Compared to other industries, the global economic crisis appears to have had a minimal effect on the pharmaceutical and medical device markets in China thanks to aggressive government spending on health care, a massive population of 1.3 billion people and an increasing demand for drugs to treat chronic diseases as well as a desire for advanced medical technologies. According to IMS, China's pharmaceutical market has the potential to double in size and climb to the fifth largest in the worldby 2012. The demand for prescription drugs (patented and non patented) will grow at staggering rates as will the demand for superior medical devices. This brings an exciting opportunity to the forefront for U.S. pharmaceutical and device companies' astute enough to enter the Chinese marketplace.
The number of multinational corporations (MNCs) in China has increased more than 10% from 1999 to 2008 and manyhave strong beliefs that China will become their leading overseas market. By the beginning of 21th century, MNCs branded products had gained major market position in large cities of China. Currently, twelve of the top 20 drug firms in the Chinese market are international MNCs and they are experiencing an average sales growth of 25% compared to 15% for the market as a whole. The high growth rate is primarily due to the fact that the drugs being sold are distinguishable and innovative. In addition, policies from the PRC Government also favor growth of prescription drugs from MNCs.
Recently, the Chinese government has also taken action to improve intellectual property rights to reward MNCs with unique products and theSFDA has even started refusing to approve generic products if there are similar patented molecules currently on the market. In addition, the SFDA is clamping down on domestic companies that don't respect patent rights.
With all that said, the market potential for unique drugs and medical devices in China is massive and will continue to explode in the coming decade. This behemoth growth becomes clearly evident when you consider: the size of the population which exceeds 1.3 billion people; the fact that the PRC governments intends to provide health benefits for all residents by the end of 2010 and finally that as of late 2009, the People's Republic of China committed an additional ¥ $850,000,000,000 ($125 billion U.S.) to provide care, including prescription drug coverage, to part of the un-served population over the next three years.