China Pharmaceuticals and Healthcare Report Q4 2008

Summary

China's US$33.9bn pharmaceutical market is an attractive proposition to multinational companies.

Growth of the sector is consistently in the double digits. Branded medicines are perceived as being of higher quality, while farreaching reforms to the healthcare system will benefit manufacturers of generic drugs as well as insurance companies. However, risks exist. The intellectual property regime is well below international standards. Due to the size and terrain of the country, distribution costs are high.

Finally, we expect the state to become more cost conscious and implement price cuts. BMI is forecasting compound annual growth rate (CAGR) of 20.26% through to 2012.

The much anticipated draft version of the Healthy China 2020 programme was published on the website of the National Development and Reform Commission (NDRC) in October 2008. The 13,500 word document calls for universal insurance, a change to the way hospitals are funded, more subsidies for staterun healthcare facilities and the establishment of a national essential drugs list.

China is on the cusp of a breast cancer epidemic according to a September 2008 study. By 2021, the number of women in the world's most populous country with the disease is expected to increase by nearly 50%. However, this forecast is far below previous estimates that used less sophisticated models.

Moreover, BMI's Burden of Disease Database (BoDD) reveals that the impact of breast cancer on disability and death will level out and eventually decrease by 2030.

China's US$1.2bn pharmaceutical equipment sector has expanded and matured significantly over the past ten years. It supplies over 90% of the domestic market and exports to both developed and emerging markets. However, BMI believes that consolidation of the local pharmaceutical industry, increased competition from abroad and the shadow hanging over the 'Made in China' brand will constrain growth and evolution of the sector.

As in most other markets, USbased Pfizer's Lipitor (atorvastatin) is the best selling drug in China for the treatment hypercholesterolaemia. Based on an industry audit, BMI estimates that the medicine generated 2007 sales of CNY2.16bn (US$315mn), which was nearly a 70% increase on the previous year. What makes these figures even more spectacular is that Lipitor competed against a locally made atorvastatin, Beijing Jialin Pharmaceutical's A Le. This finding should reassure foreign multinationals operating in China, which rely on branding to maintain market share in the face of cheaper generic drugs.

Contents

• Executive Summary
• China Pharmaceuticals And Healthcare Industry SWOT
• China Political SWOT
• China Economic SWOT
• China Business Environment SWOT
• Pharmaceutical Business Environment Ratings
• Limits Of Potential Returns
• Risks To Realisation Of Returns
• China: Market Summary
• Regulatory Regime
• Intellectual Property Issues
• Counterfeit Activities
• Pricing And Reimbursement
• Advertising Sector
• SFDA Scandal
• Other Regulatory Developments
• Industry Trends And Developments
• Healthcare Sector
• Hospital Sector
• Epidemiology
• Overseas Activity
• Domestic Pharmaceutical Sector
• Distribution Sector
• Traditional Chinese Medicines
• R&D Activity
• Vaccine Sector
• Clinical Trials Activity
• Biotechnology Sector
• Active Pharmaceutical Ingredients (APIs)
• Pharmaceutical Equipment Sector
• Industry Forecast Scenario
• Overall Market Forecast
• Key Growth Factors Industry
• Key Growth Factors Macroeconomic
• Prescription Market Forecast
• OTC Market Forecast
• Generics And Patented Market Forecasts
• Export/Import Forecasts
• Medical Device Market Forecast
• China: Medical Device Market Data And Forecasts (US$bn unless otherwise stated)
• Other Healthcare Data Forecasts
• Key Risks To BMI's Forecast Scenario
• Competitive Landscape
• Top Ten Chinese Pharmaceutical Companies In 2007
• Top Ten Chinese Retail Pharmacy Chains In 2007
• Company Profiles
• Leading Multinational Companies
• GlaxoSmithKline
• Pfizer
• AstraZeneca
• Merck KGaA
• SanofiAventis
• Novartis
• Roche
• Merck & Co
• Bayer Schering Pharma
• Indigenous Manufacturers
• North China Pharmaceutical Group Corporation (NCPC)
• China Biopharmaceuticals Holdings (CBH)
• Hubei Biocause Heilen Pharmaceuticalo
• Aida Pharmaceutical Holdings
• Shijiazhuang Pharmaceutical (CSPC)
• BMI Forecast Modelling
• How We Generate Our Pharmaceutical Industry Forecasts
• Pharmaceutical Business Environment Ratings Methodology
• Ratings Overview
• Weighting
• Sources
• List of Tables
  • Table: Pharmaceuticals & Healthcare Business Environment Rankings For Q408
  • Table: FiveStep Procedure For Drug Pricing In China
  • Table: Top Ten Chinese Pharmaceutical Distributors In
  • Table: Traditional Chinese Medicine In China
  • Table: Major Multinationals With R&D Facilities In China
  • Table: China Drug Market Data And Forecasts
  • Table: Macroeconomic Indicators Used In BMI's Pharmaceutical Market Expenditure Model
  • Table: China Health Expenditure Data And Forecasts
  • Table: China Economic Activity
  • Table: China Prescription Drug Market Data And Forecasts (CNYmn unless otherwise stated)
  • Table: China OTC Market Data And Forecasts (US$mn unless otherwise stated)
  • Table: China Generics And Patented Market Forecasts
  • Table: China Pharmaceutical Trade Data And Forecasts (US$mn)
  • Table: China Hospital Data Forecasts
  • Table: Top 10 OTC Companies In China By 2006 Sales
  • Table: Pharmaceutical Business Environment Indicators
  • Table: Weighting Of Components