Facing the era of low-priced generics…diabetes drug competition

Dong-A ST continues expanding its Suganon family…new driving force amid over-heated competition

Chong Kun Dang has established six Duvie line-ups…new growth engine

Securing profitable products in preparation for the era of low-priced generics

Dong-A ST is adding two more combination therapies that utilize its in-house-developed diabetes drug, Suganon. Having completed the development of these new combinations, the company has entered the regulatory approval stage. Once these two combination drugs are approved, six types of Suganon lineups will be secured.

Chong Kun Dang has also expanded its Duvie line, new diabetes drugs, to six products. While competing drugs are seeing stagnant growth due to overheated market competition from hundreds of generics, Chong Kun Dang has strengthened its competitiveness by securing new growth engines through the concentration of its research and development (R&D) capabilities. Analysis suggests that establishing new, incrementally modified drugs (IMDs) will be a powerful driving force for profitability in preparation for the upcoming era of low-priced generics.

Dong-A ST files for two Suganon combination drugs...establishing new growth engines amid slow growth in over-saturated market

According to the Financial Supervisory Service (FSS) on the 16th, Dong-A ST submitted applications for the marketing authorizations of “Sugaempa” and “Suganova SR” to the Ministry of Food and Drug Safety on the 13th. Both “Sugaempa” and “Suganova” are combination drugs made using Dong-A ST's diabetes drug, Suganon.

Suganon, approved in October 2015 as the 26th Korea-developed new drug, is a DPP-4 inhibitor diabetes treatment. Suganon has an outstanding blood glucose-lowering effect even at low doses due to its high selectivity for the DPP-4 enzyme. It has a low impact on the metabolism of other drugs, resulting in high medication convenience and compliance for patients with chronic diseases who must take multiple medications. Furthermore, it can be used without dose adjustment, even in patients with decreased renal function.

"Sugaempa" is a combination drug that joins Suganon with empagliflozin, an SGLT-2 class diabetes drug. The original drug for the empagliflozin component is Jardiance. "Suganova" is a triple combination drug consisting of Suganon, empagliflozin, and metformin.

Yearly outpatient prescriptions for Suganon products (unit: KRW 100 million, source: UBIST)

If Dong-A ST receives approval for "Sugaempa" and "Suganova," the Suganon family lineup will expand to six types.

In July 2016, Dong-A ST launched Sugamet, a combination containing Suganon and metformin. In May 2023, it released Sugadapa, combining Suganon with the SGLT-2 inhibitor dapagliflozin, and in January 2024, it added a triple combination drug comprising Suganon, dapagliflozin, and metformin.

By combining two different SGLT-2 inhibitor components, Dong-A ST will offer two types of Suganon + SGLT-2 inhibitor combinations and two types of Suganon + SGLT-2 inhibitor + metformin combinations. This strategy aims to equip the maximum number of combinations possible so that patients taking individual component drugs separately can utilize a Suganon combination drug. 

The Suganon family is evaluated to have successfully settled into the prescription market, recording annual sales of approximately KRW 30 billion.

According to the pharmaceutical research organization UBIST, the four types in the Suganon family recorded KRW 31.5 billion last year. Sugamet and Suganon recorded prescription amounts of KRW 17.4 billion and KRW 11.1 billion, respectively. Sugatree and Sugadapa recorded KRW 1.6 billion and KRW 1.4 billion, respectively.

However, recent growth has been slow. Last year's prescription amount for Sugamet decreased by 3.5% compared to the previous year, and Suganon decreased by 7.7%. Sugamet recorded prescription sales of KRW 20.6 billion in 2022, but they have decreased by 15.6% over the last three years. Suganon has shown a downward trend for three consecutive years, following KRW 14.1 billion in 2022, a 20.9% decline. While Suganon and Sugamet combined for KRW 34.7 billion in 2022, the prescription amount for the four Suganon family products, including Sugatree and Sugadapa, decreased by 9.0% compared to three years ago.

With both the DPP-4 inhibitor and SGLT-2 inhibitor markets in Korea entering a state of oversaturation due to the entry of generics, it is a difficult environment to sustain growth. While most domestic pharmaceutical companies compete by offering generics, Dong-A ST's move is to strengthen its competitiveness in the oversaturated market by investing in its self-developed new drugs and additional R&D capabilities. 174 subjects participated in the clinical trials for Dong-A ST's "Sugaempa" and "Suganova."

Chong Kun Dang establishes 6 Duvie lineup... Securing profitability weapon against low-priced generic era

Chong Kun Dang is also strengthening its competitiveness in a stagnant market by steadily adding to its self-developed diabetes drug Duvie lineup.

On the 11th, Chong Kun Dang received marketing authorization approval from the Ministry of Food and Drug Safety for Duviempol XR. Duviempol XR is a triple combination drug comprising lobeglitazone, empagliflozin, and metformin. Lobeglitazone is the main component of Duvie, the diabetes drug independently developed by Chong Kun Dang.

​Chong Kun Dang stated, "We expect to increase administration convenience by providing a new treatment therapy with the fixed-dose combination of lobeglitazone, empagliflozin, and metformin for type 2 diabetes patients whose blood sugar is not appropriately controlled by the dual therapy of empagliflozin and metformin."

Duviempol XR is the sixth lineup developed based on Duvie. Approved in 2013 as the 20th Korea-developed new drug, Duvie is a thiazolidinedione (TZD) class diabetes treatment.

Starting with Duvie, Chong Kun Dang currently sells four Duvie lineups: Duviemet SR, Duviemet S, and Duet S. Duviemet SR, approved in 2016, is a combination drug combining Duvie and metformin.

Duviemet S, approved in May 2023, is a combination drug containing Duviemet and the DPP-4 inhibitor sitagliptin. The original drug for sitagliptin is Januvia. In June 2023, Chong Kun Dang received additional approval for Duet S, a dual combination drug joining lobeglitazone and sitagliptin.

In January, it equipped its fifth lineup by receiving approval for Duviempa, which joins Duvie and empagliflozin. Duviempa can be used for adult type 2 diabetes patients for whom the concomitant administration of lobeglitazone and empagliflozin is appropriate.

For Chong Kun Dang, the strategy is to maximize synergy in the prescription market by presenting new treatment alternatives to medical staff and patients through the introduction of various combination drugs centered on Duvie.

Annual outpatient prescriptions for Suganon family (unit: KRW 100 million, source: UBIST)

The market situation for Duvie is also not easy. Last year, outpatient prescription costs for the four types in the Duvie family totaled KRW 20.3 billion, a 3.9% decrease from the previous year. Duvie's prescription volume was KRW 18.3 billion, accounting for about 90%, while the remaining products were not significantly prominent. In 2022, Duvie and Duviemet combined for KRW 25.4 billion. Last year, the combined prescription amount of the four products decreased by 20.2% compared to three years ago.

As with Suganon, it is a difficult environment for Duvie to sustain growth as pharmaceutical companies indiscriminately release generics for diabetes drugs like SGLT-2 inhibitors. However, the company is moving to equip itself with additional growth engines by steadily releasing combination drugs developed through its R&D capabilities. 

It is viewed that combination drugs developed by a pharmaceutical company's proprietary new drugs can become a driving force for future profitability, especially as the government continues its attempts to lower generic drug prices.

In November last year, the Ministry of Health and Welfare (MOHW) reported to the Health Insurance Policy Deliberation Committee a plan to improve the drug pricing system, which includes lowering the price calculation rate for generics and off-patent drugs from 53.55% to the 40% range. It is reported that on the 11th, the MOHW held a sub-committee of the Health Insurance Policy Deliberation Committee and suggested a generic drug price calculation rate in the low-to-mid 40% range.  

If the generic drug price standard is lowered from 53.55% to 43%, the calculation shows the maximum generic price will be reduced by 19.7%.

In the reorganization plan reported by the MOHW last November, it was specified that, while maintaining the maximum price requirements applied since 2020, the reduction rate for unmet requirements would be expanded from 15% to 20%. This means that the prices of generics that do not meet the maximum price requirements will drop even further.

Under the drug pricing system reform since July 2020, a generic product can receive the maximum price only if it meets both requirements: performing a bioequivalence study and using registered drug master file ingredients. Every time one requirement is not met, the upper limit price drops by 15%. If both requirements are not met, the structure results in a 27.75% reduction. Applying a 15% reduction rate, the generic maximum price calculation standard of 53.55% drops to 45.52% if one requirement is unmet, and to 38.69% if two requirements are unmet.

If the generic calculation standard is set at 43%, a generic that fails to meet one maximum price requirement will be lowered to 34.40%, and a generic that fails to meet two requirements will be lowered to 27.52%. In this case, the price of a generic failing to meet one requirement is reduced by 24.4% compared to the current level, and the reduction rate for failing two requirements is 28.9%. It is mathematically possible to calculate that the reduction in generic drug prices will approach 30%.

This is the background for which pharmaceutical companies are complaining that performance pressure could intensify due to the generic drug price cuts. An industry official stated, "Due to the government's policy on lowering drug prices, the market may find it difficult to expect profits from generics in the future. Equipping new drugs or IMDs that can receive high drug prices will greatly help future performance strength."