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»02/05/2007 [Industry news]
Chinese pharma sales to exceed $46 billion by 2010

Bangalore, May 2, 2007: Market research firm Research and Markets, in its recently published report, China Pharmaceuticals and Healthcare Report Q4 2006, indicates that China is a burgeoning market.

 

The long-term potential of the Chinese pharmaceutical market is huge, given its large population, ongoing healthcare system modernization and economic development. At present, prescription drugs account for just less than 80 percent of the total market, although over-the-counter (OTC) products are slowly making inroads.

At two-thirds of the market by value, generics will continue to dwarf the branded sector, although the lax intellectual property (IP) regime will continue to promote the production and use of unauthorized copy drugs. China is both a large importer and exporter of medicines, especially of active pharmaceutical ingredients (APIs), with both segments set to grow rapidly over the coming years. Pharmaceutical exports continue to be promoted by the authorities, most recently not only becoming exempt from falling export tax rebates, but instead receiving a four percentage points increase, to 17 percent.

The pharmaceutical market is expected to grow 13 percent in 2006, with sales exceeding $46.6 billion by 2010. OTCs are likely to be the fastest growing segment, almost tripling in 2010 from $5.2 billion in 2005. In terms of prescription medicines, demographic changes will particularly boost the use of novel drugs for cardiovascular, neurological, cancer and antiviral indications that are not treated effectively by currently available therapies, as well as new versions of existing prescription antihistamines, analgesics, anti-fungal agents, cholesterol reducers and acid reducers.

Ethical drugs will benefit from the gradual expansion of the retail channels, which are presently largely limited to hospitals. However, the possibility of setting price caps for all prescription medicines continues to pose a significant threat to the overall market value.

The report highlights that China will continue to outperform a number of its neighbors, but it remains behind Asia’s largest market, Japan. China’s ongoing industrial development, improving political openness and positive infrastructure modifications will serve to boost its scores in the future. The difficult IP and pricing environment might, however, hinder pharmaceutical sector growth over the coming years.

The Chinese government continues to cut the price of drugs, with cancer products affected most recently. Additionally, authorities are considering introducing price caps for all prescription drugs in the near future, which would have a negative impact on pharmaceutical revenues across the board. On the positive side, however, in a milestone ruling, the state legislature recently upheld a patent for Pfizer’s erectile dysfunction drug Viagra (sildenafil), overturning a previous decision by patent office SIPO. While the volume of fake drugs continues to be problematic, foreign direct investment (FDI) in the Chinese pharmaceutical sector will grow, following gradual legal and pricing regime improvements.


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