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China Pharmaceuticals and Healthcare Report Q1 2011
Business Monitor International, Jan 2010, Pages: 106
The China Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on China's pharmaceuticals and healthcare industry.
The dynamics of China's US$47bn pharmaceutical market have changed. Intense promotional activities by drug makers and the rapid roll-out of health insurance coverage have boosted BMI’s short-term expenditure forecast. Accordingly, we have increased our forecast US dollar 2009-14 compound annual growth rate (CAGR) from 13.8% to 16.4%.
The upcoming price controls on expensive foreign medicines, coupled with further government support for local firms, have led BMI to lower its long-term market forecast. We now expect combined sales of prescription drugs and over-the counter (OTC) medicines in China to reach a value of US$162bn by 2019, down from our previous forecast of US$175bn.
In the Asia Pacific Pharmaceuticals & Healthcare Business Environment Ratings (BERs) for Q111, China has overtaken Singapore to become the region's fourth most attractive market. Although there was no change to China’s Risks, the Country Rewards – which includes components such as population growth, urbanisation and pensionable population – score rose from 43 out of 100 to 50, resulting in the Rewards score rising from 58 to 60.
Bribery is a significant problem in China’s hospitals. In November 2011, the Health Ministry increased its efforts to eliminate collaboration between doctors and sales personnel from pharmaceutical and medical equipment companies. The ministry aims to prevent doctor receiving kickbacks and prohibit hospital staff from securing information on prescriptions for commercial purposes. Doctors, if found guilty, will face a two-year ban on practising in their respective hospitals.
Realising the economic and social benefit of pharmaceuticals, China has embraced drugmakers from abroad. Unlike India, for example, the country is modernising the provision of healthcare through reforms and essential drug lists. China's authorities have also encouraged local manufacturing and research and development (R&D) by foreign firms. However, it is BMI's view that a 'China-for-China' trend may emerge. Foreign firms may be restricted from buying Chinese pharmaceutical companies, medicine tenders may be biased towards local producers and downward pricing on imported goods could be implemented.
China's National Development and Reform Commission (NDRC) is planning to reduce the price of medicines produced by foreign companies, which are increasingly seen as profiteering. To maintain harmonious relations with these multinationals, the government will introduce the cuts gradually and engage in stakeholder dialogue.
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