By Jim Shrine
Glaxo Wellcome plc and BioChem Pharma Inc. guided their hepatitis B virus (HBV) drug through the Chinese approval process to gain the go-ahead in the world's largest market for that disease, but the companies have work left to do before they can sell it there.
Lamivudine, called Heptodin in China, also was granted Class I certification in that country, a status that provides eight-year manufacturing exclusivity of the drug when marketed for HBV. It is the first major drug given that certification, and helps assure intellectual property rights in a country known for product piracy. But, before London-based Glaxo can market Heptodin, the company must have an import-drug permit and pricing approvals.
"This is a groundbreaking drug in China, in terms of how it will be sold," said Tim Wilson, a London-based managing director at SG Cowen Securities Corp. "It's one thing to get it approved, and another to sell it. This is something that's been a long time coming. It's nice to see. We never had any doubts it would be approved."
Wilson and other analysts are taking the conservative route in their projections of Chinese sales, since there is no track record in China and pricing issues are unsettled.
But the potential is huge. More than one-third of the world's HBV sufferers reside in China - about 120 million people, 30 percent of whom are "chronic actives" who need treatment, said Jacques Lapointe, president and chief operating officer of Laval, Quebec-based BioChem Pharma.
"It's the ninth-largest killer worldwide but, within China, it's one of the three top medical priorities," Lapointe told BioWorld Today. "They're not using much for hepatitis B now other than local medicines - herbal and natural preparations. Interferon doesn't really work in that population."
Bulk Of Efficacy Data Came From Pacific Asia Trials
Lamivudine has been shown to work in China, where HBV trials of the drug first were initiated. The bulk of data showing the drug's efficacy for HBV came from trials in Pacific Asia, and China in particular.
As part of the deal with China, and perhaps in exchange for the Class I designation, Glaxo is building a manufacturing facility near Shanghai, at a cost of about $140 million. The facility, expected to be operating in 2001, will produce a range of products, including Heptodin and antibiotics.
Key issues remain pricing and reimbursement. Both Lapointe and Wilson, however, expect to see Chinese sales in the second half of the year.
"I don't know how to judge China," said Wilson, whose early estimates are $10 million in sales this year and $30 million in 2000. "If China comes on strong, there is massive upside to our numbers. Worldwide, it's a small component of our lamivudine [for HBV] figures. China's just kind of a scary market to judge."
Mike King, a senior analyst at New York-based BancBoston Robertson Stephens Inc., said he would have liked to see pricing issues squared away in advance. "But apparently the wheels grind more slowly in China than we thought. Still, I think it's an important validation.
"There are enough people in China with money that this drug will sell well," King said. "I think the Chinese government is committed to providing it for the people."
Lapointe said the first pricing negotiation will be at the federal level. That will be used to guide the private market price. Then, reimbursement issues will be negotiated province by province.
"The private market will really drive whatever sales come out of China the first year or two," Lapointe said. "That's somewhat difficult to assess right now. Access to reimbursement programs, which will be accessible in a year or two, will probably drive volume."
Elise Wang, a first vice president at PaineWebber Inc. in New York, expects Glaxo will not be able to charge as much for the drug as it does in the West. "Many of us believe it will be about half the price," she said. "Certainly, there are a number of patients who can afford the drug. The market is sizeable just by the sheer numbers.
"Glaxo has done the best job it possibly could in dealing with the complex regulatory environment, and the fact they got Class I designation is significant in its own right," Wang said. "The financial implications still have to unfold."
The same drug, under the name Epivir-HBV, was approved is the U.S. in December. It also is available already in the Philippines and Canada, and has been approved in Pakistan, Hong Kong and New Zealand. Approvals could be granted around mid-year in South Korea, Taiwan and Europe and toward the end of the year in Japan. It will be called Zeffix in most markets.
Some analysts are projecting 1999 sales for HBV of $150 million to $200 million.
The same compound, under the name 3TC, also is used for treating HIV. Sales figures for 1998 are expected to come in at about $800 million for that indication.
Glaxo gained worldwide development, manufacturing and marketing rights (outside of Canada) through a 1990 licensing deal with BioChem Pharma. BioChem Pharma's royalties for all indications are estimated at 15 percent in the U.S. and 12 percent everywhere else except Canada, where it co-promotes the product.
BioChem Pharma's stock (NASDAQ:BCHE) traded up as much as $2 per share Friday, before closing at $27.562, down $0.687. Glaxo (NYSE:GLX) gained $0.312, ending the day at $75.187. n