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GBI (www.gbipharma.com) is China’s leader in pharmaceutical and biotechnology information and consulting services. GBI provides in-depth analysis and insights that enable investors to stay ahead of China’s pharmaceutical, biotechnology and healthcare industries. Our information offerings... More
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  • Simcere’s sustainable development model
    By Berry Pan

    Simcere Pharmaceutical and Merck will establish a joint venture in China to focus on drug research, registrations, manufacturing and sales. In the first phase, the cooperative effort will seek to meet ballooning Chinese market demand in the cardiovascular and metabolic fields, which will strengthen the patented and generic product lines of both companies.

     
    Simcere is a US-listed pharmaceutical company specializing in the development, manufacturing, and marketing of branded and proprietary pharmaceuticals in China. According to GBI SOURCE, Simcere and its wholly owned subsidiary currently distribute products in areas including cardiovascular, oncology, GI, antimicrobial, CNS, respiratory, and others.

     Simcere’s patented anti-cancer drug Endu – an anti-neoplastic agent – amassed revenue of RMB 49.6 million (US$7.6 million) in the first quarter of 2011, equal to 10.3% of the company’s total revenue for the same period, an increase of 32.8% from RMB 37.4 million in Q1 2010. Although impressive, Simcere still needs partnerships in order to maintain a stable pipeline. How will the company sustain its recent performance?

     Early this year, Simcere signed a partnership agreement with Nanjing Medical University to focus on novel stroke treatments, and last year inked another with BMS for anti-cancer drug research. Diseases in these areas have high incidence rates, suggesting a demand for more effective treatments.

    By concentrating its efforts on both its patented and generic drugs/pipelines, Simcere is attempting to create a sustainable path for future revenues, a strategy that will force the company to compete both with large multinationals as well as domestic state-owned champions. If it is not able to compete head-to-head with these entities, the company will need to carefully navigate a path between the two. From the perspective of government regulators (and capital markets), positioning itself as a domestic innovator may cast the company in its most favorable role.

    Sep 05 5:32 AM | Link | Comment!
  • The pros and cons of Medical E-commerce
    By Frank Chen

    Medical E-commerce is not a new concept for most people. However, several recent transactions in the pharmaceutical industry are compelling observers to take another look.

     Back in May, an online shopping website owned by Tencent, Paipai.com, launched its online drug store. Then, on June 20th, Taobao announced that its Taobao Mall B2C platform was opening a new online pharmacy channel. Next, on July 6th, Jointown Pharmaceutical reportedly entered the online drug sales market in cooperation with 360buy.com. Most recently, on July 12th, news broke that Dangdang.com had applied for an SFDA license to sell medicine online, after having finalized an exclusive partnership deal with Sinopharm.

     According to statistics released by the China Association of Pharmaceutical Commerce, the Chinese retail market hit RMB 173.9 billion in 2010, a year-on-year increase of 17%. Nevertheless, internet sales of pharmaceutical products represented only a paltry RMB 100 million of that total.

     

    In comparison to the potential of medical e-commerce, the number of enterprises active in this space remains relatively small. According to SFDA data, only 67 companies have obtained online trading licenses, of which 36 are B2C, 23 are B2B, and 8 are third-party trading platforms.

     At present, there are three issues to be considered in medical e-commerce: (1) the availability of online trading licenses; (2) medical product distribution; and, (3) online sales reimbursement rates.

     Due to restrictions on online trading licenses, Taobao and other third-party online trading websites that hold online medical information service licenses are permitted to display medical information, but not to sell medicines. Websites expecting to join the online drug sales market must comply with the Online Medical Product Sales and Services Permit regulations.

     Drug distribution is another obstacle to the development of online trading. On one hand, distributing online retail pharmaceuticals carries higher costs than traditional wholesale pharmaceuticals; but on the other hand, medical e-commerce websites must retain only legally qualified GSP distributors to deliver drugs, since no third party may distribute drugs without proper certification.

     

    On the issue of medical reimbursements, despite annual increases in the number of reimbursed drugs and the greater acceptance of electronic payment methods, it will remain an impossible task for online drug sellers to be certified as designated drug stores for the purposes of medical insurance.

     And yet, despite these drawbacks, online drugstores have obvious price advantages over traditional bricks-and-mortar drugstores. Average online drug prices will always be lower due to significantly lower management and overhead costs.

     Meanwhile, the development of e-commerce will eliminate the boundaries of traditional distribution channels, and it will provide greater access to drugs for those consumers living in remote or rural areas. While the SFDA and other watchdogs have (rightfully) increased their scrutiny of the medical e-commerce area, the sector will likely continue to be an area of interest, investment, and controversy.

    Aug 29 5:20 AM | Link | Comment!
  • Multi-site practice pilot program expanded nationally with limited success
    By Roger Rao

    On July 25th, the Department of Medical Administration at MOH released its “Notice on expanding the multi-site physician practice pilot project”. The document states that the 2-year-old program will soon be broadened to encompass all Chinese provinces/autonomous regions/municipalities, and amended to ease physician participation. Case in point, only intermediate professional/technical credentials will henceforth be required for eligibility, rather than the more senior qualifications currently needed. Moreover, qualified physicians will be granted the right to practice at two sites in addition to their current one.

    Over the past several decades, all Chinese physicians were required to register at only one practice site (the so-called physician registration system). This meant that a doctor could only work for the hospital where he/she had registered, and practice elsewhere was deemed illegal, a circumstance that persisted from graduation to retirement. In this environment, physicians were viewed as hospital assets, creating an erstwhile oligopoly on medical human resources. Theoretically speaking, the multi-site practice program would be helpful in breaking this chokehold, releasing more medical resources to mostly non-state-owned hospitals. It would also benefit physicians, who would be free to maximize their capabilities and income potential. Unfortunately, the actual impact of the pilot project over the last two years has been less than hoped for: only a handful of physicians have applied, with most others seemingly unwilling to participate.

    The reasons for this apprehension can be found in the program itself. Significantly, we note that as a condition for participating, physicians must first obtain approval from their registered sites, something that would intuitively seem difficult, as these independent economic entities are unlikely to allow their staff to indirectly create more competition for employers. Additionally, new rules have saddled multi-site physicians with stricter management and performance review measures, a system in which their registered site conducts assessments and compiles professional records. Clearly, this cedes considerable power over physicians to the primary sites, even if the doctors have been approved for multi-site practice. In summary, the current pilot project has initiated an important process for making more efficient use of medical resources, but substantial obstacles remain. Ultimately, it may be most efficient to abolish the current physician registration system altogether.


    Aug 11 9:47 PM | Link | Comment!
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