HONG KONG – Stepped up regulations and a curb on the use of antibiotics is hurting the bottom line of antibiotic makers in China. And there is little chance of a change any time soon.

Faced with falling profits, companies are shifting their strategies. Some of the biggest antibiotic drugmakers in China are Shandong Lukang Pharmaceutical Co. Ltd., Harbin Pharmaceutical Group Holding Co., North China Pharmaceutical Co. Ltd. and Shanghai Pharmaceuticals Holding Co. Ltd. Most of those companies have had declining sales in recent years.

Lukang released a stock market notice this month responding to the inquiries from the market surveillance department of Shanghai Stock Exchange regarding its five-year consecutive negative profits.

Lukang said regulations that limit the use of antibiotics, medical insurance control, slower growth of market needs and smaller proportion of antibacterial drugs allowed in individual hospitals could be behind the underperformance. It's obvious that the company can no longer rely on its antibiotic products for profits.

The series of tightened regulations on the consumption of the drugs have hindered the purchase of antibiotics in public hospitals and placed obstacles for new product development.

"During the 12th Five-Year Plan period [2011-2015], due to the multiple policy adjustments, the antibiotic market in China faced challenges greater than ever. The market share in clinical use has fallen, the speed of market growth slowed down significantly and sales plummeted for companies like major manufacturers," said Lukang in the note.

Lukang's strategy to revamp its business is to slowly shift to the development of nonbiotic products such as lipid-lowering treatments and diabetes drugs.

Still, some companies continue to develop new products. Among those is Taiwan's Taigen Biotechnology Co. Ltd., which recently got the green light from the CFDA to market its novel antibiotic Taigexyn. That marks the first Class 1.1 new drug developed by a Taiwanese company to be approved in mainland China. Taigexyn is a new chemical entity of the quinolones family and has already been approved in Taiwan. (See BioWorld Today, June 22, 2016.)

"I understand why a lot of the companies are pulling out of the antibiotic market. It does require substantial investment of money and time to develop novel antibiotics, and companies have to justify the return on their investment," said Peter Tsao, Taigen's vice president of corporate development. "Antibiotic drugs are for short-term treatments so they can't be too expensive and that can be challenging for making profits."

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