Indian pharma makes inroads in China: Cipla, Natco Pharma, Hetero Labs chosen to supply key generic drugs

Several Indian pharmaceutical companies have won bids to supply generic medicines to Chinese public hospitals, making some headway in one of the world’s most tightly held drug markets.

Hetero Labs, Cipla, Annora Pharma and Natco Pharma were among the winners in China’s latest round of volume-based procurement (VBP) tenders conducted by the National Healthcare Security Administration, according to the India-China Economic and Cultural Council (ICEC).

Hetero and Cipla were among seven firms selected to supply about one billion tablets of Dapagliflozin, a diabetes drug that ranks among China’s top-selling small molecule medicines.

Dapagliflozin’s sales in Chinese hospitals reached 5.35 billion yuan ($739 million) in 2024, ICEC said.

Annora Pharma won a bid to supply Oxcarbazepine tablets, used to treat epilepsy, while Natco Pharma secured a contract to supply Olaparib, an oncology drug.

Kunshan Rotam Reddy Pharmaceutical, a Chinese subsidiary of Dr. Reddy’s Laboratories, also won bids for four products.

The latest tender, held last month, covered 55 drugs across multiple therapeutic areas, including anti-infectives and cancer treatments. Of the 272 companies pre-selected, Indian firms won bids for seven products.

The selection of Indian players is an encouraging sign towards breaking into the mega Chinese drug market dominated by multinational and local firms, reported PTI, citing sources in Indian pharma companies.

China’s VBP scheme, launched in 2018, pools state demand to negotiate steep price cuts in exchange for large purchase volumes.

While the process squeezes margins, it offers foreign generic makers a rare entry point into China’s public healthcare system, which accounts for the bulk of drug purchases.

“It is challenging to compete with Chinese companies who have cost leadership being backward integrated into APIs,” said an executive at one Indian firm operating in China. “ It is worth noting that China remains the biggest source of APIs (Active Pharmaceutical Ingredients) for Indian pharma companies.”

But at the same time, for Indian firms specialising in generic drugs in China, it is important to participate in VBP bidding as it is the only way to have access to a large market.

Pharma executives said multinational companies that once dominated the Chinese market are increasingly losing bids due to low pricing requirements.

India has long urged China to open its market to Indian pharmaceuticals and information technology products to help narrow a trade imbalance that has widened to nearly $100 billion in Beijing’s favour in a bilateral trade of about $119 billion.

Currently, around 10 Indian pharmaceutical firms operate in China, some with local production units, according to industry sources.