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Sino Biopharm pads hepatitis market foothold in China with generic approval

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Sino Biopharm pads hepatitis market foothold in China with generic approval

Sino Biopharmaceutical Ltd.'s recently approved hepatitis B drug could bolster the manufacturer's position in China's hepatitis market.

According to a company announcement Dec. 5, the China Food and Drug Administration approved its antiviral medicine Qingzhong to treat chronic hepatitis B.

Qingzhong is a generic version of Gilead Sciences Inc. and GlaxoSmithKline plc's Viread, which is also known as tenofovir disoproxil.

Qingzhong's approval helps cement the Hong Kong-based manufacturer as the leader in China's hepatitis drug market. Its hepatitis portfolio is headlined by Runzhong, the generic version of Bristol-Myers Squibb Co.'s hepatitis B antiviral drug Baraclude.

"We believe Sino Biopharm is quite competitive in the hepatitis drug area, indicated by Runzhong possessing about 40% of market share while the original, BMS's Baraclude, owns about 47%," ICBC senior research analyst Jialin Zhang said in an email.

The approval of Qingzhong is significant for Sino Biopharm because their current hepatitis drug portfolio has declined in past years due to pricing pressure, Zhang said.

Qingzhong has "tremendous market potential" because it has better efficacy, safety, and lower chance of resistance compared to drugs like lamivudine and adefovir, Sino Biopharm said in its announcement.

In China, the number of people infected with hepatitis B virus is estimated to be approximately 80.7 million. About 25 million have developed chronic hepatitis B, according to 2017 estimates from a Dec. 5 Jefferies note.

The arrival of the generic version Qingzhong naturally spells competition for originator Viread, which secured a spot on China's national reimbursement drug list in February.

Inclusion in China's reimbursement drug list is considered an important avenue for a drug's uptake in the country. To be included on the list, innovative and high-priced drugs commonly take a substantial price cut in order to gain reimbursement coverage. Without state reimbursement, these imported medicines are prohibitively expensive for most patients.

In May 2016, the government negotiated a 67% price reduction for Viread.

According to a Dec. 5 Citi note, Qingzhong could be priced 10% to 20% cheaper than Viread and generate about 452 million Chinese yuan in sales for 2018 and 960 million yuan in 2019.

Considering the competitive landscape, ICBC's Zhang said he expects a lower price for Sino Biopharm to compete with Viread and that competition from other tenofovir generics is also a factor in determining the market share Sino Biopharm can take.

Moreover, the newly approved Qingzhong would also cannibalize Runzhong for new patients, the Citi note added.

China's first bioequivalent generic product

Qingzhong's approval also marks China's first generic drug to pass a mandatory test for all generics to show they are just as good as the original medicine, or bioequivalent.

In March 2016, the State Council issued a guidance requiring generics to undergo a bioequivalence test before they can be approved for the market.

The rule also applies to generics that had been approved earlier and listed on the 2012 national essential drugs list. Manufacturers of these approved generics have until end 2018 to complete the test.

According to ICBC's Zhang, Qingzhong's review took about 10 months from the time the company resubmitted the drug's application.

And while other drugs may have a different timeline, the indication the drug applies for could influence how the government prioritizes the applications.

Sino Biopharm made a clever move, according to Zhang, since the applied indication for Qingzhong is for HIV, a disease with an urgent need so candidate drugs would receive fast-track review and approval.

As of Dec. 6, US$1 was equivalent to 6.62 yuan.