China • Pharma • News

 What does the pharmaceutical industry in China look like?  

The pharmaceutical industry in China is the second largest in the world. The market has been growing rapidly for decades. In 2018, the market volume was already $137 billion. A threefold increase compared to 2008. Sales in the People’s Republic currently account for around eleven percent of global sales. Market observers expect the pharmaceutical market in the world’s most populous country (1.4 billion inhabitants) to grow to $170 billion by 2023.  

More optimistic forecasts by the consulting agency GlobalData assume $200 billion in 2022. The driver of this growth is the increasing prosperity among the population in China. As in Western countries, the number of cancer and diabetes cases in China is growing rapidly along with prosperity.    

Why do European and American companies benefit from the Chinese pharmaceutical industry?    

Companies from Europe and the USA are benefiting greatly from the enormous growth of the pharmaceutical industry in China. Merck & Co. nearly doubled its sales in China in 2019 compared to the previous year. Astra Zeneca also saw an increase of around forty percent in 2019. While these numbers are all from pre-Corona times, the momentum is still impressive.  

While the pharmaceutical market in Western countries is stagnating, China sales are tearing up the group’s results. It’s a similar story in the auto industry. While Pfizer, for example, is struggling with stagnating figures, the company grew by a total of thirty percent in China in 2018 and 2019. Above all, companies that have had production in China for a long time and are considered established can benefit from the boom of the past ten years.     

Which pharmaceutical companies produce in China?  

Leading American and European pharmaceutical companies have production facilities in China. Pfizer, Astra Zeneca, Novartis, Sanofi, Bayer and Roche are among the largest pharmaceutical companies based in China. According to the China National Pharmaceutical Industry Information Center, there are a total of 4,800 pharmaceutical companies in the People’s Republic. They produce in the areas of basic ingredients (49 percent), traditional Chinese medicine (30 percent) and biotechnology (16 percent).    

Because of this distribution in the pharmaceutical industry of the People’s Republic, there is no Chinese company that is among the global technology leaders. The population relies to a large extent on traditional Chinese medicine. Those who resort to medicines are more likely to take the products of foreign companies if they can afford them. There is a deep mistrust among the Chinese population toward their own pharmaceutical industry.  

Is cancer widespread in China?   

In China, the number of cancer cases is increasing dramatically. This is due to increasing prosperity, higher life expectancy and change in demographics in the People’s Republic. There are currently around 4.3 million cases of cancer in China each year. Twice as many as in the USA, seven times as many as in Germany. In the next twenty years, the number of cancer cases in China is expected to rise to 6.7 million per year.   

The pharmaceutical industry in China is responding to the rising number of cancer cases. For example, the joint venture between the American Amgen Group and the Chinese Beigene Group has specialized in the development of cancer drugs. Its biggest competitors in this market are Merck & Co. and Astra Zeneca.  

What is the structural change in China’s pharmaceutical industry about? 

The Chinese Communist Party has already taken measures to strengthen the pharmaceutical industry for the future. For example, the “Healthy China 2030” program has been running since 2016. This incorporates plans for prevention and education of the population. But also fundamental changes in the healthcare system.   

Chinese health insurance will cover significantly more medicines by 2030. This is to be achieved through tax rebates on medicines. In 2019, 129 new preparations made it onto the list of drugs that will be reimbursed.  

In addition, China will promote the development and approval of new drugs in the future. There are lavish subsidies for research and shortened approval processes. This also applies to foreign companies active in the pharmaceutical industry in China. The Communist Party hopes that this will lead to more innovation in this sector. Until now, large pharmaceutical companies have earned a lot of money, especially with older preparations.   

What are the problems for the groups in China’s pharmaceutical industry?  

But China is also putting a lot of pressure on the companies that are active in the pharmaceutical industry. Drugs can only be sold in large quantities in China if they are on the health insurance company’s approval list. To get on this list, however, the companies have to grant massive discounts. The rating agency Moody’s estimates that pharmaceutical companies have to sell tried-and-tested drugs for half the former list price.   

Adding to the price pressure is a steadily growing number of competitors from China itself. The Communist Party has designated the pharmaceutical industry as one of the ten key industries in the “Made in China 2025” program to ensure that the People’s Republic becomes a modern state and a global technology leader. Currently, there is no leading Chinese company in the field of drug development. High subsidies and market consolidation are expected to change this in the medium term.   

What about Made in China 2025 and the pharmaceutical industry in China?    

Made in China 2025 is a long-term strategy with which the Communist Party wants to modernize the economy of the People’s Republic. The country wants to shed its image of being merely the workbench of the world. China is striving to become a world power and technology leader in key technologies of the future. Ten key industries are to achieve this goal. In addition to the pharmaceutical industry, these include energy conservation and electromobility, aerospace technology and agricultural machinery.    

Made in China 2025 is a long-term project. Many of the plans give key industries targets for 2049. The year in which the People’s Republic of China celebrates its centennial. Goals of the plan include increasing the domestic industry’s ability to innovate and improve product quality and build their own brands.  

Where are the most drugs produced?    

 The largest producers of medicines are China and India. About 90 percent of all antibiotics used worldwide come from these regions. Because competition and cost pressure are enormous in the pharmaceutical industry, manufacturers are turning to countries with low wage levels and low environmental standards. The manufacturer named in the package insert only has to handle the production step. In other words, the final inspection.  

Because of the enormous demand, large clusters of the pharmaceutical industry have formed in China. Beijing, Shenyang (Liaoning Province), Yangzhou (Jiangsu Province) and Hangzhou (Zhejiang Province) are home to large pharmaceuticals manufacturers in addition to chemical and pharmaceutical production.   

List of all chemical and pharmaceutical clusters in China:  

• Beijing  
• Shenyang (Liaoning province)  
• Nanjing (Jiangsu Province)  
• Yangzhou (Jiangsu Province)  
• Shanghai  
• Hangzhou (Zhejiang province)  
• Shaoxing (Zhejiang province)  
• Wenzhou (Zhejiang province)  
• Jiangmen (Guangdong Province)  
• Chongqing  

List of all universities with study and research focus in the field of chemistry and pharmacy in China:  

• Beijing University  
• Nankai University  
• University of Science and Technology of China  
• Xiamen University  
• Jilin University  
• Fudan University  
• Lanzhou University  
• Wuhan University  
• Nanjing University  
• Zhejiang University  
• Sun Yat-Sen University  
• Sichuan University  
• Northwest University (Xi’an)  
• Fuzhou University  
• Hunan University  
• Zhengzhou University  
• Tsinghua University  
• Suzhou University  
• Shanxi Medical University  
• Xi’an Jiaotong University  
• China Agricultural University (Beijing)  
• Guizhou University  
• Yunnan University  
• China Pharmaceutical University (Nanjing)  
• Shenyang Pharmaceutical University  
• Sichuan University  
• Ocean University of China (Qingdao)  
• Shanghai Jiaotong University  
• Guangdong Pharmaceutical University  
• Anhui Medical University (Hefei)  
• Huazhong University of Science and Technology (Wuhan)  
• Nanjing Medical University 

What about the research and development of the pharmaceutical industry in China?    

Due to China’s massive subsidies for its own pharmaceutical industry, the establishment of corresponding clusters and research and study opportunities, the People’s Republic is also gaining in importance as a development location for European and American pharmaceutical companies. In 2016, Novartis alone invested around one billion dollars in the establishment of a research and development center in Shanghai. The Merck Group’s research center opened in Beijing back in 2009. This was followed by the opening of an innovation center in Shanghai in 2019.   

The pharmaceutical industry in China is facing a major structural change. The government in Beijing wants to make the sector a major driver of innovation in the future. At the same time, large European and American pharmaceutical companies want to profit from the enormous growth. The Table.Media editorial team therefore provides all the news on the pharmaceutical industry in China.