If the intermediate raw materials miss out in these two years, they will be unable to enter the market for this product.

Domestic Pharmaceutical Company Breaks Through Crystalline Patents to Launch Two Generics Early

To protect their commercial interests, multinational pharmaceutical companies typically build complex patent barriers around their products, with crystalline patents being one of the most difficult to overcome. These patents often serve as the last line of protection after the compound patent has been invalidated, ensuring the company's market exclusivity. For instance, AstraZeneca’s dapagliflozin and Novartis’ Entresto (which generated nearly $3.8 billion in sales in the first half of the year) have both extended their market exclusivity by several years using crystalline patents.

Recently, Entresto’s crystalline patent faced another challenge. One of its crystalline patents, CN102702119B, was partially invalidated following a decision (No. 567275) after a challenge by Nanjing Xixinhe Pharmaceutical Technology Co., Ltd.

According to Guideview, Nanjing Xixinhe Pharmaceutical Technology Co., Ltd. is a subsidiary of Fangshenghe Pharmaceutical. Its generic version of sacubitril/valsartan sodium tablets, Yixintan?, became the first product globally to successfully overcome the original crystalline patent barrier through independent innovation and receive regulatory approval. In 2022, domestic sales of sacubitril/valsartan sodium tablets (Entresto) in China reached nearly 3 billion yuan, with the Chinese patent set to expire in November 2026. The approval of Yixintan? has allowed it to enter the market three years early, with exclusive commercialization rights held by Fosun Pharma and production by Jiangsu Xuantai Pharma.

Earlier this year, Yixintan? received its first prescriptions in Shandong, Guangdong, Jiangsu, Zhejiang, Hunan, and Shaanxi, marking its entry into widespread clinical use. According to Fosun Pharma, Yixintan? is a first-line treatment for heart failure and hypertension with an innovative crystalline form covered by independent intellectual property rights and has been included in the latest national medical insurance catalog.

As Novartis’ only domestic competitor in this niche market, Nanjing Xixinhe has further challenged the crystalline patent of Entresto. However, the patent remains valid in its core claims after voluntary amendments by the patent holder. This means other approved domestic generic manufacturers must wait until all related Entresto patents expire in November 2026 before they can enter the market.

According to data from the Pharmaceutical Economic News, 13 companies in China have already received approval for sacubitril/valsartan sodium products, setting the stage for intense competition. Despite the impending competition, Novartis can still expect substantial returns from Entresto through patent protection strategies, deep market penetration, and new growth opportunities.

Guideview also reports that in December last year, Fangshenghe Pharmaceutical’s generic version of dapagliflozin, Tangjing?, was officially approved for market release. The original dapagliflozin product extended its patent protection until March 2028 through crystalline patents. Fangshenghe Pharmaceutical claims that it creatively broke through the crystalline patent, allowing Tangjing? to be legally launched five years ahead of schedule.

Tangjing? was submitted for approval after the July 2021 implementation of China’s "Early Resolution Mechanism for Drug Patent Disputes" and is the second generic version in China to be approved under the 4.2 category declaration (patent avoidance). In March this year, a subsidiary of Zhiyun Health obtained exclusive commercialization rights for Tangjing?. No public statements from AstraZeneca regarding this generic’s market launch have been found so far. (For more information, see related article: AstraZeneca's Patent Officially Declared Valid, $6 Billion "Blockbuster Drug" Faces Domestic Generic Hurdles).

Behind the Patent Hunts, a Generic Drug Production Chain Has Emerged

As of now, Novartis’ Entresto (sacubitril/valsartan sodium tablets) is the only product of its kind available in the domestic market, with the first generic, Yixintan, successfully entering the national insurance scheme and local procurement programs. However, beneath the ongoing patent challenges against Entresto lies an emerging generic drug production chain. Companies that fail to secure their supply chains for intermediate raw materials within the next two years will likely be shut out of the market once the original patents expire, as a flood of generics will rush in, turning the market into a highly competitive “red ocean” where latecomers will struggle to gain a foothold.

An analysis article from a related financial column provides an overview of the generic industry chain for sacubitril/valsartan sodium tablets, some of which is summarized by Guideview as follows:

In the domestic market, sacubitril/valsartan sodium tablets have shown robust growth in recent years. In 2022, sales of this drug in China reached 2.83 billion yuan, marking a year-on-year increase of 13.29%. Globally, the original Entresto achieved sales of $3.548 billion in 2021, and this year it is expected to surpass $7 billion.

As the patent cliff approaches, Novartis will face increasing competition from generics in the domestic market, likely leading to price reductions through patent licensing strategies. With the rapid increase in volume, sales of the original drug in China are expected to exceed 5 billion yuan by 2024. After the patent expires in 2026, the domestic generic market for this drug is projected to surpass 6 billion yuan, with even stronger growth anticipated in the future.