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Editor |Xu Yue
Eli Lilly and Company’s China Division Announces Further Transformation of Its Retail Business ModelIt was recently reported that Eli Lilly and Company’s China division is further deepening the transformation of its retail business model. The company will disband the Cialis and Retail Products Business Unit and will no longer maintain a dedicated sales team for retail stores. The current E-commerce and Key Account teams (including National Key Accounts and Regional Key Accounts) will be fully integrated into the Commercial Team.
Cialis, the renowned original tadalafil tablet developed by Eli Lilly, along with Pfizer’s (now Viatris) Viagra (sildenafil) and Bayer’s Levitra (vardenafil hydrochloride), constitutes the three mainstream treatments for male erectile dysfunction (ED) currently available on the market.
In response, Eli Lilly told Jiemian News that the company is adjusting its business focus and will concentrate on five key therapeutic areas: oncology, immunology, diabetes, pain, and neurodegenerative diseases.
It is evident that, following the recent restructuring of the Cialis sales team, the elimination of a dedicated retail store sales force signifies a decline in its market importance within Eli Lilly China.
This is also related to Cialis’s market performance in China. For Eli Lilly, Cialis once demonstrated strong global sales performance, with annual sales exceeding US$1 billion. In 2017, global sales of Cialis surpassed US$2.3 billion, far outstripping Viagra’s US$1.2 billion in the same year.
However, in recent years, global sales of Cialis have shown a clear downward trend. Eli Lilly’s Q1 2020 financial report revealed that global sales of Cialis amounted to $193 million for the quarter, representing a 37% year-over-year decline.
In the Chinese market, Cialis has consistently underperformed compared to Viagra. According to IMS Health data, in 2013, Viagra held a 58.8% market share across 27 major cities in China, while Cialis accounted for 34.6% and Levitra for 6.6%. In the same year, the sales revenues of Viagra and Cialis in China were RMB 1 billion and RMB 200 million, respectively. Statistical data from the PDB database of the China Pharmaceutical Industry Information Center shows that the growth rate of Cialis turned negative starting in 2017.
Both Viagra and Cialis have faced fierce competition from generic drugs in China. Viagra has encountered price competition from generic versions produced by companies such as Baiyunshan and Qilu, while since 2019, generic tadalafil products from companies including Chia Tai Tianqing, Changchun Haiyue, and Tasly have also been approved for market launch.
In early 2020, tadalafil was included in the second batch of drugs subject to China’s national volume-based procurement. Tasly and Changchun Haiyue won the bids, while the originator product Cialis by Eli Lilly and Company and Chia Tai Tianqing, among others, failed to secure contracts.
However, the volume-based procurement program covers only the in-hospital market. As an erectile dysfunction (ED) medication, tadalafil’s primary market is actually out-of-hospital retail. Therefore, Cialis previously maintained a dedicated sales team for retail pharmacies, as well as teams for e-commerce and key retail accounts. Nevertheless, the continued significant price reductions of Chinese-made generic drugs following the implementation of volume-based procurement have clearly had a substantial impact on Cialis, further eroding its market position for this product within Eli Lilly’s China division.