According to some estimates, China’s GDP has decupled in the last 20 years; in other words, the Chinese economy is ten times larger than it was in 1993. Of all the rapidly developing economies, this is surely the most remarkable success story, and it represents an ongoing clarion call to businesses looking for new markets to access.
The statistics on health care expenditure in China tell a similar story, with spending rising from $156b in 2006 to $357b in 2011. IMS Health forecasts that China’s pharma market will be the world’s third largest this year.
A few life science companies have been eager to steal a march on their rivals by investing early. Astra Zeneca started spending heavily in China ten years ago. GSK, Merck and Eli Lilly have also increased spending in the region dramatically. As commentators Pharmafocus note: “Since 2006, 13 of the top 20 pharma companies have established R&D centers in China, and several have announced major manufacturing investments”.
It hasn’t entirely been plain sailing for companies seeking to expand in China. The market access landscape is fragmented and complex, with a large amount of state involvement. This is as one might expect given the economic and political background. State agencies have demanded significant discounts on pharmaceuticals, and the government has a patchy record on patent protection in general. Some companies, like Pfizer, have found teaming up with local companies to be beneficial.
Whatever route to market is attempted, at a time when economic stagnation is affecting the world’s developed economies, phenomenal growth in this region will continue to capture everyone’s attention.