Thursday, 28 January 2010

China - What is likely to be the fastest growing segment of the Chinese pharmaceutical market?

The Chinese government will actively promote self-medication as it seeks to keep rising health expenditure down to counterbalance investment elsewhere.

China’s OTC market is growing at a considerable rate each year, faster than anywhere else in Asia-Pacific, and Espicom anticipates this market to continue to flourish over the coming years. OTC drugs only make up around 10% of the pharmaceutical market in China, so more and more foreign drug companies are entering and/or expanding their presence in the country with OTC drugs. Self-medication will be further promoted by the government as it seeks to keep rising health expenditure down to counterbalance investment elsewhere, and also to try to reduce hospital visits. Unlike in many other countries, China has permitted the internet to be a marketplace for OTC products. This will further boost sales in a country with the most online citizens in the world.

Having said this, one must not assume that traditional Chinese medicine (TCM) is not the favoured medication for many people in China. Official data from the China Association of Pharmaceutical Commerce (CAPC) puts total profit for the TCM industry in 2007 at US$2.0 billion, higher than the Western pharmaceutical market. Also, the size of the TCM market is nearly as large as the Western pharmaceutical market in China, and this market is growing at a faster pace than the Western pharmaceutical market, with a year on year increase of 21.7%. However, the government is keen to advance the Western pharmaceutical market, and is investing jointly with foreign companies into numerous R&D parks, such as ‘Medicine Valley’ near Shanghai.

Further reading - A detailed analysis of the Chinese pharmaceutical market is available from Espicom: The Pharmaceutical Market: China (published January 2010)

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