(Yicai) Nov. 20 -- MSD China is set to downsize its diabetes division, according to a source at the unit of US pharmaceutical giant Merck Sharp & Dohme. Reports suggest that the layoffs stem from the anticipated inclusion of key treatments such as Sitagliptin in China’s centralized drug procurement program.

The reports of redundancies are true, but the scale is not yet known, the insider told Yicai. MSD China has not yet replied to Yicai’s request for comment. 

MSD’s portfolio of diabetes drugs includes Sitagliptin, Sitagliptin/metformin, and Ertugliflozin pidolate, with the first two accounting for most sales at its diabetes business. Sales of those two drugs have been declining globally due to patent cliffs and intense market competition, sinking 25 percent last year to USD3.4 billion.

Sitagliptin in an oral regular-release dosage form and Sitagliptin/metformin will be included in the 10th round of China's National Centralized Drug Procurement program, a government-led bulk-buying scheme that aims to make drugs more affordable and accessible. On Nov. 1, the National Organization Drug Joint Procurement Office began collecting data on the next batch of drugs.

MSD will face fierce price competition with generic drug companies once Sitagliptin and Sitagliptin/metformin are included in the program, with its market share among China's public healthcare centers likely to shrink.

Sales of Sitagliptin in an oral regular-release dosage form in public healthcare centers in China exceeded CNY2 billion (USD276 million) last year, according to medical data information platform Menet. Although there were more than 30 generic drug manufacturers of such treatments, MSD had a market share of over 90 percent.

Editor: Martin Kadiev