At the National On-site Conference on Rational Drug Use held on February 3, Ma Xiaowei, Deputy Director of the National Health and Family Planning Commission, stated that efforts to promote rational drug use should be centered on antimicrobial stewardship, with particular emphasis on extending such management to primary-level and private medical institutions. At the same time, the implementation of the “strictest environmental protection law” will tighten profit margins for pharmaceutical companies whose core business is antibiotics, ushering in a new round of industry consolidation.

　　At the National On-site Conference on Rational Drug Use held on February 3, Ma Xiaowei, Deputy Director of the National Health and Family Planning Commission, stated that efforts to promote rational drug use should be centered on antimicrobial stewardship, with particular emphasis on extending such management to primary-level and private medical institutions. At the same time, the implementation of the “strictest environmental protection law” will tighten profit margins for pharmaceutical companies whose core business is antibiotics, ushering in a new round of industry consolidation.

　　In recent years, following the nationwide special campaign to rectify the clinical use of antimicrobial drugs, health authorities have continuously strengthened the management of such medications. Recently, the Jiangsu Provincial Health and Family Planning Commission issued the “Jiangsu Province Catalogue for Tiered Management of Clinical Antimicrobial Use (2015 Edition)” (hereinafter referred to as the “Catalogue”), which stipulates that the catalogue will take effect on March 1. The document places particular emphasis on prohibiting medical institutions from unilaterally lowering the management tier, thereby ensuring strict oversight of antimicrobial drugs throughout the province.

　　At the National On-site Conference on Rational Drug Use held on February 3, Ma Xiaowei, Deputy Director of the National Health and Family Planning Commission, stated that efforts to promote rational drug use should be centered on antimicrobial stewardship, with particular emphasis on extending antimicrobial management to primary-level and private medical institutions. This signifies a move toward more granular and detailed antimicrobial management.

　　Many industry insiders told reporters that a new wave of stringent restrictions is upon us, compounded by the implementation of the “strictest environmental protection law to date.” As a result, pharmaceutical companies whose core business revolves around antibiotics will see their profitability squeezed, and the industry will face another round of consolidation.

　　Stricter Management of Antimicrobial Drugs

　　According to information obtained by the reporter from the website of the Jiangsu Provincial Health and Family Planning Commission, when formulating their own tiered management catalogs for the clinical use of antimicrobial agents, all medical institutions must adhere to the principle of stringent oversight and may not unilaterally downgrade the management levels. This “special provision” was introduced because, under the previous version (2012–2014), medical institutions were authorized to establish their own tiered management catalogs for the clinical use of antimicrobial agents and could adjust the corresponding management levels. Clearly, the new regulation imposes strict restrictions on such “level adjustments,” which is seen as a signal that the measures to curb antimicrobial resistance are being further tightened.

　　According to reports, antimicrobial agents are managed under a three-tier system: unrestricted antimicrobials, restricted antimicrobials, and antimicrobials for special use. A representative from a pharmaceutical company in Jiangsu Province stated that, typically, each region or hospital has its own regulations, with physicians’ use of antimicrobials subject to tiered authorization based on their credentials. In this latest move, Jiangsu Province has revoked the authority of medical institutions to establish their own tiered systems for antimicrobial use, centralizing this responsibility under the provincial Health and Family Planning Commission.

　　The aforementioned Catalog includes 207 antimicrobial agents, an increase of only one compared with the previous edition; in terms of specific agents, the new edition adds cefoxitin and carbenomycin to the list of drugs subject to special-use management and removes aureomycin (previously classified as a drug for unrestricted use).

　　At a recent national on-site conference on rational drug use, regulatory authorities once again designated the management of rational drug use as a key priority. Industry insiders analyze that antimicrobial stewardship is set to face increasingly stringent oversight.

　　On January 28, the National Health and Family Planning Commission issued the “Notice on Printing and Distributing the Action Plan for Further Improving Medical Services,” which stipulates, with regard to antimicrobial drugs, that their inappropriate use shall be curbed through measures such as the implementation of a negative list for prescriptions and prescription review. By the end of 2017, the rate of antimicrobial drug use among inpatients in general hospitals shall not exceed 60%, and the antimicrobial drug utilization intensity shall be kept below 40 DDDs per 100 patient-days; other types of hospitals are required to meet the specific remediation targets for the clinical application of antimicrobial drugs.

　　Antibiotic Industry Faces a Shake-Up

　　Under the sustained, stringent enforcement of multiple rounds of policies aimed at strengthening antimicrobial stewardship, a notable shift has been the decline in the clinical use of antimicrobial agents. According to statistics, in 2013, antimicrobial drugs—which had long ranked first in terms of drug procurement expenditure at sample hospitals—were overtaken by antineoplastic agents.

An industry insider told reporters, “Overall, China’s antimicrobial product portfolio is overly redundant, and there are relatively few small enterprises; under the current stringent policy environment, it has become even more difficult for companies to turn a profit.”

　　According to reports, many companies are currently seeking opportunities for transformation. For example, this year North China Pharmaceutical Group has begun transitioning into the biopharmaceutical sector.

　　Yu Mingde, President of the China Association of Pharmaceutical Enterprise Management, has stated: “Under the increasingly stringent regulatory environment for antimicrobial drug use, small and medium-sized pharmaceutical companies are relatively better positioned to undergo transformation; however, large, traditional antibiotic manufacturers with decades of production history face considerably greater challenges in making the transition.”

　　From the perspective of corporate revenue, the “antibiotic restriction order” has inflicted severe pain on pharmaceutical companies. Lu’An Pharmaceutical, one of the “Big Four” traditional antibiotics, recorded year-on-year declines in net profit of 88%, 991.45%, 108%, and 53.75% for the first three quarters of 2011, 2012, 2013, and 2014, respectively. Notably, the company’s performance only began to improve in 2013 thanks to a substantial government subsidy. Recently, the company issued a preliminary announcement forecasting a loss of approximately RMB 120 million for the full year 2014.

　　In addition to the anti-restriction order, the recent introduction of the “strictest environmental protection law” has also driven up companies’ environmental compliance costs, with the antibiotic API industry being particularly hard hit. On February 3, Lu’ant Pharmaceutical announced that the environmental protection authorities, in accordance with relevant provisions of the Air Pollution Prevention and Control Law, had imposed a fine of RMB 50,000 on the company—the maximum penalty allowed under the law.

　　A research report by Debang Securities argues that the antibiotic API industry is characterized by high pollution and high emissions, and given that most companies have historically underinvested in environmental protection, the sector faces particularly intense environmental regulatory pressure. “Many firms lack the financial capacity to shoulder the substantial costs of environmental upgrades and remediation, which could force smaller players to exit the industry.” (Daily Economic News)