China Pledges RMB 800 Million For Cataract Surgeries, Bringing Ophthalmic Market Potential Into Focus

With a large aging population, China’s ophthalmic market is poised to see growth, and companies with mixed product portfolios will be the biggest winners, analysts say.

BEIJING – A newly released plan will provide public financial support to 1 million Chinese patients for cataract surgery, with 250,000 surgeries to be completed by the end of November, according to a joint announcement from China’s Ministry of Health and the China Disabled Persons’ Federation (CDPF).

The campaign, dubbed Helping 1 Million Get Eyesight Back, is the most recent effort to provide needed medical services to patients in small towns and rural areas under China’s healthcare reform, noted the MOH in a statement. A similar project, conducted from 2009 to 2011, benefited 1.09 million patients with cataracts.

According to the plan, MOH is tasked with ensuring operational quality and logistics, while CDPF will conduct cataract screening and select candidates for surgery.

For each operation, the central government will pay RMB 800 ($126), and 100 million patients will be treated over a period of four years, said MOH. In the first year, 250,000 surgeries will be conducted in 28 provinces, except Beijing, Tianjin and Shanghai. The three metropolises are mostly urban and have comparatively higher income levels than other provinces.

Setting different patient numbers for each province, the MOH has prioritized areas with higher cataract prevalence and lower development levels. For example, Southwestern Yunnan will see the most surgeries conducted with 40,000, followed by Hunan (20,000), Shandong (20,000), and Henan (15,000).

In general, county-level hospitals in each locality are designated to be the center for such surgeries, although in some areas a specialty ophthalmologic hospital or department inside a large hospital may conduct them.

Each hospital should have at least one ophthalmologist with experience conducting extracapsular cataract extraction (ECCE) and intraocular lens implantations. The surgeon should have conducted at least 200 such surgeries in the past two years. In addition, every hospital should be equipped with surgical devices to conduct the operations, said MOH (See: China cataract project – Chinese language).

MNCs Growing Market Share

China’s move to treat low-income cataract patients is expected to have limited impact on multinational ophthalmic device makers because their focus has traditionally been on urban and higher-end markets. However, the multi-year, large-scale program could provide opportunities for foreign players to raise brand awareness among usually hard-to-reach patients and penetrate increasingly important low-tier markets, according to one analyst.

“Combined with coverage provided by national medical insurance schemes, the treatment won’t cost too much. However, the social impact will be huge,” Mo Cheng, research director of Guangzhou-based Medical Economy Institute, told PharmAsia News.

According to research conducted by Cheng’s team on retail pharmacies in China, foreign makers now account for roughly half of the ophthalmologic market share in China despite coming late to the game. And not surprisingly, they have a dominant position in the mid- to high-end markets.

The report noted that anti-fatigue procedures take the lion’s share of the ophthalmologic market segment in China, with 46.8%, followed by cataract treatment at 21.5% and anti-infectives at 17% of the market. The report compiles data collected from China’s three largest urban pharmaceutical markets – Beijing, Shanghai and Guangzhou.

The dry-eye segment of the market has three top brands from foreign manufacturers: Xinledun (aspartate, VB6 and dipotassium glycyrrhizate) from Japan’s Rohto Pharmaceutical Co. Ltd.; and Lanrunjie and Hongrunjie (chrondroitin) from Bausch & Lomb Inc.’s Chinese subsidiary Shandong Chia Tai Freda Pharmaceutical Co. Ltd. The products are popular due to a series of product launches and promotional tools, noted the report.

China has roughly 5 million patients with cataracts, 3 million of which are blind. With an increasingly aging population affected by environmental and diet changes, the occurrence rate of new cases is also increasing. Each year, 800,000 to 1 million Chinese citizens are diagnosed with cataracts, according to data compiled by the Bank of China Security Research.

Although surgery is the most effective way to treat retinal disorders such as cataracts, eye drops to treat the disease are still a big seller, largely because patients often have to put off surgery and use eye drops while they await treatment, the report explained.

Chinese domestic brands dominate the cataract eye drop market. The five top sellers include three synthetic drugs plus traditional Chinese medicines. The three drugs are bendazac lysine, pirenoxine and glutathione. Most of these drugs are priced at RMB 30-50. The market is also highly concentrated, with the five brands taking 70% of the market share.

Like the dry-eye market, the anti-infectives segment is dominated by foreign maker’s brands. They include Rohto’s Ledunkang (sulfamethoxazole), Santen Pharmaceutical Co. Ltd.’s Tarivid (ofloxacin), Bausch & Lomb’s Bairunjie (chloramphenicol), and Tobrex (tobramycin) from Novartis AG subsidiary Alcon Laboratories Inc.

Overall, there are more than 250 domestic makers that are marketing ophthalmologic products, compared to just 25 foreign makers, according to the report.

Device Opportunity, Alcon’s Awareness Drive

Ophthalmic device makers could benefit more from China’s drive to reduce blindness caused by cataracts and other major retinal disorders, says researcher Mo Cheng.

One recent technological improvement in surgically treating cataracts is phacoemulsification, which uses an ultrasonic device to break up and remove cloudy lenses. Compared to ECCE, it has a smaller incision, quick recovery, and no need for a hospital stay. However, due to higher cost, the procedure is mostly conducted at hospitals in large and mid-sized cities, Cheng said.

In some affluent provinces, county-level hospitals also have the capacity to conduct the procedure to meet demand from patients, he added.

Compared to drugs, devices have a better chance of getting reimbursed at these hospitals because they generally don’t have to undergo a centralized tender system, according to Cheng. Indeed, due to a price-heavy, winner-take-all system, multinational drug makers have been largely absent from the county-level hospital bidding process (Also see "In China, A Province's Drastic Price Cut Model Is Being Modified To Fit A Nationwide System: A Look At The Anhui Model" - Scrip, 7 Apr, 2011.).

However, provincial-level centralized tenders have begun in a few provinces for certain devices. For example, in June, Hunan province piloted a centralized bidding process for orthopedics, and leading companies such as China Kanghui Holdings, Shandong Weigao Group Medical Polymer Co. Ltd. and Trauson Holdings Co. Ltd. won a majority of the tenders (Also see "China Conducts First-ever Centralized Tender For Orthopedic Products" - Scrip, 16 Aug, 2012.). In April, Northwestern Gansu province released tender prices for high-value medical consumables and testing agents, and multinational makers had smaller price cuts for their winning stent products (Also see "A Closer Look At China’s First Provincial Medical Device Tender In 2012" - Scrip, 19 Apr, 2012.).

Alcon is one multinational ramping up to take advantage of China’s cataract market. In 2011, the company donated RMB 130 million and two phacoemulsification devices to train physicians around the country. Alcon also donated 3,000 post-surgery drugs to the training efforts.

Aided by a product portfolio consisting of both drugs and devices, Alcon is expanding rapidly in China, Cheng said. The company is currently ranked No. 2 among ophthalmic companies in China, following Japan’s Santen. However, Cheng predicted that Alcon will likely take over Santen in 2012 or 2013 to become No. 1 in China’s ophthalmic market.

[Editor’s note: Want to know more about how China is changing the global pharma industry? Don’t miss the PharmAsia Summit Shanghai Sept. 24-26. Click here for details. ]