That’s because China rocketed into its position as the world’s second-largest economy in a matter of decades under a strict one-child policy, contributing to a rapidly aging society with rising medical needs.
According to health-care information company IQVIA, China was the world’s second-largest national pharmaceutical market in 2017 — worth US$122.6 billion.
It was also the biggest emerging market for pharmaceuticals with growth tipped to reach US$145 billion to US$175 billion by 2022.
“The development of China’s healthcare industry is still in its infancy, evidenced by its low healthcare expenditure as a percentage of GDP … and a smaller proportion of its population aged 60 and over,” DBS analysts Mark Kong and Chris Gao said in a recent note. “That implies plenty of room to grow because as the population ages, the demand for medicines will increase.”
There’s still scope for growth, experts said, even though the Chinese pharmaceutical market’s compound annual growth rate from 2013 to 2017 was 9.4 percent.
Made in China 2025
China already has ambitions for exporting generic medication. Last year, Chinese pharmaceuticals obtained U.S. Food and Drug Administration approvals for 38 generic drugs, up from 22 such approvals in 2016.
But, as part of Beijing’s “Made in China 2025” industry plan, President Xi Jinping identified the pharmaceutical sector as one to push, with the focus on innovation and homegrown research and development.
This year, at least, will be “promising” with potential new blockbuster therapies expected to be approved in China that will come with affordable price tags, said Credit Suisse in a sector note in January.
As any delay in approval will cause declines in stock prices of the pharma companies involved, Credit Suisse advises investing in bigger names with strong near-term earnings support and new drugs or first-to-market generics in the works.