China Pharmaceuticals Market Report
The size of the Chinese drug market (including all Western and traditional Chinese medicine drug products and biopharmaceuticals) at retail price level grew at an average annual rate of 15.3 percent between 2001 and 2008, reaching RMB 482.6 billion (US$70.7 billion) in 2008, according to Wicon International.
Industry analysts predict between 20 percent and 25 percent in revenue growth and 30 percent profit growth for the Chinese pharmaceutical industry in 2009.
It is expected that drug sales in the country will expand by at least RMB 80 billion (US$12 billion) in 2009 as coverage of the Chinese population by urban employee and resident basic medical insurance systems and the rural cooperative medical system expands.
Positive drivers in 2009 include restored order in the marketplace after regulatory corrections, and anticipated market expansion brought by the healthcare reform under which government investments will increase considerably. Other factors include continued industry consolidation, resulting in higher market share and profitability of larger companies, relatively steady drug prices, rise of new product launches by Multi National Corporations (MNCs), and the continuous inflow of foreign and domestic investments to the drug industry.
China has a universal basic medical care system (with maximum payout limit in the region of US$10,000) that it is hoping to put into place through healthcare reform. Healthcare expenditures are less than five percent of Gross Domestic Product (GDP) and average annual drug consumption per capita is only US$53.
Other negative factors and uncertainties surrounding the Chinese pharmaceutical sector include:
- The slowdown of the Chinese and global economy,
- Uncertainties in export growth,
- Instabilities and turbulences caused by the introduction of various new regulations and healthcare reform measures by central and local governments,
- Looming reform of government drug pricing policies,
- Continuous financial pressures from hospital drug purchase tenders,
- Rising raw material and production costs.
While the absolute drug market size of China is already comparable to that of Japan, the country still lags behind Japan by far in terms of its per capita healthcare spending and maturity of its healthcare system. However, it is important to note that China offers much higher growth, not to mention its expanding roles in global R&D and manufacturing.
To take full advantage of what China offers, MNCs are advised not to rank China’s importance by its current share in total revenues, but to elevate it to a position at least comparable to that of Japan.
