Novo Nordisk, Sanofi and Eli Lilly cut insulin prices and lose share in China's latest cost squeeze

China flag against blue sky
Altogether 42 insulin products took an average 48% discount to win tenders in China's latest volume-based procurement. (SW1994 / Pixabay)

On the centennial of the discovery of insulin, China decided a round of price cuts on the diabetes therapy is due. As a result, foreign companies Novo Nordisk, Sanofi and Eli Lilly are taking a beating in the key market.

Forty-two insulin products from companies foreign and domestic took an average 48% discount to win tenders from China’s public hospitals in the country’s latest volume-based procurement (VBP) scheme, state-run news agency Xinhua reported.

Starting next year, Novo, Sanofi and Lilly will cede their dominant positions in the market because their price cuts weren't steep enough to outcompete domestic players. Novo, the largest insulin provider in the country with roughly 50% share of volume, projects a 3% pullback in global sales growth next year thanks to the insulin VBP program.

China represents a large diabetes market with about 120 million patients. While other drugs such as DPP-4 inhibitors and GLP-1 agonists are available, insulins remain the most used diabetes meds in the country. The three Western diabetes drugmakers were estimated to hold a combined market share of more than 70% before the VBP.

RELATED: Market leader Novo Nordisk still has lots of upside in China's rapidly growing diabetes market: analyst

The insulin VBP procurement process covers two years of treatment and will account for 210 million doses of insulins in 2022. Popular products such as Novo’s Novolog, Lilly’s Humalog and Sanofi’s Lantus were all included in the tender process.

Lilly gave up the largest discount: After a 75% reduction, the price of the Indianapolis pharma’s Humalog Mix25 went down to 18.89 yuan ($2.96) per pen, the lowest among the class of premixed insulin analogs. In doing so, Lilly gets to keep all the drug’s existing market share.

VBPs offer large procurement contracts from China’s public hospitals in exchange for price cuts. For this round specifically designed for insulins, China’s healthcare security authorities grouped the drug class into several groups—fast-acting, basal and premixed human insulins or insulin analogs.

Besides Humalog Mix25, Lilly’s Humalog and Sanofi’s Lantus managed to retain relatively large market share after 68% and 66% price cuts, respectively, according to results compiled by PharmCube, a China-based pharmaceutical data service provider.

By comparison, six brands from Novo, plus Lilly’s Humulin and Sanofi’s Apidra, will lose 30% of expected market share to domestic companies like Gan & Lee Pharmaceuticals and Tonghua Dongbao Pharmaceutical.

All told, China expects the insulin VBP could save it 9 billion yuan ($1.4 billion) in medical costs in 2022.

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China piloted the VBP program in 2018 and over the years it has dealt serious blows to Big Pharma’s off-patent small-molecule medicines. The latest round marks the first time the program has affected large molecules, triggering speculation that other biologics, including antibody drugs, could be next.

Meanwhile, Novo has been enjoying solid growth for its insulin portfolio in China. In the first nine months of 2021, Novo’s insulin sales in China grew 10% at constant currencies year over year to 9.5 billion ($1.45 billion) Danish krones while the U.S. market dropped 9% to 10.9 billion krones.

Novo is also busy introducing its newer GLP-1 drugs to China. The Danish diabetes specialist won Chinese approval for Ozempic in April with a dual label that also allows it to lower the risk of cardiovascular events in Type 2 diabetes patients. During the first 9 months of 2021, the company’s GLP-1 sales in China rose 64% to DKK 1.3 billion, compared with a 23% growth to DKK 24.2 billion in the U.S.

And in the U.S., the three diabetes giants have introduced major price cuts on their insulin offerings amid a public outcry of rising prices. To put them under more pressure, Viatris just launched Biocon-partnered Lantus copycat Semglee, the first interchangeable insulin biosimilar in the U.S.

Sanofi and Lilly didn’t respond to requests for comment by publication time.