BMI View: Ongoing challenges facing multinational pharmaceutical firms in China will persist into 2016. This includes pricing pressures on off-patented pharmaceuticals, as authorities look to meet the unmet medical need in the country by expanding access to medicines while curbing rising healthcare costs. Long and uncertain drug approval times will also remain a factor impinging on sales growth, as time is needed for authorities to fully develop and implement regulatory reforms.
Headline Expenditure Projections
Pharmaceuticals: CNY687bn (USD109bn) in 2015 to CNY770bn (USD115bn) by 2016; +12% in local currency terms and +6% in USD terms.
Healthcare: CNY4,023bn (USD640bn) in 2015 to CNY4,628bn (USD686bn) in 2015; +13.5% in local currency and +11.2% in USD terms.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||98.750||109.410||115.850||125.330||138.000||152.300||167.300|
|Pharmaceutical sales, % of GDP||0.93||0.96||1.00||1.03||1.05||1.07||1.09|
|Pharmaceutical sales, % of health expenditure||17.2||17.1||16.9||16.6||16.2||15.7||15.2|
|Health spending, USDbn||575.500||640.270||686.960||756.500||852.440||967.750||1,098.930|
In Q316, China is amongst the most attractive countries according to our Pharmaceutical Risk/Reward Index. The country scores 62.6 out of 100 and is ranked sixth amongst 19 other Asia Pacific countries. Key to China's strong score is its high market expenditure, high sector value growth and policy continuity. The only limiting factors come from the country's business transparency and limited legal diligence.
In January 2016, IHH healthcare announced that it would set up a 350-bed hospital in Chengdu China. According to the firm, this will be a multi-disciplinary hospital and upon completion, the facility will serve a total population of 148mn residents in the region.
In February 2016, AstraZeneca announced a licensing agreement with China Medical System Holdings for the commercialisation rights to Plendil (felodipine). According to Mark Mallon, Executive Vice President at AstraZeneca, this commercial collaboration supports their strategy of working with a local partner to maximise the value of their medicines in China.
In April 2016, China's State Council affirmed that the government must enact healthcare reform. Under the new healthcare reform discussed, the government would be working on expanding the number of cities currently engaged in urban public hospital reform to 200 from the original 100 pilot cities.
BMI Economic View
The Jing-Jin-Ji integration plan, which aims to promote sustainable growth and help first tier cities climb up the value chain, will have a positive impact on economic development in the region over the coming years. Beijing, Tianjin and Hebei will benefit from transport integration and industry upgrading. However, environmental concerns and protectionism will continue to pose risks to this progress.
BMI Political View
Myriad layers of bureaucracy and the sheer size and complexity of China mean that local governments are given a significant degree of flexibility when implementing the central government's policies. Indeed, the close links between local governments, bureaucrats and state-owned enterprises suggest that local authorities can actively thwart Beijing's will if it is deemed to be harmful to local objectives. The effectiveness of central government policy is therefore largely dependent on the interaction between these three entities at all levels of local government.
The China Pharmaceuticals and Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's China Pharmaceuticals and Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the China pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for China, to test other views - a key input for successful budgeting and strategic business planning in the Chinese pharmaceutical and healthcare market.
- Target business opportunities and risks in the Chinese pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in China.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.