AWSJ: Glaxo Prepares To Launch Marketing Blitz In China
By STEPHEN D. MOORE
Dow Jones Newswires
LONDON -- After years of careful preparation, Glaxo Wellcome PLC is about to embark on one of its most ticklish marketing blitzes ever -- the launch of a ballyhooed medicine called Zeffix against hepatitis B in China.
In an eagerly awaited step, Glaxo officials announced Friday that Zeffix would go on sale in China in August. The drug already is available in a handful of countries such as the Philippines, Hong Kong and the U.S. In January, Chinese authorities granted Zeffix regulatory approval -- and guaranteed Glaxo a 7.5 year period of manufacturing exclusivity in China.
Zeffix promises to be the most effective therapy to date for one of the world's biggest health problems. Hepatitis B is a liver infection that kills more than one million people world-wide every year. An estimated 350 million people are long-term carriers of the hepatitis B virus -- with 75% of those carriers concentrated in the Asian-Pacific region and more than 100 million in China alone.
"Hepatitis B affects approximately 10% of people across the Asian-Pacific region and can be responsible for roughly 3% of the national health-care outlays -- which puts it in the same order of magnitude as diabetes, asthma or other major chronic diseases in the developed world," said Ken Windle, Glaxo's regional director for the Asia Pacific and a member of the British company's group management committee.
Clinical data disclosed in recent months have shown that Zeffix halts replication of hepatitis B and lowers the amount of virus below detectable levels in the blood of patients with active infections. Moreover, the drug appears to wipe out all traces of infection -- tantamount to a cure -- in up to 40% of patients treated for at least three year
Dispensed as a pill taken once a day, Zeffix appears to have far less severe side effects than the best established current therapy, alpha interferon, which is injected three times daily for up to six months. Economics also are stacking up in Glaxo's favor: treatment with Zeffix costs roughly $1,500 a year -- a fraction of the $5,500 annual tab for alpha interferon.
Industry analysts believe Zeffix sales in China could approach GBP 400 million ($647 million) within a few years. That figure would vault the medicine past Pfizer Inc.'s heart drug Norvasc, which currently is the biggest selling Western medicine in China with annual sales of about $80 million. A big breakthrough for Zeffix is key to boosting Glaxo's anemic ranking as No. 20 among global drug companies active in China, a market expected to overtake the U.S. and become the world's biggest single pharmaceutical market during the next century.
"Zeffix is a major medical breakthrough," said Glaxo's Research Director James Niedel. "A year and a half ago, nobody could have dreamed we'd be talking of either curing or achieving long-term remission in 40% of patients with a disease of this severity." Though admitting that few Western companies to date have managed to break into Asian-Pacific markets in a big way, Dr. Niedel insisted that "if any company can do it, this is the right product and the right strategy. So we'll give it a whirl."
For all that promise, Zeffix still faces plenty of hurdles. The most immediate challenge is to complete a second phase of so-called administration protection, China's equivalent of patent protection, which would insure Glaxo total exclusivity over Zeffix for 7.5 years in treatment of hepatitis B. Mr. Windle, who visited China 14 times last year from his home base in Singapore, is confident of receiving that additional clearance within a few mont
Western companies traditionally have been wary of launching their drugs in China because intellectual-property protection has been lax and pirate copies often flood the market despite official guarantees. Nevertheless, Glaxo officials are betting that hepatitis B is such a pressing health problem in China that the Chinese will enforce guarantees on Zeffix. That confidence was buoyed by personal assurances received by Glaxo Chairman Sir Richard Sykes in a meeting last year with China's President Jiang Zemin.
Pricing of Zeffix is another potential snag. Mr. Windle says Glaxo will demand the same price for the drug in China as in the West and he doesn't expect any objections from national authorities now reviewing Glaxo's pricing request. But haggling would begin in earnest when Glaxo tackles subsequent negotiations with 30 provincial governments over reimbursement policy. A separate round of pricing talks probably will be necessary with dozens of hospitals that employ liver specialists who dispense Zeffix.
By contrast with the U.S., where per capita health-care outlays exceed $3,600, or the U.K., which spends $1,900 per citizen per annum for medical care, China's per capita health-care expenditure is only $22 a year, according to the Organization for Economic Cooperation and Development. Mr. Windle plans to propose cash rebates pegged to Zeffix consumption as one way to enhance the ability of provinces and hospitals to pay. "We discussed a national rebate -- but that plan proved unworkable," he said. "We'll try to make money available to cover the price of caring for large numbers of patients while maintaining a price and a margin for Glaxo." |
