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China

China has estab­lished an impres­sive Health­care indus­try struc­ture, becom­ing one of the largest OTC and Pharma pro­duc­ers in the world. The Chinese OTC and Pharma mar­ket has grown rapidly over the past ten years in the wake of the country’s economic growth—this is the main draw for Pharma investors with their sights set on China.

With a total mar­ket value of US $82.2 billion, the Chi­nese phar­ma­ceu­ti­cal mar­ket is dom­i­nated by orig­i­nal pre­scrip­tion drugs.

China has a regional mar­ket dis­tri­b­u­tion sys­tem, and its main cus­tomers are hos­pi­tals (56%), phar­ma­cies (24%) and local health cen­tres (20%). Domes­tic demand for tra­di­tional Chi­nese med­i­cines has fallen in recent years, with ris­ing levels of edu­ca­tion and fre­quency of chronic dis­ease. The ‘busy lifestyle’ is shift­ing the population’s pref­er­ence from herbal supplements to chem­i­cal drugs, but these traditional med­ica­tions still occupy a sig­nif­i­cant place in the OTC mar­ket. Cold and flu med­i­cines account for the high­est demand in the OTC seg­ment, while dia­betes, hyper­ten­sion and heart dis­ease drugs drive the demand in the pre­scrip­tion drugs seg­ment.

Imported phar­ma­ceu­ti­cals for human use must have already obtained mar­ket approval in the coun­try where they are manufactured and must undergo clin­i­cal test­ing and registration in China.

In terms of cur­rent dis­tri­b­u­tion issues, hos­pi­tals remain the dom­i­nant sales chan­nel for phar­ma­ceu­ti­cal drugs, account­ing for 70%, while retail phar­ma­cies com­prise the remain­der. There are an esti­mated 360,000 drug retail­ers in urban China, with around 2,000 retail phar­macy chains that oper­ate 120,000 stores; two of every three retail phar­ma­cies are sole traders.

Four pre­vail­ing fac­tors have con­tributed to the chang­ing land­scape of the phar­ma­ceu­ti­cal mar­ket in China, mak­ing it the region to watch: urban­i­sa­tion, an age­ing pop­u­lation, a lack of pri­mary care and a lack of pri­vate insur­ance.

Cur­rently, how­ever, the Chi­nese phar­ma­ceu­ti­cal indus­try is focus­ing on generic prod­ucts. There is a great need for inno­v­a­tive and pro­pri­etary prod­ucts in China that will address the country’s vast med­ical needs.

CPC Press Releases on China:

China and India: Big opportunities… or big risks?