AstraZeneca rides China wave as rival GlaxoSmithKline struggles

By Ben Hirschler

LONDON (Reuters) - AstraZeneca (AZN.L) is enjoying booming drug sales in China, helped by reforms to the country's regulatory system and an increased sales force, in sharp contrast to its British rival GlaxoSmithKline (GSK.L).

China revenue in the third quarter increased by 12 percent at AstraZeneca and the country now accounts for 15 percent of its global product sales - a far higher proportion than at other big pharma companies.

"We are in a special place in China," Chief Executive Pascal Soriot said on Thursday, after presenting financial results. "For the next two to three years I can see this growth rate maintained."

The picture is very different at GSK, which said last month that its pharmaceutical sales in China declined by a "mid-teens" percentage rate in the quarter.

While AstraZeneca has added sales representatives to cover more of China and has successfully exploited local market changes, GSK has yet to recover fully from a bribery scandal that landed it with a record fine in 2014.

China is now the world's second-biggest drugs market after the United States, with more cases of cancer and diabetes than any other nation, fuelled by fast food, smoking and pollution.

That is opening up an opportunity for suppliers of modern medicines, despite competition from local suppliers of cheap generic drugs.

Significantly, recent reforms at the China Food and Drug Administration have started to speed up new drug approvals and Soriot noted that AstraZeneca's lung cancer pill Tagrisso had won a green light in record time.

At the same time, Chinese funding authorities are also moving faster to agree payments for innovative drugs, albeit after negotiating price discounts in many cases.

AstraZeneca has had five new products recently added to the country's National Reimbursement Drug List - Onglyza for diabetes, cancer drugs Iressa and Faslodex, heart medicine Brilinta and antipsychotic treatment Seroquel.

"We have a portfolio of products that really fit very well the needs of Chinese patients today," Soriot said.

(Reporting by Ben Hirschler; Editing by Adrian Croft)