None of the five global top 10 generic drug companies in India are from China!

Five of the world's top 10 pharmaceutical companies are from India, not China.

According to the latest report of IMARC, an international market research organization, the global generic drug market will reach US$386 billion in 2020.

Take the United States as an example.

On the other hand, the proportion of sales of generic drugs has been declining, reaching only 11% in 2020.

This has also brought about changes in the pattern of generic drug manufacturers.

According to public information statistics in 2020, the top ten global generic drug revenues are:

In 2010, the well-known American media fierce pharma also announced the ranking of the top ten generic drug companies that year:

01.

The M&A history of Teva, the world's largest generic drug company, can be traced back to the 1970s.

In 2016, Teva completed the acquisition of Allergan's generic drug business at a price of 40.

If Teva became the biggest reliance on acquisitions before, Viatris, who may challenge his position in the future, also relies on mergers and acquisitions.

In 2019, the US generic drug giant Mylan and Pfizer Pfizer announced a merger.

Another change is that a total of five Indian companies have been squeezed into the 2020 list, and India’s reputation as a powerhouse of generic drugs is becoming more and more "worthy of its name.

The top-ranked Sun Pharmaceuticals ranks among the world's fourth largest generic drug companies in 2020, and its development also represents the expansion trajectory of the Indian generic drug giants.

02.

Innovation has become a key word for pharmaceutical companies.

When all pharmaceutical companies turn to innovation, are generic drugs really worthless?

In the United States, 9 out of 10 prescriptions filled out by doctors are generic drugs.
In 2019, the U.
S.
generic drug market reached a value of 115.
2 billion U.
S.
dollars (approximately RMB 750 billion), with a compound annual growth rate of 11.
7% during the 2014-2019 period.
According to the estimates of IMARC Group, the US generic drug market will show strong growth in the next five years.

Back to China, there are reports that 2018 is the first year that my country's generic drug consistency evaluation varieties have passed, and it is also the starting point for my country to rise from a big generic drug country to a powerful country.
In the past, my country’s generic drug market and the global market have been inverted.
On the one hand, generic drugs have been in a weak position in the competition with original drugs for a long time, and they are basically a two-to-eight layout; but on the other hand, the generic drug market based on the aforementioned layout is in a weak position.
In 2018, the scale is still close to 500 billion yuan, coming from more than 4,500 pharmaceutical companies.

The core reason for the upside-down is the "high pricing of generic drugs.
" In order to solve this problem, one is to increase the over-reviewed varieties, and the other is to increase the purchase volume, which requires the real linkage of the three medicines.

In March 2016, the original CFDA forwarded the "Opinions on Carrying out the Quality and Efficacy Consistency Evaluation of Generic Drugs" issued by the General Office of the State Council, and the consistency evaluation of generic drugs was officially launched.
In November 2018, the Medical Insurance Bureau formally implemented the "4+7" pilot project for mass procurement.
So far, 4 batches and 5 rounds have been carried out.
According to official data, as of 2020, the average drop of the first three batches of selected products has reached 54%, and the overall cost savings has exceeded 100 billion yuan; provincial centralized procurement can save 24 billion yuan each year; high-value medical consumables coronary stents The cost savings of centralized procurement reached 11.
7 billion yuan.

Generic drugs are the foundation of the transformation and innovation process.
In order to reduce drug prices and improve patient accessibility, China cannot do without generic drugs.

03.
Where is the spring of generic drugs? Why can't China produce the top 10 generic drug companies in the world?

With the advancement of centralized procurement, generic drug companies are gradually desperate: Where is the spring of generic drugs?

But it has to be said that generic drugs after centralized procurement are the norm and the new birth of generic drugs.
Comparing the data in the United States, the price of clopidogrel 75mg tablets in the United States for generic drugs is $0.
3/piece (approximately RMB 1.
97), and the first bid price of the same specifications of domestic Xinlitai is 3.
18 yuan/piece, and the second expansion The lowest price of the stone medicine won the bid is 2.
44 yuan / tablet, this is the truth about the price of generic drugs.

As for why the price of generic drugs in the United States is so low, the key lies in full competition.
Regardless of whether the top 10 pharmaceutical companies in global revenue are Indian or Israeli, one of their main camps is the US market, with a large space policy, including a half-year protection system for the first generic drugs, including encouraging hospital pharmacies and pharmacies to use generic drugs.
"The United States has a free replacement system for generic drugs on the market.
The basic principle is consistency, which is recognized by both pharmacists and patients.
Therefore, as soon as generic drugs are launched, pharmacies and hospital pharmacies automatically replace them, and about 80% of sales are switched to generic drugs.
" An investor familiar with the sales of generic drugs in the United States previously told the E drug manager.

In the past, the main reason for the high prices of generic drugs in China was channels.
After centralized procurement, channel factors no longer affect drug prices, and economies of scale have become the core factor in the prices of generic drugs.
Why is Qilu Pharmaceutical's lowest price every time it collects reports, but every time it posts a good news.
"It is still profitable, you can visit his factory.
" An investor said.

The inability to reduce lower costs also makes it impossible for domestic pharmaceutical companies to go abroad on a large scale and compete with those top generic drug companies on the same stage.
A piece of past data shows that in 2016, Teva had 330 product listing applications waiting for approval by the FDA, of which 71 are expected to be approved in advance, and 95 were the first to apply for listing.
In contrast, the total number of ANDA approved by 22 domestic pharmaceutical companies in 2016 was 22, which is in a "small outbreak" state compared with 12 in previous years.
If you do not go overseas, whether it is an innovative drug or a generic drug, it is equivalent to a broken leg.

However, it is worth paying attention to why the generic drug market of 500 billion yuan (equivalent to 2/3 of the US) can not cultivate a global TOP10 generic drug company?

"The concentration is too low and there is no integrator" commented by an analyst.
In the past many years, Chinese pharmaceutical companies have not undergone major mergers or acquisitions, and global generic drug companies have all been built through acquisitions.

However, as centralized procurement continues to lower drug prices, the polarization of industry enterprises will become more obvious, and there will be mergers in the future.
This development can refer to the growth of the top 10 generic drug companies, and the development of domestic pharmacies.
Hillhouse Capital has stirred up the entire industry like a catfish, and has greatly increased the concentration of the industry.

There is also a view that in the future, outstanding innovative drug companies will stand out.
Pharmaceutical giants that have successfully transformed generic drugs will rise to the next level.
Emerging small companies will turn around, and they will be able to survive by relying on centralized procurement to streamline personnel as much as possible.
However, the intermediate companies have accumulated a certain amount of accumulation, but also have their own inherent problems.
The slower response may be a change of ownership.

On the other hand, the entry of Indian pharmaceutical companies into China will also make mergers and acquisitions necessary and accelerate their arrival.
After the "China-India Drug Regulatory Exchange Conference" was held in June 2019, the four Indian giants were all thinking about how to open the Chinese market.
Sun Pharmaceuticals and Kangzhe signed a cooperation agreement and said they would expand their business in China; Cipla established a joint venture with Jiangsu Chuangnuo and held a controlling stake to build a factory in China; Strides also established a joint venture with Sihuan Pharmaceutical; Natco Pharma focuses on the development of anti-tumor drugs in China through Durui Pharmaceuticals.

Reduce costs through mergers to achieve economies of scale or look forward to the future of generic drugs, then who will be the integrators?

04.
Who may become an integrator?

If in the next 5 or 10 years, the integration between generic drug companies will inevitably occur, then who will be the integrator?

The integrator either needs to have a strong capital operation ability, or needs to have funds, or needs a strong operation ability, or is limited by the scale, it is difficult for him to transform and innovate as a whole.
If you follow these levels, you can find companies in two dimensions: one comes from the industry direction, or a CMO company, or a pharmaceutical company; the other comes from the direction of capital, after all, capital is best at saving.

The scale of Yangtze River Pharmaceutical is capable of supporting the title of "integrator".
The first is revenue.
What is the bottom line of Yangtze River Pharmaceutical's revenue? All are mysterious numbers in the industry.
A list of the top 200 local pharmaceutical companies in hospital sales shows that in the first half of 2020, Yangtze River Pharmaceutical's sales reached 9.
297 billion yuan, roughly 20 billion yuan on an annual basis.
More statistics show that Yangtze River Pharmaceutical's revenue has reached 80 billion yuan.

The second is personnel assets.
According to its official website, the company currently has more than 16,000 employees, which is second only to Hengrui, China Biopharmaceuticals, and CSPC.
Among them, the chemical generics team has nearly 1,000 people, mainly engaged in the research and development of high-end preparations, chemical generics, consistency evaluation and other drugs, or it is one of the largest branches besides the sales team.

Again it is variety.
As of 2020, the group has 301 products on sale and 314 specifications, covering anesthesia and analgesia, respiratory and anti-allergic, anti-infection, anti-tumor, cardiovascular, and contrast agents.
Among them, 122 varieties of chemical drugs are on sale, and more than 500 projects are under research.
Up to now, 25 varieties have passed or deemed to have passed the consistency evaluation, of which 15 are the first in the country to have passed the evaluation.

Last year, Yangzijiang began to disclose its innovative layout.
In November 2020, Yangtze River Pharmaceutical entered into an exclusive strategic cooperation with Alvotech, a biopharmaceutical company, and its joint venture with Changchun Hi-tech, Anwo Hi-tech.
According to the agreement, Yangzijiang Pharmaceutical will obtain the commercialization rights of 8 biosimilar drugs in China.
At that time, Yangzijiang Pharmaceutical said that the commercial cooperation with Alvotech and Anwo High-tech was an attempt of international cooperation in biosimilars.
Yangtze River’s vision is to develop, manufacture and introduce high-quality biosimilars.

Also focus on Qilu Pharmaceutical, another unlisted pharmaceutical company.
If it becomes an integrator, the company may reach the level of leading generic drugs in the world.
According to the Shandong Business Daily, Qilu Pharmaceutical's operating income in 2019 was 23.
2 billion yuan, surpassing CSPC during the same period and on par with Hengrui Medicine.

In terms of assets, there are more than 15,000 employees, 2,000 full-time R&D personnel, and ten production bases.
In terms of drug varieties, Qilu has launched more than 200 products in China.
According to data from Minai.
com, Qilu Pharmaceuticals ranks second in the number of approved generic drugs in 2020, and the application for listing of generic drugs ranks fourth, with a very strong first imitation ability.
It also launched the first bevacizumab biosimilar drug, and there are also products under development.
Qilu has a certain foundation in internationalization, and its APIs and preparations cover more than 70 countries and regions including Europe, North America, and Japan.

Since last year, Qilu Pharmaceutical has been making frequent innovations.
It has successively launched the innovative bladder cancer drug Vicineum (an ADC targeting EpCAM) and the new hypertension drug firibastat.
There are currently 15 Class 1 new drugs under development.
If you become an integrator, you will become a large pharmaceutical company with parallel generic drugs + innovative drugs.

The last one is bold conjecture-Hillhouse Capital.
Just like you in 2017, it is hard to imagine Hillhouse Capital will buy pharmacies on a large scale.
After the establishment of Gaoji Medical, which is responsible for the operation of pharmacies in 2017, it took only two years to acquire tens of thousands of pharmacies, and it is now the largest chain pharmacy in China.

Hillhouse’s admission to the drugstore has brought "panic", and the entire industry has started a mighty wave of acquisitions, which has promoted the concentration of the entire pharmaceutical retail industry.
According to a data, the chain rate of pharmacies in my country was 49.
44% in 2016, and this indicator has increased to 55.
34% by 2019.
The market share of TOP10 chains increased from 14.
4% in 2014 to 21.
6% in 2018.
Looking at the case of Hillhouse Capital rescuing Belle from a cross-border perspective, Hillhouse's integration seems to be able to rejuvenate.

Beginning in 2020, Hillhouse has subscribed for a large amount of equity in pharmaceutical companies in the secondary market, with the intention of becoming the second or third largest shareholder through fixed increase.
He successively participated in the fixed increase of Kailaiying, Hualan Biological, Health Yuan, etc.
This year, he participated in the new stock issuance investment of Luye Pharmaceutical and Nuocheng Jianhua, and the amount of intention fixed increase has exceeded 10 billion yuan.
In addition to becoming a major shareholder through large investments in the secondary market, excluding investment in the primary market, Hillhouse also directly participates in the manufacture of medicines through the incubation and establishment of Lunlu Pharmaceutical.
Therefore, in the future, Hillhouse will “roll up his sleeves” again and become an integrator, and whether it will become the spring of generic drugs, we can wait and see.

Original title: Global TOP10 generic drug companies, with five seats in India, none of them are from China! Is there a future for Chinese generic drugs? Who will be the integrator?