Summary
Hong Kong boasts a small but advanced pharmaceutical sector, which holds modest longer-term potential when compared to other Asian markets. Main drivers of future growth include an ageing population and rising demand for novel treatments, as well as local investment by foreign companies. At present, prescription medicines remain dominant, at 75% of total sales. In the future, government cost-containment initiatives will encourage the development of over-the-counter (OTC) which presently account for under 25% of the total - as well as traditional Chinese medicine (TCM) markets. However, concerns remain that political priorities set by the mainland Chinese administration will continue to negatively influence local regulation of the pharmaceutical sector.
The report a modest growth of around 6% in 2006, with the market exceeding US$0.93bn by 2010. Prescription medicines are likely to be the fastest growing segment, reaching US$0.7 in 2010 from US$0.54bn in 2005. 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.
In regional terms, Hong Kong will lag behind a number of its neighbours, not just the more advanced markets such as Japan, but also its more immediate neighbours, such as South Korea and Singapore. The reasons behind this include the lack of local R&D and the unsettled political climate in relation to mainland China, among others. The unresolved intellectual property issues will, additionally, hamper more multinational involvement, despite a favourable foreign direct investment (FDI) climate. The adjusted Business Environment Rankings for Asia place Hong Kong in seventh place out of the 14 countries surveyed.
Industry activity will relatively limited over the forecast period, mostly due to the small size of Hong Kong's pharmaceutical market, and investors' preference for the mainland Chinese market. Most developments will concern formation of joint ventures (JVs) and partnership deals, both nationally (with mainland China) and internationally. Furthermore, the government will continue to promote traditional Chinese medicines (TCMs) as a means of boosting its export performance. The few problems with the intellectual property (IP) regime, including counterfeit trade, will continue to hamper multinational investment in the area, as will the government's proposals to speed up generic drug approvals. The anticipated changes would negatively impact branded sector revenues, but also attract low-cost regional manufacturers of generic medicines.
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