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China selects 7 international drugmakers under expanded purchase program

Seven international drugmakers have been named as likely winners to provide off-patent and generic drugs to public hospitals under China's recently expanded drug procurement program.

Sanofi, Eli Lilly and Co., AstraZeneca PLC, Merck & Co. Inc., Lek Pharmaceuticals d.d., Bristol-Myers Squibb Co. and Dr. Reddy's Laboratories Ltd. are on the list of companies selected to provide the drugs, according to a Sept. 25 notice posted on the website of the Shanghai city government.

About 45 drugmakers are set to become exclusive suppliers of 25 off-patent or generic drugs to Chinese public hospitals under the program, the notice said.

As a next step, public opinion will be invited on the winning companies until Sept. 29, it said.

One Hong Kong-based analyst told S&P Global Market Intelligence the list is unlikely to undergo major changes after the public opinion deadline. "The list is basically set," the source said, on condition of anonymity.

The program, introduced in December 2018 and expanded in September this year, aims to make off-patent and generic drugs cheaper and more accessible in the country.

To be included in the preferred drugs list, companies need to make substantial price cuts in exchange for greater market access.

"The price cut is larger than expected, with manufacturers appearing willing to slash prices to gain market share," Cyrus Ng, a Hong Kong-based healthcare analyst at Jefferies, said in a report issued Sept. 24.

Drug prices were slashed by a further 25% from the first round, the Shanghai government notice said.

Ng also said multinationals were "more active in participating in the price cut" this time around.

Sanofi, for instance, slashed the price of its antiplatelet medication clopidogrel by 83%, Guosheng Securities analyst Zhang Jinyang said in a report released Sept. 25. The company put in a bid to supply the drug at 17.81 yuan per pack, according to the notice.

The company is also set to provide blood pressure treatment irbesartan and hydrochlorothiazide tablets.

Eli Lilly, meanwhile, won two bids to supply chemotherapy drug pemetrexed, or Alimta, in two separate doses, while Lek Pharmaceuticals was awarded the contract for supplying cardiovascular drug rosuvastatin.

AstraZeneca is set to secure orders for cancer treatment gefitinib, or Iressa, while Bristol-Myers is set to be awarded contracts for blood pressure therapy fosinopril, or Monopril. These two companies were the only winners in the previous round.

For the first time, an Indian drugmaker, Dr. Reddy's Laboratories, won the bid for olanzapine, a treatment for schizophrenia and bipolar disorder.

The entry of Indian drug manufacturers and the participation of multinationals is likely to intensify competition and result in larger price cuts in future rounds of drug procurement, Ng said in his report.

As of Sept. 24, US$1 was equivalent to about 7.12 Chinese yuan.