By Mark Steedman, PhD, Manager, Centre for Health Solutions
In March, Deloitte colleagues David Xie and Xiaofeng Li published the article Gain the edge in a fast moving market, introducing a series of articles on ‘Launching innovative biopharma in China’. This introductory article was the subject of a previous blog that we published in February.1 This week’s blog explores the findings in the next two articles in the series: A new view on market access and reimbursement, examining innovative alternative reimbursement opportunities in the public and self-pay markets; and A new view on China’s digital health care, evaluating how product launches can target digitally savvy consumers.
China’s economy has boomed in the past few decades, becoming the world’s largest manufacturer and biggest exporter.2 Its biopharma and medicinal products market has followed suit and was the second largest national market in 2017, worth $122.6 billion, with projections to reach $145-175 billion in sales by 2022.3 Many factors account for this pharma market growth, including quicker regulatory approval and widening market access. However, the vast majority of firms are often disappointed by their commercial launches in China. Future growth will depend on companies’ abilities to maintain an agile approach to China’s dynamic system.4 We first look at how rethinking market access and reimbursement strategies can help companies successfully launch innovative medicines in China.
Market access and reimbursement
In China, innovative medicines have historically faced an enormous struggle to achieve reimbursement. Reimbursement requires a medicine to be included on the national reimbursement drug list (NRDL), which lists drugs that the Chinese government will pay for some or all of the costs. However, between 2001 and 2016 the NRDL was updated on only three occasions, despite the Ministry of Health’s early 2000s directive that the list should be updated every two years.5 Additionally, innovative medicines – particularly cancer drugs – were included in these updates to only a limited extent. Since 2017, much has changed, and 36 drugs (oncology and non-oncology) were added to the NRDL in 2017, and a further 17 (oncology only) were added in 2018, ten of which were new products. Importantly, a price negotiation mechanism was formally introduced at the national level for the first time in 2017. While this is an encouraging sign for domestic and multinational manufacturers of innovative medicines, achieving reimbursement has its drawbacks, with an average price cut of 44 per cent across the 36 products added in 2017 and 57 per cent across the 17 products added in 2018.6
Moreover, some provinces in China have historically provided better coverage for innovative medicines, linked to affordability and willingness to pay. Payers and private insurers in these provinces have also been more proactive in experimenting and piloting different programmes to enhance patient access.
In Deloitte’s view, biopharma companies operating in China should tailor their launch campaigns to handle the vastly changing market place and help increase patient access. In developing launch strategies, companies should consider the following:
- pursuit of public reimbursement – companies should allocate internal investment to research the options and brand opportunities in a more sophisticated way than for a traditional volume-price assessment, practice robust scenario planning for forecast and launch activity and take a tactical approach to timing, understanding that updates to medicine lists are now occurring more often than previously
- viability of the public payer option – the public route may not be the best solution for all brands or companies, so companies should assess the immediate priorities of public payers and how payers perceive product value and then undertake a careful evaluation of the profitability of commercial business cases
- choosing the model, shaping the market – companies need to understand the constantly changing dynamics of the public and private markets in China and continue to explore new access options for patients.
Digital health care
Digital technologies, ranging from mobile devices to innovative applications and tools, have been widely adopted across China, transforming the health care market. Patients and physicians are behaving and interacting differently, spending a significant proportion of their time on medical related activity. For example, patients are using digital tools to take a more active role in their own treatment, and clinicians are using digital platforms as the main way of accessing professional information (see Figure 1).
Figure 1. Patient and physician behaviour in the new digital world
Deloitte has identified four digital trends that are likely to bring significant change to China’s health system in the short term and will also influence how the biopharma industry approaches the market:
- informed and demanding patients managing their health – patients are more informed and engaged in making health care decisions, and new tools such as consumer-facing digital platforms offer new opportunities for the biopharma industry to influence patient behaviour and continuously support them outside the traditional care setting
- physicians using new channels of communication – biopharma and tech companies need to learn how to engage physicians through virtual platforms, conferences and live broadcasting to provide medical education and training
- evolving models of care – traditionally, health care resources have been concentrated in hospitals in major cities and metropolitan areas, and they are struggling to keep up with demand. Patients and providers are exploring alternative access models, including virtual consultations. Biopharma can tap into these new digital models, for example offering on-line vaccination consultations
- big data and advanced analytics – China’s increasing investments in AI, big data and analytics, alongside new collaborations between technology firms, biopharma companies and hospitals, are leading to new models of care and new payment models.
To understand and exploit these trends in launching innovative products, Deloitte recommend four actions that biopharma companies can take to mitigate the most common obstacles to launches:
- form a longer-term vision/ value proposition – the lack of a clear vision in digital technology’s role in launch programmes can hold many companies back. Early clarification of a long-term vision and the role of digital technology will help companies use technology more effectively
- target the consumer with the right content – engaging physicians and patients effectively, given the number of available channels, requires marketing teams to understand customers’ channel preferences, prioritise channels and decide which external partners to work with
- embrace cross-functional collaboration – improving follow-up, collecting feedback and analysing the substantial amounts of new data generated by digital channels can allow companies to exploit the full potential of digital tools
- support systematic digital processes – biopharma companies should establish an optimal structure and governance to support digital processes, be prepared to hire new talent, set up an internal structure to drive the launch, and design frameworks and guidance to ensure that teams are aligned.
The above articles examine market access and reimbursement, and the fast-changing digital environment. These factors are becoming increasingly important for biopharma companies planning product launches in China, as companies need to be agile and creative to capitalise on the rapidly evolving system, starting with early preparation and planning. Stay tuned for the remaining two articles in this series, which explore the regulatory landscape in China and how biopharma companies can be agile in a fast-changing health care environment.