dailypharmkorea

Opinion
[Reporter's eyes] Despite Tessentrick's high sales
by Apr 15, 2022 06:03am
According to Roche audit report, the company recorded sales of 343.9 billion won and operating losses of 69.6 billion won last year. Sales fell 22.5% year-on-year, and operating losses increased. This is the first drop in sales in 10 years for Roche Korea, which has increased its sales every year. It is the largest deficit in 10 years. Roche Korea has blockbuster products like anti-cancer drugs. Based on IQVIA, a pharmaceutical research institute, two of the top 10 best-selling drugs in Korea last year were Roche products. Avastin recorded 112.3 billion won in sales and Perjeta 93.9 billion won in sales. Sales of Tecentriq, an immuno-cancer drug, also amounted to 67.2 billion won, and Herceptin's sales amounted to 65.3 billion won. Roche Korea has a risk-sharing contract with the NHIS for Kadcyla, Perjeta, Herceptin, and Tecentriq. It is a contract in which the company refunds the amount of medication equivalent to the excess amount to the corporation during the agreed period. Each year, the company calculates the estimated amount of the risk-sharing refund as unpaid expenses and deducts it from sales. Last year, the estimated risk-sharing refund set by Roche Korea was1942 billion won and the amount paid was 77.2 billion won. An additional 200 billion won in refunds was incurred alone. The remaining amount of refunds at the end of the year reached 178.5 billion won, including 61.6 billion won, the basic amount. In terms of figures alone, they have to pay more than half of Korea's total sales. The refund amount of Roche was not large from the beginning. It was enough to cover 9.4 billion won at the end of 2017, 31.7 billion won at the end of 2018, 49.9 billion won at the end of 2019, and 61.6 billion won at the end of 2020. Then, the amount of refunds increased sharply last year, increasing the company's burden. How the pharmaceutical company set the ratio of refunds with the government is private. However, the industry views Tecentriq's influence highly. The government accepted the government's proposal to share Tecentriq, generic for immuno-cancer drugs, to quickly enter the market, which may have made it difficult for Roche. At the time of Tecentriq's registration, Roche Korea was the only company with immuno-cancer drugs to accept the government's proposal to "burden pharmaceutical companies for the initial three-cycle medication cost." It also accepted the proposal of an "initial treatment refund type" that refunds the administration for an initial period of time depending on whether or not the patient responds to the expansion of the benefit. Therefore, there was also a story about Tecentriq that "the more you sell, the more you lose." Thanks to this, Tecentriq was able to quickly increase its market influence, but the company cannot be amused by the rapidly increasing amount of refunds. Since Roche does not make drugs by itself, but buys and sells finished products from its headquarters, the amount of refunds accumulated in hundreds of billions of won is a loss. Fortunately, Roche Korea's financial condition is very good. As of last year, cash and cashable assets amounted to 82.9 billion won, and retained earnings amounted to 135 billion won. In other words, the refund is still "at a level to cover." However, if the refund occurs nearly 200 billion won every year, financial stability is likely to falter. Last year, 1942 billion won was generated, and the debt ratio increased sharply. The debt-to-equity ratio of the company, which stood at 89% in 2020, stood at 203% at the end of last year. Roche Korea is trying to revise the refund conditions in the RSA renewal negotiations. However, due to the nature of immuno-cancer drugs, it is not easy to change the conditions already accepted once in favor of pharmaceutical companies at a time when there are many indications to negotiate the expansion of benefits. This is why Roche's concerns are deepening.