Update on COVID-19 Pandemic in China and its Impact on Pharmaceutical Market - IQVIA Management Consulting March 20, 2020 - IQVIA.com
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Update on COVID-19 Pandemic in China
and its Impact on Pharmaceutical
Market
IQVIA Management Consulting
March 20, 2020
0
In China, the battle ground for COVID-19 pandemic is shifted to screening
and isolating imported cases from overseas
Trend of new COVID-19 cases in China Number of new cases from overseas reached its peak,
while new domestic case approaching zero
# of daily new cases in China 140 # of new cases from overseas
120 # of new domestic cases
15,000 100
14,000 80
60
5,000 40
4,000 20
3,000 0
2,000 1-Mar 8-Mar 15-Mar 22-Mar
1,000
0
19-Jan 26-Jan 2-Feb 9-Feb 16-Feb 23-Feb 1-Mar 8-Mar 15-Mar 22-Mar
Jan 23rd Feb 12th Mar 17th
Mar 6th
Lockdown of Wuhan New cases (13,332) New domestic cases
New domestic casesIn the last 24 hours, the whole China, including Hubei has zero new domestic
cases, but 34 imported cases
Hubei province (Wuhan being the state capital) has been
under lockdown for 57 days since Jan 23rd, 2020
Hubei province, excluding Wuhan, is
As of Mar 19th, 2020 being unlocked
• 3,675 medical professionals from 41
nationally recruited medical teams has left
Wuhan
• 46 COVID-19 designated hospitals in
Wuhan planned to resume regular
services in April
Number of existing patients • Wuhan aside, Hubei is gradually removing
0
traffic blockade
1-9
10-99 • 49.3% manufacturers, mostly large
100-499 SOEs has reopened, with the rest reopen
500-999
after March 20
1000-9999 China Hubei Wuhan
Existing
Patients 7456 6992 6744
Source: National Health Commission; IQVIA analysis; Public News 2Life outside Hubei is expected to return to normal in April, while recovery in
Hubei is expected in June
• >90% manufacturing reopened outside Hubei, 49.3% in Hubei
• Pharmaceutical, chemical and electronics industries have recovered to ～70% of original capacity
Manufacturing • Government has taken actions to stimulate the economy, including low interest loan, tax subsidy and deferral
• Service sector has recovered to 67% of level seen in 2019 Q4 nationwide, ~30% in Wuhan
• 90% of supermarkets, retail stores, restaurants and hotels have re-opened nationwide
Commerce
• Nearly 100% of cross-state highways reopened and 80% local traffic resumed nationwide
• Other than Wuhan, Hubei unblocked all communities on Mar18th
Transportation
• Schools are already open in 3 provinces (Qinghai, Guizhou, Xinjiang)
• All schools outside Hubei will gradually open throughout April
Education • Hubei schools are expected to reopen in June
Source: National Health Commission IQVIA analysis; Public News 3Hospitals/Sites increasingly re-opened from Feb, and 100% of the sites
outside Hubei will resume patient access by the end of May
Outside Hubei, access to patients will return In Hubei, access to patients started to recover in
to normal by the end of May March and will recover to 70% in June
% of hospitals % of hospitals
back to BAU 100% back to BAU 70%
100% 90% 70%
60%
80% 50%
50%
60%
60% 40%
30%
40% 30%
30%
20%
20% 10%
10% 10%
0 0
0 0
Feb Early End Apr May Feb Early End Apr May Jun
Mar of Mar Mar of Mar
• By end of May, ~100% of the hospitals (outside Hubei) • By June, ~70% of hospitals in Hubei (excluding Wuhan), will
will resume services with patient access resume services with patient access. Recovery in Wuhan may
need additional 1-2 months
Note: Hospitals/Sites in Wuhan (90% of those in Hubei province), recovery progress is generally one month later compared to the rest of hospitals in Hubei province
Source: IQVIA analysis 4Pharma market is affected in Q1 and Q2, but will gradually recover in Q3
COVID-19 Impact in 2020
China Pharmaceutical Market Prognosis, Bn RMB
(Sales value, by quarter, 2020) 1 Regions: Hubei vs. Non-Hubei
Hubei is seriously impacted by COVID-19 and it may take more time to
Forecast Adjusted / Forecast Baseline recover
• The outbreak ends in April and June outside and inside Hubei, respectively
Sales by Q, Forecast Baseline
Sales by Q, Forecast Adjusted • Hospitals repurposed for COVID-19 will resume normal function. The process
takes longer time for Hubei than rest of China
100% 98% 99%
2 Channel: Hospital vs. Retail
96%
Hospitals, especially large hospitals have greater impact due to COVID-19,
95% while retail channel has limited impact
93% • Nationwide quarantine reduces hospital visits
• More drug purchase and dispense shifted to retail pharmacy, including
online pharmacy
90% 273 270 • Reimbursement for online drug purchase likely to be piloted in Wuhan and
255 262 250 258 255
237 Shanghai
3 Therapeutic areas: by ATC
85% The impact varies by therapeutic areas
• Drugs for anti-viral, respiratory, and life-threatening diseases are least
impacted
• Drugs for chronic diseases and general surgery are moderately impacted
80% • Drugs for adjuvant therapy and supportive care are most impacted
2020 Q1 2020 Q2 2020 Q3 2020 Q4
Note: All projections are based on the constant inflation rate 5
Source: IQVIA analysisBased on our best understanding, we project that growth rate will drop to -
2% and 0% in Q1 and Q2, respectively, then recover to 5-7% in Q3 and Q4
China Pharmaceutical Market YoY Growth Trend (Sales value, 2016Q1-2020Q4)
2016 2017 2018 2019 2020
15 13%
11% 11%
YOY Growth %
10%
9% 9%
10% 8% 8% 6%
6% 6% 6%
5% 5% 5%
5 3% 5%
2% 7%
1% 5%
0%
YOY, Forecast adjusted by COVID-19 -1%
0% -2%
YOY, Forecast baseline
-5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2016 2017 2018 2019 2020
✓ Comprehensive reform on ✓ Continue to implement a ✓ Local lockdown and stay-
✓ Ensure drug quality and ✓ VBP in 4+7 cities has been
Key Impact
public hospitals, including strict drug control policy. home quarantine
effectiveness. execution in March 2019.
medical expenses control, ✓ Implementation of Generic ✓ Stringent cost
✓ Tendering & central ✓ Announced piloting DRGs
the percentage Quality Consistency containment of medical
purchase, and reform pilot payment system in 30
of drug expenditure control Evaluation. insurance
of reimbursement price. cities.
✓ Separation between ✓ 17 oncology products were
Integration of distributors. ✓ 2019 NRDL update. ✓ Decrease in out-of-
medical and pharmaceutical included in NRDL list .
✓ Clinical medicine use ✓ Announced the result of pocket expenditure
services. ✓ Announced the result of
standardization and drug volume-based procurement
✓ Promotion of hierarchical volume-based procurement ✓ Disruption in commercial
fee control in alliance regions.
medical system. in 4+7 cities . activities
Note: All projections are based on the constant inflation rate 6
Source: IQVIA analysisWe anticipate market rebound will continue throughout 2021 and recover
growth momentum by 2022
China Pharmaceutical Market Prognosis, 2018-2023
Forecast baseline
Forecast adjusted by COVID-19 1,226
1,166
1,108
1,048
Bn RMB 988 1,180
1,118
(Sales Value） 916 1,059
1,012
2018 2019 2020 2021 2022 2023
7.9%
Growth Rate 6.1% 5.7% 5.6% 5.6%
4.6%
5.2%
2.4% 5.2%
4.7%
2018 2019 2020 2021 2022 2023
Short-term (2020-2021) Mid-term (2021-2022)
✓ The outbreak of novel coronavirus affects the entire ✓ Pharmaceutical market will regain the growth momentum and return to the
Key Impact
pharmaceutical industry chain in 2020, including: baseline growth rate from 2022, because
• Pipeline clinical research • Hospital service: impact from delayed and cancelled services will be fully
• Drug manufacturing and import minimized in 2021; more regular and strict control in the next flu seasons
• Drug distribution • Tightened budget: limited healthcare funding on drugs with cost
• New product launch containment; consumer confidence and willingness-to-pay will recover
• Sales and marketing activity • Delayed access timeline: negotiation and regular NRDL update will be
• Procurement and reimbursement delayed in 2020 and consequently impact on the local implementation
Note: All projections are based on the constant inflation rate 7
Source: IQVIA analysisThank You
8Appendix: Pharma market in Hubei took the biggest hit, hence takes longer
time to recover
China Pharmaceutical Market Prognosis, by region, 2018-2023
(Sales value, Bn RMB) Key Assumptions
Non-Hubei Forecast Baseline Hubei Forecast Baseline • Hubei is more influenced
Non-Hubei Forecast Adjusted Hubei Forecast Adjusted by COVID-19 than other
1,500 60 52 regions in China, the
1,175 47 49
1,061 1,117 42 44 forecast of pharmaceutical
947 1,004 50 39 47
877 market in Hubei and non-
1,000 40 40
1,078 1,134 35 Hubei would decease by
980 1,024 30 32
28.3% vs. 2.4% compared to
500 20 original forecast
Decrease by -2.4% Decrease by -28.3%
10 • It would take longer for
0 0 Hubei market to recover
2018 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023
• For non-Hubei provinces,
China Pharmaceutical Market Prognosis, by region, 2020 the outbreak would affect
(Sales value, by quarter, Bn RMB) 2020 Q1 and Q2, while for
Non-Hubei Hubei province, the impact
would last for a whole year
Hubei -3% -1% -1% “…Hubei pharma market would be
-6% Non-Hubei, Forecast Baseline
very difficult this year due to traffic
-45% 251 243 -36% 262 261 -20% 247 245 -13% Non-Hubei, Forecast Adjusted control, infection risks, etc. and
244 231
Hubei, Forecast Baseline major work of most institutes is
epidemic control…”
11 6 11 7 12 9 11 9 Hubei, Forecast Adjusted —Director of Class 3 hospital in SH
2020 Q1 2020 Q2 2020 Q3 2020 Q4
Note: All projections are based on the constant inflation rate 9
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