China Market Immensely Tough for Western Pharma Cos

Published Date : Aug 06, 2015

The Chinese market is getting rather difficult for pharmaceutical companies in the West since Beijing has been pushing for a rising healthcare bill and prices have been brought under pressure.

China has surpassed Japan as the second largest prescription medicines market in the world after the United States. The country has, in recent, years, drawn prominent investments from worldwide drug makers. However, growth rates have marked a rather slow increase. 

None of the large pharmaceutical companies that have reported results of the second quarter of 2015, except for AstraZeneca, have managed to register double-digit percentage in terms of sales growth in China, according to Deutsche Bank’s recent analysis.

Novo Nordisk of Denmark, which is the largest insulin maker in the world, was the most recent company to report disappointing numbers on Thursday, with a slide of 6 per cent in Chinese sales.

The company held declining diabetes market growth responsible for this slip, along with stock building in the previous quarters and rising competition from locally made cheap insulins. 

Many executives of drug companies are still rather bullish when it comes to the long term growth prospects of China. The government has been improving access to health care and drug spending is anticipated to rise as much as US$ 185 billion by the next three years, independent consultancy firm IMS Health stated.

The short term picture, however, is turning out to be much less pretty, since hospital sector reforms have been having a major impact on prescriptions and the pressure of pricing that has been going up for a wide range of drugs. 

Chief executive of Novartis Joe Jimenez said that growing health care coverage had led to an increase in costs and Beijing was now attempting to control the recent spending growth. Novartis is the largest drug maker in the world, in terms of sales.