American drug companies such as Merck & Co. and Bristol-Myers Squibb Co. are facing stiff competition from local Chinese drug manufacturers in the cancer drug market in China. These drugs, called PD-1 inhibitors, work with the body’s immune system to fight tumors, and Chinese companies are creating and selling the drugs at up to a third of the price charged by American companies in the country, according to Bloomberg News.
The entrance of Chinese drugmakers into more complex treatments is part of a larger push by Chinese leaders to create a world-class pharmaceutical business by approving drugs faster and investing more in health care. Selling innovative drugs at a much lower cost than American competitors is another way to enter the pharmaceutical market.
The large number of new cancer patients every year in China, about 4 million, which makes China a huge market for both Chinese and foreign drug companies. However, PD-1 drugs are much less prevalent in China and no PD-1 drug is currently on the country’s public health insurance list, forcing patients to pay the cost out of pocket. While Bristol-Myers’s and Merck’s drugs are already much cheaper in China than in the United States, these foreign companies will likely face intense competition from local Chinese companies within the next few years, if not sooner.