AstraZeneca begins ERP and business unit restructuring

AstraZeneca to withdraw Forxiga from Korean market due to pricing reductions… The company has stated that “many factors have influenced the withdrawal”

Business unit for Forxiga will be integrated into the BioPharmaceuticals Business Unit…The sales of combination drugs will continue

AstraZeneca Korea has initiated an early retirement program following the withdrawal of the diabetes treatment Forxiga from the Korean market.

 

The company has stated that it is in discussions with the government to minimize the impact of Forxiga’s withdrawal along with its business unit restructuring.

 

According to the pharmaceutical industry sources on the 18th, AstraZeneca Korea is currently implementing an Early Retirement Plan (ERP).

 

Under this plan, the ERP compensation package is structured as of January 2024, with a monthly base salary*(years of service*2+8) + 130 million won.

 

For example, an employee earning a monthly base salary of 5 million won with 10 years of service would receive an additional 130 million won on top of 5,000,000 multiplied by 28.

 

AstraZeneca Korea’s Forxiga

Forxiga (ingredient: dapagliflozin), a SGLT-2 inhibitor class treatment for diabetes, is a blockbuster drug that accumulated sales of 55 billion won in the previous year.

 

However, AstraZeneca Korea announced its withdrawal from the Korean market in December last year.

 

The primary reason for Forxiga's withdrawal is widely attributed to the price reduction resulting from patent expiration.

 

AstraZeneca Korea contested the price reduction resulting from the generic listing and initiated administrative litigation against it.

 

While the court has accepted this for execution suspension, if price reductions are implemented after February, the current price of around 730 won may drop to the 390 won range.

 

However, as Forxiga's indications were expanded to conditions like heart failure and kidney disease, in addition to Type 2 diabetes, continued price reduction remains possible.

 

The challenge for the company is that the price reduction in Korea can influence the price of the drug in neighboring countries, and the company cannot rely solely on sales in Korea.

 

The price of Forxiga in Korea is known to be the lowest among OECD countries, approximately 1/40th of the price in the United States.

 

"A decision to withdraw Forxiga takes into account various factors beyond just price.

 

We are currently in discussions with the Ministry of Food and Drug Safety (MFDS) regarding the withdrawal and timing of domestic withdrawal," a representative from AstraZeneca Korea stated.

 

AstraZeneca Korea to restructure business units while maintaining the sales of combination drugs. AstraZeneca Korea is also undergoing a restructuring of its business units.

 

The current Respiratory & Immunology Business Unit and Cardio Vascular Renal Metabolism (CVRM) Business Unit will be integrated into the BioPharmaceuticals Business Unit.

 

Following the integration, AstraZeneca Korea will operate with three units: BioPharmaceuticals, Oncology, and Rare Disease.

 

However, AstraZeneca Korea clarified that the organizational restructuring is not because of the ERP program.

 

According to a company representative, as part of the headquarters' strategy, existing CVRM and Respiratory & Immunology business units will be integrated into the BioPharmaceuticals Business Unit.

 

And products like Xigduo XR Tab (Dapagliflozin/Metformin) and Sidapvia Tab (Dapagliflozin/ Sitagliptin) will continue to be part of the CVRM Business Unit's roles.

 

For combination drugs, the extent of price reduction is not significantly greater than that of Forxiga, as there are no additional indications other than type 2 diabetes.

 

As a result, the company may have chosen to maintain domestic sales of Xigduo XR and Sidapvia.

 

Beginning this year, HK Inno.N will sell Xigduo XR and Sidapvia in Korea.

 

"We believe that Xigduo XR can provide additional benefits to patients as a combination drug, and the factors taken into account were different from those for Forxiga," a representative from AstraZeneca Korea stated.

 

The concern revolves around patients who are currently taking the active ingredient dapagliflozin and have conditions such as heart failure and kidney disease.

 

Currently, among SGLT-2 inhibitors, only Boehringer Ingelheim's Jardiance has secured indications for heart failure and kidney disease.

 

The withdrawal of Forxiga could potentially create challenges for patients and doctors in accessing the treatment.

 

"The decision to withdraw Forxiga was extremely difficult for the company, considering the potential impact on patients in accessing the treatment," a representative from AstraZeneca Korea stated.

 

"AstraZeneca Korea is actively engaged in discussions with the MOHW to find solutions that would allow patients receiving treatment for chronic heart failure and chronic kidney disease to continue their treatment.” In response to concerns about potential shortages and supply issues with Forxiga at the end of last year, a company representative said that they have secured enough of the drug.

 

"The supply of Forxiga is sufficiently secured for this year,” the representative stated and clarifying, “Even if the approval is withdrawn, insurance code for the drug remains valid for six months, so we have secured the quantity for that duration.”