China’s Pharmaceutical Market is Booming

China’s Pharmaceutical Market is Booming

©Takeda Pharma

According to a current study from the American research institute “IMS Health”, the growth markets in the pharmaceutical industry no longer lie in the industrial countries, but rather in the emerging countries. Above all, China. According to the forecasts, the country will ascend this year to become the world’s third-largest market in the pharmaceutical industry. The Chinese packaging industry is developing at the same pace.

The global market for pharmaceuticals is supposed to amount to approx. US$ 880 billion in 2011. Thus, according to IMS Health, growth of five to seven percent would be attained. However, the international pharmaceutical markets are developing in quite different ways. With a population of 1.3 billion people, China is at the top of the emerging pharmaceutical markets. The pharmaceutical market is also growing rapidly in Brazil, Russia and India.
According to information from Germany Trade and Invest (gtai), the Chinese market for pharmaceuticals also increased substantially in the year 2010. The research institute called the Southern Medicine Economic Research Institute (SMERI), which is part of the national State Food and Drug Administration, forecasts market growth of approx. 20 percent per year in the next ten years. For the year 2010, market growth is forecasted to be 22 percent while the market size is forecasted to be 755.6 billion renminbi (approx. 87 billion €). Thus, the People’s Republic of China had a share of 15 percent of the entire global market for pharmaceuticals in 2010.

Increasing Sales and Investments

Upon a parallel basis to the increasing domestic demand, the international trading of pharmaceuticals is also developing rapidly. Overall sales have increased by 22.8 percent to almost US$ 15.3 billion in the first ten months of the past year in comparison with the year before that. One of the fastest developing sectors is the Chinese pharmaceutical sector. The country is increasing its investments in pharmaceuticals and production processes so that the country is increasingly presenting itself as the cheap pharmaceutical location for international companies. The National Bureau of Statistics reported that the investments in the industry have increased by 31.6 percent to 153 billion renminbi – a new record.

Healthier and Older

And, in the meantime, the Chinese are also becoming ever older and healthier. The increasing prosperity of the Chinese combined with the population of billions has resulted in the fact that giant markets have developed for many industries. China is still the third-largest economic power in the world - behind the USA and Japan. But the huge country could already become number one in the next decade. And nowhere else in the world is the market for pharmaceuticals growing as quickly as in China.

While the Chinese could afford only a few pharmaceuticals in the past, this has changed massively in the past years: In 2001, the average Chinese citizen still spent approx. 21 dollars per year for pharmaceuticals. By 2009, the expenditures per person tripled to 67 dollars. Growth which will continue according to the experts. The average expenditures for pharmaceuticals indeed still lie substantially beneath the western levels, but the typical civilisation illnesses have noticeably increased in China as well. Thus, in the last six years, the number of persons afflicted with heart problems and cancer has doubled while high blood pressure and diabetes are supposed to have increased by 200 percent. The one-child policy has also resulted in an even stronger trend towards the aging of the society and thus to similar demographic changes as in the western countries – with the corresponding economic consequences.

Outstanding Outlooks

While China’s pharmaceutical market consisted primarily of suppliers in the past that mixed together plant substrates, a booming and modern pharmaceutical industry has emerged in recent years. The government has also invested large amounts: 125 billion dollars is supposed to be made available for the development of the health system – with the goal that all 1.3 billion Chinese will have basic health care and that China will develop its own new pharmaceuticals. Meanwhile, the interest of the western companies in the markets in the Far East is constantly growing. International pharmaceutical groups of companies are constantly expanding their presence in China, investing large amounts in their own locations and relocating their R+D activities to the Middle Kingdom.

Concurrently with the change in the consumer habits of the Chinese, the requirements for corresponding packaging are also increasing. The standard of living is constantly growing while the packaging industry is developing at the same pace. According to the forecasts, approx. 36 million tons of packaging are supposed to be produced in 2015. Thus, the Chinese pharmaceutical packaging and the labelling market also have rosy outlooks for the future.

China is forecasted to also have outstanding outlooks for 2011. According to SMERI, the overall Chinese market for pharmaceuticals is supposed to grow by an additional 24 percent to 938.8 billion renminbi in comparison with 2010. By 2013, the sales could triple from currently US$ 25 billion to more than US$ 70. Thus, China would overtake Germany and France and become the third-largest pharmaceutical market – after the USA and Japan.