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.