Magazine Article | April 7, 2009

Will Healthcare Reform Boost Pharma Prospects In China?

Source: Life Science Leader

By James Shen, Life Science Leader magazine

After a year of stunning growth in 2007, the pharmaceutical industry in China delivered another impeccable performance in 2008. Revenues of the Chinese pharmaceutical manufacturing sector rose 28.8% while its total profits jumped 39.8% in the first eight months of 2008.

As the world embraces a sharp global economic downturn and epidemic financial turmoil, it is inevitable that China will be affected adversely, given the fact that the country’s past economic miracle has largely been built on strong exports. Already, Chinese economists have been talking about slower economic growth in 2009 with expected GDP growth rates falling into the single-digit range.

Understandably, the Chinese pharmaceutical sector will not be spared by the current debacle. Southern Medicine Economic Institute (SMEI), China’s leading pharmaceutical market research institution, recently lowered its estimated growth for the 2009 Chinese pharma industry.

Provided that China’s GDP does not fall under 8%, the country’s pharmaceutical export growth does not drop below 25%, and healthcare reform is implemented smoothly, SMEI forecasts the total output value of the overall Chinese pharmaceutical industry to grow around 23.2%, reaching 1 trillion CNY (Chinese Yuan Renminbi [a currency unit]) in 2009. Under the same assumptions, the total output value of pharmaceutical formulations subindustry is forecasted to reach 270 billion CNY with an annual growth rate of around 20%.