All kinds of scenes before price reduction of retail peptic ulcer drugs

Core Tip: In early April this year, the NDRC informed the decision to adjust the maximum retail price of some digestive drugs since May 1, and the price of the proton pump inhibitor dominant at the present stage falls by more than 40%. In Beijing, Chengdu, Guangzhou, Nanjing, and Changsha five cities, four of them belong to medium concentration markets in terms of the overall market of peptic ulcer chemical drugs and only Guangzhou is a low concentration decentralized market. The market of proton pump inhibitor distributes in three ladder shapes…

(Menet Feature) In recent years, the NDRC has reduced the maximum retail price of many drugs for almost 30 times accumulatively. Last year, the NDRC reduced the maximum retail price of some hormone drugs, drugs regulating endocrine and nervous systems, and antibiotics used for treating infection and cardiovascular diseases as well as circulatory system series of drugs in succession. In early April this year, the NDRC issued another notice and decided to adjust the highest retail price of some digestion system used drugs since May 1, which once again attracted everyone’s attention. This drug price adjustment involved in a total of 53 varieties and more than 300 formulation specifications, with an average reduction of 17%, while the average reduction of high-priced drugs decreased by 22%, of which proton pump inhibitor’s price reduction exceeded 40%.

Most of the digestive system drugs are sold in the retail terminal market and make more contribution to the revenue of pharmacies. Proton pump inhibitors are currently mainstream drugs, whether the new price cuts will affect the market is still unknown, but we can take this opportunity to learn about the sales situation of such drugs in the market.

I randomly selected the data of the fourth quarter in 2011 of Nanjing, Guangzhou, Chengdu, Beijing and Changsha five cities as the representative to analyze the terminal retail market of the digestive ulcer chemical drug and have a glimpse of such market segment.

Proton pump inhibitor alone occupies half of the chemical drugs of peptic ulcer 

The treatment of peptic ulcer mainly uses chemical-based drugs. According to the function mechanism of the drug, the market is chiefly divided into four categories: antacids, H2 receptor blockers, proton pump inhibitors and gastric mucosal protective agents. Proton pump inhibitors are the main development direction of clinical use at this stage, accounting for half of the chemical drugs of peptic ulcer, and the proportion gradually increased. Many of these drugs are the key products making chief contribution to the sales performance of enterprises, such as LOSEC Tablets, Omeprazole Enteric-coated Capsules, Esomeprazole Magnesium Enteric-coated Tablets, and Takepron Capsules.

The main role of anti-acid drugs is to neutralize too much gastric acid, and representative drugs include aluminum hydroxide, sodium bicarbonate, aluminum magnesium carbonate and other weak base of magnesium or aluminum salts. Bayer’s Talcid Chewtab and Xiuzheng’s Vitamin U Belladonna and Aluminum Capsules have been widely known to consumers as well-known brands.

Gastric mucosal protective agent drugs are commonly known as bismuth potassium citrate and sucralfate and the action principle is to form an ulcer protective film. Representative drugs include: Gefarnate Tablets, Bismuth Potassium Citrate Capsule, marzulene-S granules. About more than 30 products are competing in the terminal.

H2 receptor blockers are tidine series products and inhibit the secretion of gastric acid by blocking the H2 receptor, so as to promote the healing of ulcers. In this price adjustment, oral formulations were not involved, only the price of cimetidine injection of SK&F whose price has been set alone has reduced to 8.7 yuan since May 1, 2013. As the price of most tidine series products is 10 yuan or less, they are a category with the lowest average price among all subtypes of drugs curing digestive ulcer, and they are a household name. Other categories such as proglumide occupy smaller shares.

Due to the fact that the infection of helicobacter pylori is the main cause of peptic ulcer, in addition to direct use of anti-peptic ulcer drugs clinically at present, binary therapy or ternary therapy will generally be used to reduce the recurrence rate of ulcers, and the therapies are mainly amoxicillin + lansoprazole or amoxicillin + lansoprazole + clarithromycin + metronidazole + bismuth potassium citrate and so on.

Urban concentration has regional characteristics

By measuring the overall market and proton pump inhibitor market concentration (Figure 2) of five cities through CR4, we can find that only Guangzhou belongs to a low concentration decentralized market in the peptic ulcer chemical drug market, and other four cities all belong to medium concentration markets. Every city has 80-90 or more products sold in the terminal market but temporarily no brand has dominated the market.

Proton pump inhibitor market distributes in three ladders: Guangzhou belongs to a medium concentration market; Beijing, Nanjing and Changsha belong to a high concentration one and Chengdu belongs to an extremely high concentration market. Averagely, every segment factory has over 50 products on sale, but forefront products such as LOSEC, Esomeprazole Magnesium Enteric-coated Tablets, Pariet, Omeprazole Enteric-coated Capsules, and Omeprazole Enteric-coated Capsules are in a relatively ascendant position and the competitiveness of other brands are still to be improved.

Prazole series products become key areas for price regulation

H2 receptors mainly include ranitidine, famotidine and cimetidine; while ranitidine and famotidine account for 78.4% of the total size of H2 receptor in the five cities, and cimetidine as the first generation of tidine, its competitiveness is gradually weakened. As the price of such products has been low, this price adjustment is not related to oral preparations. But because of too many manufacturers, most sales channels have turned to the third terminal market.

Among several major prazoles of proton pump inhibitors, omeprazole still occupies a proportion of _% while the remaining market is occupied by esomeprazole, rabeprazole, pantoprazole and lansoprazole. The most affected in this price adjustment is this category, of which the price of omeprazole decreased by more than 40%, that of lansoprazole decreased by about 38%, that of different formulations of pantoprazole decreased by between -% to -%, and that of rabeprazole is around -%, lower than the first three; and esomeprazole is still in the patent period, it was listed in 2002, entered the health insurance directory in 2004, and its price has been growing rapidly.

Ladder distribution of price of brand drugs is better

The comprehensive analysis to the quarterly growth rate, average unit price and market share of key brands of the proton pump inhibitor in the five cities (Figure 4) shows that: prices of most competition brands are concentrated in the range of 20 yuan to 50 yuan, and competition in this range is the fiercest. The largest market share is occupied by omeprazole enteric-coated capsules, its price floats around 25 yuan basically and there are many manufacturers of this brand. Totally among the five cities, HPGC Sanjing Pharmaceutical Holdings Co., Ltd. performs better, but considering different regions in each city, the leading company will be different. Whether to create their own corporate brand and stand out through marketing means is the common problem faced by production enterprises of this common name.

LOSEC tablets have four specifications in total: 10mg, 3 tablets and 7 tablets; 20mg 7 tablets and 14 tablets, which are subdivided into low, medium and high three different price regions, meeting the demands of different consumer groups. The price strategy is good. At present, among the aggregate share rankings of the five cities, the specification that performs best is 20mg *14S, and that grows fastest is 10mg*7S. The two specifications of Esomeprazole Magnesium Enteric-coated Tablets spread in the 80 yuan and 120 yuan two regions; it belongs to the substitute upgraded products of AstraZeneca to cope with the expiry of LOSEC patent; and the quarterly growth rate of the 7-tablet with a higher content slides down. Luckily, the 7-tablet with a lower content is more favored by consumers, so its share ranks top 3 and the quarterly growth rate remains at over _%. Therefore, the Esomeprazole Magnesium Enteric-coated Tablets has successfully formed a solid defense line together with LOSEC and continued keeping the leading position of AstraZeneca in peptic ulcer used drugs.

Same with Omeprazole Enteric-coated Capsules of Changzhou Siyao Pharmaceuticals Co., Ltd., the Pariet of Eisai China Inc. also has three specifications, but the average price of Pariet regardless of specification is over 160 yuan; and the price of 10mg*7S of which the average price of three specifications is the lowest is also above 120 yuan, so it can be said the price segmentation is not obvious. Pariet focuses on targeting at high-end consumer groups.

The average price of the leading specification of Omeprazole Enteric-coated Capsules 20mg*14S is more than 50 yuan. Although the other two specifications consider the subdivided price groups and the average prices are around 25 yuan, their contribution rates are very low, so Omeprazole Enteric-coated Capsules have not become effective supplement temporarily, and together with the Lilijin Enteric-coated Capsules of Hainan Haili Medical Doctor Pharmaceutical Group Co., Ltd., they all appeared negative growth in the fourth quarter of 2011.

After the price reduction, will the product price distribution be different, and whether will the competition pattern change accordingly? The National Development and Reform Commission just makes adjustment to the highest retail price of drugs, and in reality, there are always many imitation varieties that their actual bid prices in the hospital or retail terminal prices are lower than the highest retail price stipulated by the NDRC. Will the impact to the pharmaceutical companies be as unperturbed as what is analyzed by insiders in the market after May or will there be some change? We will continue following that. But in any case, for ordinary people, price reduction is good news.

[Data in the text comes from “China Retail Drug Monitoring and Analysis System (RDM system)” of Guangzhou PICO Medicine Information Co., Ltd. and are zoomed from the sample data of sample cities for the first time. There may be some errors. For more accurate and detailed data, please call +86-20-37886782. ]

Information Source: Menet