The landscape of the insulin market has shifted dramatically, with homegrown Chinese companies on the rise and gaining market share from foreign firmsThis transformation comes after a rough patch for local insulin manufacturers in 2022, but as we move forward into 2024, these companies are affirmatively stepping into a new era of growth and increased market presence.

Recent updates to the insulin procurement policies have shown only mild price reductions, with an average decrease of roughly 3.8 percentage points compared to past agreementsNotably, Gan Li Pharmaceutical has made headlines by successfully bidding on all six of its insulin products, achieving an average price increase of 31% over previous national procurement roundsThis surge in pricing and subsequent demand reflects a substantial change in purchasing dynamics, as Gan Li's procurement volumes have surged by 60% on average as well.

Analysis of the proposed procurement results reveals that many foreign products adopted a price protection strategy and hence mostly achieved lower-tier classifications (B and C categories). In contrast, many domestic insulin products have successfully landed in the higher-tier A category

This decisive outcome illustrates a significant shift, with local manufacturers now capturing a larger share of the market, facilitating an expedited phase of domestic substitution for previously dominant foreign products.

On April 23, 2024, the National Drug Procurement Office disclosed the proposed results for specialized insulin procurementOver 35,000 medical institutions submitted requests amounting to more than 240 million units of insulin, encompassing the commonly used second and third-generation formulationsThe final prices maintained a close alignment with previous procurement rounds, primarily due to the advanced release of procurement rules, which clearly defined pricing lines for various categories of products.

The results show a marked increase in successful bids for A category products—from 40% previously rising to 71%—as companies' offers were closely aligned with the specified price lines, leading to a reduced disparity in pricing amongst similar products

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For instance, the price gap for third-generation pre-mixed products has diminished from a previously wide 2.3 times to a more manageable 1.6 times across the board.

Details from the bid results indicate that numerous foreign firms strategically opted to protect their pricing, with Novo Nordisk's submissions revealing only partial success; one bid was abandoned, while offerings fell into the B and C categories for the remainderEli Lilly faced similar challenges with two out of six products not being bid on, escalating the need for a reshuffling of their competitive strategiesAnalysts predict that Novo Nordisk and Eli Lilly will lose more than 30 million units to A category procurement.

With respect to domestic firms, Gan Li Pharmaceutical and Tonghua Dongbao showed significant competitive resilience with six and five successful bids, respectively, across various classifications

Each major entrant scored multiple products classified as A, further amplifying their market presence considerably more than in the previous procurement phases.

The remarkable success of Gan Li Pharmaceutical cannot be understatedAll six of its submitted products landed successful bids, along with substantial price hikes averaging 31%. Its flagship product, insulin glargine, saw price increases soaring as much as 48%. Each of Gan Li's six insulin products covered included a range of formulations, allowing the company to firmly establish its market position.

Comparatively, Tonghua Dongbao's transition from lower-tier classifications to A status highlights how rapidly the domestic market is evolvingTheir inclusion of new products, particularly pre-mixed variations of insulin as part of this procurement cycle, bodes well for future sales and competitive positioning.

Before this initiative, the Chinese insulin sector was predominantly characterized by foreign domination, with local brands capturing only a modest 31% of the market, particularly disheartening among third-generation insulins which accounted for just 16%. However, the 2020 insulin market in China's public hospitals approached 270 billion yuan, with foreign companies such as Sanofi, Novo Nordisk, and Eli Lilly comprising nearly 75% of market share.

The historical data shows a gradual but undeniable decline in foreign market share; for instance, Novo Nordisk experienced a drop from nearly 56% in 2015 to 47% in 2019. This upsurge of local alternatives indicates a progressive shift in competitiveness, particularly after comprehensive procurement initiatives were implemented.

On the international front, the global insulin market is dominated by a handful of players, predominantly Novo Nordisk, Eli Lilly, and Sanofi, together monopolizing about 92% of sales volume across the globe

The pricing of insulin in the U.Sunderscores the industry's struggles; U.Sprices often exceed those in other developed nations by tenfoldFor example, in 2018, the average market price of insulin products in the U.Sreached an astonishing $98.70 per unit.

However, a change in U.Slegislation that caps out-of-pocket expenses for Medicare D patients at $35 per month from January 2023 has prompted these key pharmaceutical players to significantly reduce insulin prices, offering price declines of up to 78% as they adapt to new market conditions.

To monetize the transition in the U.Smarket further, Gan Li Pharmaceutical anticipates additional growth opportunities as it has already secured 51 drug registration approvals across 19 countries, while also entering the North American market with applications submitted to the FDA for their various injectable insulin products.

In summary, the rise of domestic insulin products in China suggests an increasingly competitive landscape where local manufacturers thrive amid strategic adaptations, entering markets beyond their borders and capitalizing on global trends