Gilead wins Chinese approval for Epclusa, but the emerging market is getting crowded

Gilead won Chinese approval for pangenotypic hepatitis C approval Epclusa, but competitors are close behind. (Gilead)

Epclusa was just greenlighted by China’s Drug Administration (CDA). For hepatitis C patients in China, that means the first pangenotypic treatment will soon be available to them. But for Gilead, it might be too little, too late.

The Chinese authority based its decision on five international phase 3 studies that showed Epclusa’s ability to reach 92% to 100% cure rates across all six hepatitis C genotypes. Before China’s recent updates to its drug approval policies that further align them with those used in developed countries, foreign drugs often had to go through China-specific clinical studies.

“With high cure rates across all HCV genotypes, Epclusa could increase HCV treatment in China by potentially eliminating the need for genotype testing, which can be a barrier to treatment in many settings,” said Professor Lai Wei of Peking University in a statement.

However, the question is never about Epclusa’s efficacy profile, but more about the size of market left for Gilead.

With the dwindling patient base in the U.S. and Europe and the arrival of fierce rivals, sales of Gilead’s HCV franchise have dramatically declined from $14.83 billion in 2016 to $9.14 billion in 2017. For the first quarter of 2018, the number plummeted by 59% to a mere $1 billion.

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China represents a new opportunity. The country has about 10 million HCV patients, with about 200,000 new diagnoses each year, according to the nation’s health department. But competition from both Gilead’s multinational pharma archrivals, and local biotechs, is building at an unprecedented speed thanks to China’s recent policy changes designed to hasten approvals for innovative therapies.

It was only last April when Bristol-Myers Squibb’s dual-drug regimen Daklinza and Sunvepra became the first direct-acting antiviral agents approved in the country. Gilead then won approval for Sovaldi in September, the same time AbbVie got its ombitasvir and dasabuvir combo through.

Epclusa’s nod comes just a few weeks after Merck’s Zepatier was approved to treat patients with HCV genotypes 1 and 4. Besides, domestic firm Ascletis is also expected to reach the market in the third quarter with Ganovo (danoprevir) and file an application for its pan-genotypic DAA ravidasvir around the same time.

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The bigger concern for Gilead is, of course, the 8-week pangenotypic therapy Mavyret vs.12 weeks for Epclusa. Mavyret is one big reason behind Gilead’s HCV freefall. Since its launch last year, the drug has occupied 45% of the market, said CEO Richard Gonzalez on the company’s first-quarter earnings call. AbbVie filed for Chinese approval last month.

Gilead has said it expects its market share to stabilize by mid-2018, with more predictable but slightly declining patient starts. It hasn’t updated its full-year HCV guidance that now rests at around $3.5 billion to $4 billion, on par with AbbVie’s projection of about $3.5 billion for its HCV business.

Getting their HCV treatments on the Chinese market is only the first step for drugmakers. What comes next is a process of carefully negotiating a price with the government to win coverage on the National Reimbursement Drug List, which entails taking a huge discount to reach a much larger patient population. Securing national insurance coverage could mean do-or-die for a pricey drug sold in the price-sensitive China, especially if a competitor has it.