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1 Jan 2016

Overview of China Pharmaceutical Market

The China pharmaceutical market is the second largest in the world after the United States, and in 2014 was worth 109.3 billion U.S. dollars, an increase of 12 per cent from the previous year. Despite China experiencing a slowdown in economic growth, the China pharmaceutical market is expected to maintain strong growth into the future due to substantial expansion via the rapid aging of the population and the government’s policies to improve access to medicines.

In particular, even higher growth is expected for generic pharmaceuticals that will make up the majority of prescriptions in small and medium sized cities in inland and regional areas as well as small and medium sized hospitals which have had inadequate access to medicines until now.

Furthermore, in terms of value, generic pharmaceuticals account for approximately 80 per cent of the China pharmaceutical market. In contrast, the top 10 companies in most developed countries control about half the market. With the government aiming to improve the quality of generic pharmaceuticals in China, there is strong demand for the stable supply of generic pharmaceuticals with a high level of quality on par with branded pharmaceuticals. Accompanying the progress of future reforms to the healthcare system, it is predicted that the needs for high quality medical treatment will expand not only in major cities but also in small and medium sized cities in regional and inland areas.

Foreign players account for 10% to 20% of overall sales, depending on the types of medicines and ventures included in the count. But sales at the top-tier Chinese companies are growing faster than at Western ones.

Like its U.S. and European counterparts, the Chinese pharma business is regulated by government agencies, and competition is fierce in the business. The biggest differences include following:

  • most Chinese pharma companies are generic drug manufacturers;
  • a large number are traditional Chinese medicine manufacturers;
  • hospitals are still the major drug market;
  • patent issues are the greatest weakness of Chinese producers.

When the Chinese are developing an API they try patent searches via the internet, but are limited by the scope of the available services. Few factories yet have patent attorneys on staff, but for the larger pharma groups who are seeking partnerships with large Western firms, this may come soon.

The Chinese business environment is mainly relationship-based, and this is reflected in the pharmaceutical business. Establishing relationship with a pharma companies through personal connections is a common way to contact Chinese pharma companies. Attending pharmaceutical exhibitions, pharmaceutical conferences or seminars is another approach, as is holding a press conference attended by officials of related government agencies or associations and senior pharmaceutical executives.

Regulatory Body in China 

The China Food and Drug Administration (CFDA) was founded on the basis of the former State Food and Drug Administration (SFDA). In March 2013, the regulatory body was rebranded and restructured as the China Food and Drug Administration, elevating it to a ministerial-level agency.

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