China Pharmaceuticals & Healthcare

Summary

The long-term potential of the Chinese pharmaceutical market is huge, given its large population, healthcare system modernisation and economic development. At present, prescription drugs account for just under 80% 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 lax intellectual property (IP) regime will continue to promote the production and use of unauthorised 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.

BMI expects the pharmaceutical market to grow 13% in 2006, with sales exceeding US$46.6bn by 2010. OTCs are likely to be the fastest growing segment, almost tripling in 2010 from US$5.2bn 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 expansion of the retail channels, which are presently largely limited to hospitals.

In regional terms, China will continue to outperform a number of its neighbours, but remain behind Asia's largest market, Japan. Its ongoing industrial development, improving political openness and infrastructural modifications will serve to boost its scores in the future. The difficult IP and pricing environment may, however, should hinder pharmaceutical sector growth over the coming years. BMI's revised Business Environment Rankings for Asia place China fifth out of the 14 major markets.

The Chinese government continues to cut the price of drugs, with cancer products affected most recently. Additionally, the 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, 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.

Key Benefits of Report

• Rely On Our Independent 5-Year Forecasts As A Benchmark
  to test other views - a key input for successful budgetary and strategic business planning.
• Target Business Opportunities & Risks
  through our reviews of latest industry trends, regulatory changes, and major deals, projects and investments
• Exploit Latest Competitive Intelligence & Company SWOTS
  on your competitors and peers through company rankings by sales, market share and ownership structure – includes multinational and national companies.

Scope of Report

An at-a-glance perspective on latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The SWOT outlines strategic factors which affect BMI’s forecast analysis, and taken together with BMI’s Economic and Business Environment SWOTS, give a complete overview of market climate.

Outline of market characteristics, growth factors, leading therapeutic segments and a competitivness of the market.

Guide to and analysis of country intellectual property developments and pricing & reimbursement issues, which constitute the regulatory make-up of the market.

Focus on government healthcare reforms, epidemiological trends, company M&As, product launches, market entries, FDI activity, R&D and patent legislation.

5-Year Forecasts to end-2010 for all key industry indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast, including:

• Drug market expenditure (US$bn); drug expenditure per capita (US$); as % of gdp
• Prescription drug market (US$bn)/as % of total market; sales by alimentary tract/metabolism; antibiotics, cardiovascular, central nervous system, oncology, musculoskeletal and respiratory system
• OTC market (US$bn)/as % of total market (sales by analgesic, cough and cold, digestives, skin treatments, vitamins and minerals)
• Generics market (US$bn)/ as % of total market
• Health expenditure (US$bn, % of gdp and per capita); public sector health expenditure as % of total; number of hospitals; beds, hospital admissions, doctors, births and deaths per 000 population

Forecasts based on bespoke BMI economic modelling, using historical data sets of macroeconomic and industry variables to derive rigorous statistical relationships, anchored in advanced linear regression techniques.

BMI forecasts for all headline macroeconomic indicators, including:
Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against US$, government expenditure, external debt

Intelligence on the market position of major MNC power houses and indigenous companies. BMI profiles key research-based companies. Company SWOTS are provided for all key strategic players, complete with a company activity overview, its leading products and analysis of business opportunities.

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