemical APIs is only about 5%, while the net profit margin of chemicals is generally more than 30% According to the data of China Chamber of Commerce for import and export of pharmaceutical and health care products, compared with about 6% five years ago, the proportion of export volume of Western pharmaceutical preparations in drug export has increased to more than 10%, but the proportion of export of APIs still exceeds 80% For example, more than $600 million of drug exports of PetroChina group each year, more than 90% of which are contributed by APIs Trying to export high value-added preparations has become an option for pharmaceutical companies to break through the siege Most enterprises in developing countries as a station After that, some pharmaceutical companies began to undertake international contract processing industry, that is, using the approval documents of foreign pharmaceutical companies to do international OEM Pharmaceutical companies undertaking OEM production must meet the requirements of cGMP in Europe and the United States, which means that it takes a long time and costs a lot of money According to Caijing, a preparation workshop spent nearly 200 million yuan in five years to pass the FDA certification Most of the products transferred to China are old generic drugs, with low profits and large market fluctuations They often face the risk of delisting due to the failure of price competition For the export of reagents, the main opportunities for Chinese pharmaceutical companies lie in the expiration stage and the later generic name stage, including the imitation after expiration, challenge and authorized imitation within the period For the vast majority of Chinese enterprises, at present, they do not have the strength of challenge and authorized generic drugs After expiration, it is a realistic choice to apply for or purchase anda production license in the field of generic drugs, and enter the mainstream market in Europe and the United States In December 2016, at the delivery ceremony of Qilu pharmaceutical's first batch of powder injection preparations exported to the United States, Bao Haizhong, deputy general manager of Qilu pharmaceutical, repeatedly took off his glasses and wiped his tears, "it's not easy." This is the domestic pharmaceutical enterprises to achieve the export of cephalosporin injection powder to the United States It usually takes four to five years for an export preparation from initial research and development to final marketing, with an investment of millions to tens of millions of yuan Among them, it needs to go through the production of R & D, confirmation and registration batch, stability research, compilation and application of registration data, and a series of preparations for listing, including packaging design, production organization, product release and logistics selection, etc after being approved According to the person in charge of international certification of Qilu pharmaceutical, when the company's preparations were just exported, the big difficulty was that the recognition of Chinese pharmaceutical enterprises and the recognition of "made in China" brand in foreign countries, especially in the regulatory market were low, "it was necessary to apply for and obtain international certification constantly, gradually obtain recognition, and the export of preparations grew step by step It does take a process " "The American pharmaceutical market pays special attention to quality Once there is a quality problem, it will have a great impact on the market in the future." The head of import and export business of a pharmaceutical company told Caijing From 2009 to 2017, the U.S FDA issued import warnings to more than 40 Chinese pharmaceutical enterprises, including many large pharmaceutical enterprises Especially in recent years, the FDA's monitoring of Chinese APIs and preparations has changed from random inspection to routine inspection The main problems are in data, including incomplete data, inaccurate data, falsification of analysis report, replacement of records, copying records, inconsistency between date and signature, etc The main way for most Chinese pharmaceutical companies to enter the international market is mainly through trade If we compare the participation of Western pharmaceutical preparations in the global market competition to a race, European and American pharmaceutical companies, even Indian pharmaceutical companies, have already made a large part of it, and Chinese pharmaceutical companies are just starting According to US FDA data, in 2016, FDA approved 22 anda applications from Chinese pharmaceutical companies In the first half of 2017, another 18 anda numbers were approved This is still weak compared with generic Indian pharmaceutical companies According to rough estimates, the annual sales volume of several domestic pharmaceutical companies that really go global is more than 200 million US dollars, compared with the annual sales volume of the third largest pharmaceutical company in India in the US market of more than 1 billion US dollars After the expiration of a drug, there is a short-term profit window, which has been filled by Indian enterprises and local generic pharmaceutical enterprises in Europe and America "For some products that have expired for a long time, we don't have much chance." Wang Xuegong told Caijing, "many Chinese enterprises only register two or three varieties in the United States, so it is difficult to form international scale sales." The large-scale export of preparations is a complex system engineering The development of foreign generic drugs is different from that of China, and the life cycle of a product may be very short A generic drug company will generally launch new products three or five years after its listing, and constantly fill in the gaps, which is a continuous and dynamic process The internationalization strategy of pharmaceutical enterprises is inseparable from a series of conditions, such as product layout, continuous R & D registration, docking and development capabilities to European and American markets, and production sites that meet the standards According to Wang Xuegong's analysis, it is fortunate that there will always be some expired drugs every year If these varieties are well grasped and the window period is seized, there may be an opportunity to break through Domestic pharmaceutical enterprises have the advantages of APIs For some products with a large quantity and a high proportion of cost composition, they can take advantage of the integrated advantages of APIs Like the pharmaceutical enterprises in India in those years, several domestic leading export enterprises of generic drugs began to accelerate internationalization through M & A, which is one of the effective paths for domestic pharmaceutical enterprises to go global in recent years Wang Yao, vice president of Fosun Pharmaceutical, Jason, managing director of international investment and business development of humanwell pharmaceutical Zhang said that through M & A and investment, enterprises can not only obtain overseas technology, but also obtain global sales network, which is conducive to their own R & D products and M & A products, directly entering the global network, realizing business layout overseas, and also helping to upgrade domestic operations In 2016, the number of overseas M & A cases of large and medium-sized pharmaceutical enterprises reached 25, with a total amount of 5.5 billion US dollars For example, LVYE pharmaceutical acquired aceno's transdermal drug delivery system business with 245 million euros, and obtained product lines, manufacturing centers and business systems in Germany, and more than 20 partners worldwide In the same year, humanwell acquired epic of the United States Pharma is expected to have more than 100 anda approvals in the future; in 2017, Fosun Pharmaceutical acquired 74% of the equity of Indian pharmaceutical company gland Pharma with us $1.091 billion, setting a new record for overseas M & A amount of Chinese pharmaceutical companies Investment and M & A are not as simple as "buy buy" Taking the case of LVYE pharmaceutical's acquisition of aceno's transdermal drug business in Switzerland as an example, this acquisition belongs to the bidding project LVYE has made full due diligence in the early stage, fully evaluated its potential business risks, and explored its business value, focusing on how the target company can make contributions to its future, bring products and technologies to China, and whether it can generate more business and cooperation The same effect "The integration after M & A is very important Many companies have completed the M & A and found it difficult to integrate In the business negotiation stage, there needs to be enough teams to connect " Jiang Hua, vice president of green leaf group, analyzed the experience afterwards If an enterprise does not have a formed international strategy, blind M & A will have risks "If you look at a foreign enterprise, you can't just look at its financial statements, but also measure whether the enterprise really understands the business model and operation rules of the foreign market." Wang Xuegong said In recent years, large pharmaceutical companies at home and abroad have also tried to wade a new path -- cooperation with small and medium-sized innovative pharmaceutical companies Wu Xiaobin, President of Greater China of Pfizer Pharmaceutical Co., Ltd., once said that multinational pharmaceutical enterprises can carry out various forms of drug R & D cooperation with small and medium-sized innovative pharmaceutical companies, "encourage the investment and construction of innovative pharmaceutical companies, and give small enterprises freedom" From the combination of imitation and innovation to innovative drugs, Chinese enterprises are ambitious At present, more than ten innovative drugs have been approved by FDA to enter the clinical research stage However, for Chinese pharmaceutical companies, it is in a period of pain Some pharmaceutical companies haven't seen returns on innovative drugs and acquisitions, but in order to upgrade the industry and adjust the strategy, they have to stop the orders of generic drugs and APIs In the past, China's pharmaceutical exports faced a major dilemma because of the different policies and standards Now, a number of policies have been issued to encourage the internationalization of preparations, which may improve China's standard formulation mainly considers the production technology level, drug inspection level and economic development capacity of each regional market, while compared with foreign countries, the domestic product quality standard is relatively low in the formulation process Liu Dianbo, chairman of LVYE pharmaceutical, pointed out that China's past 20 years have been a special period, and people in the industry have a kind of speculative mentality In this case, no one really contributes and works according to international standards GMP in China is also formulated by referring to cGMP in the United States However, at the implementation level, most pharmaceutical companies think GMP is too cumbersome to be strictly managed according to GMP The regulatory department