(Yicai) Aug. 14 -- China’s volume‑based drug procurement program, introduced in 2019 to reduce prices and tighten oversight, has driven domestic insulin suppliers to upgrade production facilities, strengthen quality controls, and scale up, helping some secure approval to sell in highly regulated Western markets.

Insulin products from several Chinese drugmakers have successfully entered the European and US markets this year, breaking the long-standing global monopoly held by a handful of Western pharmaceutical giants.

Sunshine Lake Pharma started shipping an initial batch of 1.15 million units of its insulin glargine injection Langlara to the United States at the end of last month, marking the first time a finished Chinese insulin product has been exported to that market. Deliveries are scheduled to be completed mid‑to‑late this month.

According to prior disclosures, the Dongguan-based company has signed a supply agreement with a US buyer for at least a 18 million shots of Langlara over 18 months.

Constant investment in manufacturing upgrades and quality consistency is essential to ensuring reliable supply under procurement contracts and winning acceptance among clinical end users, Tang Xinfa, president of Sunshine Lake's parent company HEC Technology, told Yicai. These efforts also laid the groundwork for the firm to subsequently secure regulatory approvals in overseas markets, he noted.

‘Stress Test’

Volume-based procurement, launched as a pilot in 2018, leverages the massive buying power of China’s public hospitals to secure huge guaranteed sales in exchange for steep price cuts on generic and essential medicines. It is also having a broader impact by effectively subjecting the pharmaceutical supply chain to a comprehensive “stress test," according to industry observers.

By squeezing inflated sales and distribution costs and strengthening dynamic inspections under good manufacturing practices, the policy helps firms build process‑and‑cost advantages plus large mass production capacity, they noted, adding that these strengths eventually become core competitive advantages that paves the way for overseas market entry.

“We passed the US Food and Drug Administration's on-site inspection on the first attempt," Tang said. Beyond investment in tangible hardware, he attributed the breakthrough largely to Sunshine Lake's "software" capabilities, including mechanisms for communicating with US regulators and the development, integration, and refinement of its drug registration and regulatory submission systems, he noted.

Sunshine Lake was among the successful bidders in China’s first volume-based procurement tender for insulin run by the National Healthcare Security Administration in November 2021. Langlara had only received the green light in China a month earlier.

Although the initial contracted volume was modest, the win created opportunities for Sunshine Lake to expand production capacity. Its insulin plant in Yidu, a city in central Hubei province, became operational in 2021, with annual capacity rising over the following five years from about 15 million units to around 100 million units.

Other Overseas Insulin Approvals

At the end of last month, Shanghai-listed King-Friend Biochemical Pharmaceutical announced that it had received US FDA approval for a biologics license application covering its insulin aspart jab, making it the first China-made insulin aspart product to enter the US market.

Tonghua Dongbao Pharmaceutical, the injection’s manufacturer, said that only four months elapsed between the FDA's on‑site inspection and final approval. The short turnaround shows that its product‑quality assurance system is highly attuned to global standards, it noted.

Meanwhile, three insulin products from Gan & Lee Pharmaceuticals, also listed in Shanghai, received successive regulatory approvals in the European Union during the first half of this year. The Beijing-based drugmaker is poised to become the only Chinese pharmaceutical company with both long-acting and rapid-acting insulin products approved in the EU.

There is no difference in quality between Sunshine Lake's products supplied to the domestic market and those exported, Tang pointed out. The company applies identical standards to raw and auxiliary materials, manufacturing processes, impurity controls, and stability testing, he said, adding that its ability to lower prices comes from economies of scale rather than from easing quality standards, he added.

Improving product quality has also helped China’s insulin suppliers rapidly expand their share of the home market. Before insulin was included in the bulk-buying program, three foreign businesses jointly held about 70 percent of the market, but that had dropped to about 55 percent by April 2024.

Editors: Tang Shihua, Martin Kadiev