Bayer Reports Sharp Decline in Glucobay Sales Amid China's Volume-Based Procurement Policy

On August 4, Bayer AG released its second-quarter financial report, with sales in its healthcare division affected by the pandemic and China'sVolume-Based ProcurementThe policy has had a significant impact. Among them,Revenue from the diabetes drug Glucobay, which was included in the volume-based procurement program due to its globally lowest price, has plummeted, with the increase in sales volume failing to offset the losses caused by the sharp price decline.

The report shows that Bayer AG's sales in the second quarter were approximately €10.054 billion, a year-on-year decrease of 6.2%. Its sales for the first half of the year amounted to €22.899 billion, representing a slight decline of 0.3% compared to the same period last year. Apart from the Crop Science division, both the Pharmaceuticals and Consumer Health divisions, as well as sales in the four major global markets, showed a downward trend.

Volume-Based Procurement and the Pandemic Led to a Decline in Medical Business Sales

Specifically in terms of medical business,Bayer’s second-quarter sales for this business segment amounted to €3.992 billion, representing an 8.8% year-on-year decline. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at €1.368 billion, down 7.1% from the same period last year. For the first half of the year, Bayer’s healthcare division reported sales of €8.538 billion, a 2.5% decrease compared to the previous year.The common reasons are primarily attributable to the impact of the COVID-19 pandemic and pressures from the Chinese market.

Amid the impact of the pandemic and hospitals’ anti-epidemic efforts, sales of Bayer’s ophthalmic drugs and radiology business products declined significantly; however, given current signs of a slight rebound, Bayer optimistically expects a recovery by year-end.

However, the pressure exerted on Bayer’s medical business development by China’s volume-based procurement policy is not something that can be alleviated in the short term.The report shows that the product with the largest year-on-year decline in sales for Bayer in the second quarter was Glucobay, a drug used to treat diabetes, which saw a 74.2% drop compared to the same period last year. The main reason lies in its winning bid at the lowest global price in the second round of volume-based procurement.

Bayer's Glucobay isAcarbose(Acarbose) is the originator drug, an α-glucosidase inhibitor that lowers blood glucose levels. In China's acarbose market, Bayer holds a dominant 69% share. Zhongmei Huadong and Luye Pharma follow closely, with market shares of 26% and 5%, respectively.

In China’s second round of volume-based procurement bidding in January this year, the acarbose sector saw fierce competition. Ultimately, Bayer’s Glucobay, with a bid price of RMB 0.181 per tablet—the lowest globally—forced Lv Fuyuan Pharmaceutical and Huadong Medicine out of the market. However, this low price is now beginning to “backfire.”

Bayer’s Q2 report indicated that Glucobay sales plummeted due to the implementation of volume-based procurement, amounting to only €40 million in the second quarter compared to €155 million in the same period last year. For the first half of 2020, Glucobay sales totaled €156 million, representing a year-on-year decline of 54.4%.

The increase in Glucobay sales could not offset the losses caused by its significant price drop. Furthermore, the sales growth of its anticancer drug Stivarga™ and its pulmonary arterial hypertension treatment Adempas™ failed to reverse the overall decline in sales.

Innovative Layout in the Field of Chronic Diseases

Perhaps having long anticipated the “side effects” of Glucobay, Bayer has already been making innovative moves in the chronic disease sector since January this year,It primarily covers China’s three key areas of chronic diseases—chronic respiratory diseases, cardiovascular and cerebrovascular diseases, and diabetes.

Currently, emerging innovative drugs in oncology and ophthalmology have provided new growth momentum for Bayer. Although sales of ophthalmic drugs declined in the second quarter, this was primarily due to the impact of the pandemic, and the market remains poised for recovery. However, the diabetes sector, represented by Glucobay, presents a different scenario.

In May this year, Bayer announced a commercial collaboration agreement with WaveForm. By combining WaveForm’s innovative proprietary technology with Bayer’s experience and expertise in diabetes management, the partnership aims to deliver innovative continuous glucose monitoring solutions to patients and physicians in China.

Under the agreement, WaveForm will be responsible for obtaining marketing authorization for the Cascade CGM System in China and undertaking post-market maintenance activities; Bayer will be responsible for the commercialization, distribution, sales, and customer support of the system in China. Furthermore, both parties will jointly explore customized upgrades to CGM products tailored to the needs of patients and physicians in China.

 Notably, while Bayer’s pharmaceutical sales have declined overall, the company continues to advance numerous R&D pipelines. The second-quarter report shows that Bayer currently has 14 drug candidates in Phase II clinical trials and 9 in Phase III clinical trials. Its drugsXareltoApproved in China on the 3rd for use in combination with aspirin to reduce the risk of major cardiovascular events in patients with chronic coronary artery disease or peripheral artery disease.

Currently, the biggest competitor of Xarelto (rivaroxaban) is apixaban, whose sales have grown rapidly in recent years. Due to apixaban's advantages in preventing stroke and bleeding, while Xarelto has only demonstrated non-inferiority, Xarelto has been losing ground in the U.S. market. However, with the approval of more indications and an expanding patient population, Bayer may be able to turn the tide and generate revenue for its future healthcare business.

This article is sourced from Yiou, an original piece by author Lin Yiling. For reprint or collaboration, please click hereReprint Notice, Unauthorized reproduction will be subject to legal action.