HUTCHMED (China) Limited
Q4 2018 Earnings Call Transcript
Published:
- Christian Hogg:
- Okay. All right. Well, 9
- Michael Mitchell:
- Mike Mitchell from Panmure Gordon. The Two-Invoice System, just wondering how the restructuring or if we should think about any further restructuring during 2019. Or was that now completed? And on the QCE bidding process, has that -- how do you think about that mapping on to the Commercial Platform as it stands at present and over the coming years?
- Christian Hogg:
- So the Two-Invoice policy has basically played out. I think you might see a little bit of impact in 2019 but not much. On the 7+4 QCE policy that's come out, it's essentially a policy that's designed to squeeze pricing in the generic drug industry. I actually see that -- it will hit the Hutchison Sinopharm business a little bit in terms of revenues just because we do sell some third-party generic products under this Hutchison Sinopharm JV. But they're very low margin. It won't affect our profitability at all. But I think, in general, that 4+7 QCE policy is going to be really positive for Chi-Med over the next few years because ultimately the whole point of it is to bring price down on generic drugs to open up more headroom for reimbursement of innovative drugs, which will be where we will be bringing our oncology assets. So yes, I think in the short term, you might see these commercial reforms impacting Hutchison Sinopharm sales a little bit, won't impact our profit by much. And in the long term, mid- to long term, it will really help us as a company.
- Cinney Zhang:
- Cinney Zhang from Bloomberg Intelligence. You're pushing to get fruquintinib on the National Drug Reimbursement List. When exactly do you expect that to happen? Also do you expect the final reimbursement price to be significantly lower than your retail price?
- Christian Hogg:
- Thank you, Cinney. I'm hearing that there's going to be an update on the National Drug Reimbursement List sometime in September, October this year. I don't know whether that's certain. But they're trying to get it done this year is what I'm hearing. Whenever you bring a new drug into the National Drug Reimbursement List, it's a negotiation on the price. And that's a negotiation that is set to happen. It hasn't happened yet. So it's difficult for me to really comment on what the price will be. I haven't seen any drug go into the national reimbursement list with a premium. So it will be a discount. But the extent of that discount will have to be determined through negotiations basically.
- Susie Jana:
- Susie Jana, Edison. Could you just talk us through the hirings in the U.S., 30 more people this year, what sort of profile you're looking for? And how rapidly are you going to expand in 2020 and 2021, given the amount of assets going into global development?
- Christian Hogg:
- Thanks, Susie. Yes, the team in the U.S., I mean, it's wonderful to be able to attract high-quality clinical regulatory talent into our U.S. organization. We've recruited in a Chief Medical Officer in the U.S. from Eli Lilly. And he has set about building a fully functional clinical regulatory organization, clinical operations, clinical science, everything. So we are just in a great position having -- I think what's able -- what allows us to really attract high-quality talent is our assets and our appetite to develop those assets in the U.S. and Europe. So I would imagine, as I say on this presentation, by the end of this year, our target is to be up to about 30 people. I would imagine that would grow quite rapidly after that because we'll be running multiple programs in parallel and we'll need the resources to manage that. But particularly, it's not just the U.S., it's Europe as well. Because in a lot of these global studies, you need European sites and you need those European sites to be functioning properly. So you need people on the ground over here as well. I don't know whether that answers your question. But it's a full-fledged building of a big multifunctional organization in this space.
- Unidentified Analyst:
- And just picking up on the -- you mentioned the ASCO GU data, kind of the KEYNOTE-426, you've seen some impressive stuff there. Are you thinking yourself about maybe a PD-1 fruquintinib combination in kidney cancer? Or is it -- are they too far ahead, those kind of your Merck's world?
- Christian Hogg:
- So it's a bit -- clearly, fruquintinib or surufatinib in combination with a PD-1 in kidney cancer is attractive to us. It's very competitive. There are a lot of players that are already in that space. But we're looking at a lot of things. I won't go into details of what we're looking at. But we're looking at a lot of things. And I think there is certainly clear proof of concept in there that both of those assets, surufatinib and fruquintinib, could do well in RCC. But I think you can't just be following what everybody else is doing. You've got to think about it in a slightly different way. And that's what Weiguo and the team are looking into.
- Christian Hogg:
- Any more questions? Okay. Do we have any? Okay. So if that's it, thank you all very much for coming, and appreciate your attendance and look forward to a good year. Thank you.
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