Will Generic Viagra Transform China?

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Chris Ratcliffe | Bloomberg | Getty Images

Viagra’s patent in China has expired, and some analysts expect lower prices to lead to increased demand for the legendary erectile dysfunction (ED) drug.

The Chinese ED drug market is an attractive cake with significant profits, “said Dr Neil Wang, China general manager at Frost & Sullivan, in email comments.” The launch of generic alternatives to the market will lead to intense competition. ”

The size of the potential increase in sales in China could be huge. Sales of erectile dysfunction drugs could triple to 5 billion yuan ($ 810 million) by 2018, from around 1.7 billion yuan in 2013, according to Citigroup in a recent report.

He estimates that Viagra, made by Pfizer, has about 40-45% of the erectile dysfunction drug market in cities of level one, two and three and he expects the generic version to take more than 40% of the erectile dysfunction drug market. half of the market. Globally, Pfizer reported approximately $ 1.88 billion in Viagra sales in 2013.

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Cost is probably the main driver of increased sales, with the current price of 50-70 yuan per dose dissuading around 30-40% of patients in China from taking erectile dysfunction drugs once prescribed. Citigroup said, noting the generic Viagra, also known as sildenafil citrate, will likely be offered at a reduced price of 30-50%.

The target audience is quite large and increasing with around 10-25% of men aged 20 and over in China, Citigroup said, based on its interviews with “thought-leader urologists” and other surveys. carried out in major cities in recent years.

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It’s not entirely clear why erectile dysfunction appears to be a growing problem, Citigroup said, but he cited possible reasons such as increasing pressure from work and life, the spread of pollution and fashions. unhealthy living, including smoking, alcohol and a high fat diet.

“In addition, erectile dysfunction could be an early symptom of several major chronic diseases such as diabetes, hypertension, arteriosclerosis and depression,” he said.

The frequency of ED also increases with age. China’s population is quickly turning gray, with around 200 million people over the age of 60, and the number is expected to grow to over 400 million over the next 20 years, more than the population of the United States. China’s total population is estimated to be around 1.39 billion.

Certainly, not everyone expects the generic version of the legendary blue pill to make a big difference in the Chinese erectile dysfunction drug market, bypassed by the country’s difficult relationship with intellectual property.

“The availability of cheap counterfeit or gray market products – essentially the same formula – is already quite high,” Ben Cavender, analyst at China Market Research Group, told CNBC. “You can walk into any drugstore and get it for not a lot of money.”

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Cavender also expects that most “recreational” users – or those who fall into the “fun to try” categories rather than the health-related categories – will continue to use gray market products.

The cheaper pills are also unlikely to influence social attitudes on the mainland much, Dr Wang said.

Compared to Westerners, China’s attitude towards sex is more conservative, ”said Dr Wang, although he noted that a gradual shift in views on sex education was already taking place. ongoing, driven by growing wealth and exposure to foreign cultures.

China’s efforts to push its birth rate up are also unlikely to get a boost, Cavender said. Late last year, China relaxed its one-child policy, in place since the 1970s, allowing couples to have two children, if one parent is an only child.

But Cavender doesn’t think health concerns have much to do with many couples’ lack of interest in a second child.

“They want careers and extra income. They are not rushing to have a second child,” he said.

Dr Wang agreed. “The BThe death rate in China is greatly affected by economic wealth, popularization of education, urbanization and other factors, ”Wang said.

The first approved pills will likely hit the market by the end of the year, based on the filing status of an application from Guangzhou Baiyunshan Pharma, Citigroup said.

—By Leslie Shaffer of CNBC.Com; Follow her on twitter @ LeslieShaffer1

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