Market Report Source

Overview

Introduction
The Chinese pharmaceutical market, although only positioned ninth globally, has experienced pronounced and rapid expansion in recent years, driven by the growth of both Chinese and Western manufacturers. Increasingly, there is a shift towards a research-based industry, focused on generating new, innovative therapies, supported by improving intellectual property regulations.

Scope
Overview of macro-environmental and regulatory issues affecting the Chinese pharmaceutical industry
Assessment of the Chinese pharmaceutical market, analyzing the key prescription therapy areas, as well as OTC and TCM medicines
Case study analysis of key Western and Chinese manufacturers in China
Insight into the key opportunities for Western manufacturers in China, and the areas likely to provide revenue growth in the future

Highlights
With improvements in intellectual property regulations, Government funding and the growth of tax incentivized Special Economic Zones, China’s R&D environment is developing fast. Western manufacturers are increasingly looking towards China as a place to conduct drug discovery and clinical trial research, although a number of challenges still remain.

China is becoming an increasingly competitive environment due to ongoing price competition, and numerous Governmental price cuts. Unless Western manufacturers have Chinese based manufacturing plants which can produce generic drugs at low-cost, there is little financial incentive or future prospects for foreign companies in the generics market.

China still exemplifies the disease and treatment profile of a developing market, with a focus on prescribing anti-infectives. However, with westernization of diet and lifestyle, and China’s improving healthcare system, treatment of more chronic disorders will eventually become more of a priority in the future.

Reasons to Purchase
Understand the dynamics of the Chinese pharmaceutical market and the effect of recent changes to pricing, reimbursement and patent regulations
Identify China’s R&D attractions, which are encouraging Western manufacturers to off-shore and out source drug discovery and clinical trials in China
Optimize your Chinese market growth strategy through detailed knowledge of the performance of the Chinese and Western manufacturers in China

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Scope of the report

IMS caveat

Datamonitor’s insights into the Chinese pharmaceutical market, 2006

China – a place for drug discovery and clinical trial partnerships?

A changing focus in the Chinese pharmaceutical market?

China – a land of opportunity for Western pharmaceutical manufacturers

CHAPTER 2 MACRO-ENVIRONMENTAL ISSUES AFFECTING THE CHINESE PHARMACEUTICAL INDUSTRY

Key findings

General country information – China

A changing economy

An overview of China’s healthcare system

The current scenario

Administrative and regulatory bodies of the healthcare system in China

SFDA’s increased focus on improving drug safety

China’s health reforms – hope for the future?

Healthcare expenditure and funding in China

Healthcare expenditure and financing set to improve

Health insurance coverage – increasing, but still insufficient

CHAPTER 3 REGULATORY ISSUES IN CHINA

Key findings

Reimbursement is negotiated with local authorities rather than at national level

Pharmaceutical Catalog classification

Continuing national price cuts pose significant dilemmas for manufacturers

A complex distribution system in China

Despite ongoing IP improvements, counterfeiting provides a significant threat to public health and drug development

Implications – China is too risky for the manufacturing of on-patent APIs

GMP – improving but still some way to go before Western manufacturers and regulatory agencies are fully satisfied

Drug approvals

Priority review procedures – public health crises

CHAPTER 4 CHINESE MARKET ASSESSMENT – PERFORMANCE BENCHMARKING

Key findings

The Chinese pharmaceutical market

China compared to the seven major markets

Other emerging countries – stressing China’s advantages and challenges

Which therapy classes are growing?

Competitive positioning of the top Chinese pharmaceutical players

Traditional Chinese Medicine (TCM) – a strong past and bright future

Regulation and GMP – the way forward for TCMs

Joint ventures are increasingly popular, driving TCM R&D

OTC in China set to increase further in the coming decades

Bayer acquires OTC cough and cold portfolio from Topsun Science and Technology

Internet pharmacy is playing an increasing role in the OTC market

OTC market entry recommendations

CHAPTER 5 CHINESE DOMESTIC PHARMACEUTICAL COMPANY OVERVIEW

Key findings

Chinese Pharma companies have traditionally driven growth through the API and generics business

Bulk manufacturing continues to drive China’s export industry

Overview of China’s R&D pipeline

Generics and biosimilars

There is little incentive for MNCs to enter the generics market

Chinese biosimilars players

Dragon Pharmaceutical – China’s leading biosimilar company

CHAPTER 6 OPPORTUNITIES FOR WESTERN MANUFACTURERS IN CHINA

China – a land of opportunity for Western pharmaceutical manufacturers

China – a place for drug discovery and clinical trial partnerships?

China’s Key R&D attractions

Foreign companies’ drug discovery outsourcing activity in China

MNCs are increasingly entering clinical trial partnerships for drugs for domestic and worldwide use

Key Western players in China – case studies

Key differences between AstraZeneca, Novo Nordisk and GSK operations in China

AstraZeneca – rejuvenated growth in recent years

Novo Nordisk – continued high growth rate

GSK – flat revenues due to increased generic competition on old drugs

CHAPTER 7 CHINESE PHARMACEUTICAL COMPANY PROFILES

Previously highly fragmented and regionalized

Leading domestic manufacturers sales in China

Yangtze River Pharmacy Group

Overview

Strategy

Therapy area focus and revenue generation

Partners

The Harbin Pharmaceutical Group

Overview

Strategy

Therapy area focus and revenue generation

HRP in the news

Jiangsu Hengrui Medicine Company

Overview

Strategy

Therapy area focus and revenue generation

R&D investment and pipeline focus

Partners

Shandong Qilu Medicines

Shanghai Pharmaceutical Group – Asia Pioneer

Shanxi Pude Pharmaceuticals

JL Weiwei Pharmaceuticals

Guangzhou Tian Xin

TH James-Andy

Shandong Lunan Better Pharmaceutical

Chongqing Yaoyou Pharmaceutical Company

Shandong Reyoung Pharmaceutical Company

CHAPTER 8 BIBLIOGRAPHY

Bibliography

Websites

Journals and press articles

Scrip

APPENDIX

IMS caveat

Exchange rate

LIST OF TABLES

Table 1: Economic statistics – China, 2005

Table 2: Main economic indicators for seven of the world’s largest economies (2003)

Table 3: China, country-specific healthcare information of interest, 2005

Table 4: Selected Chinese national health accounts indicators, 2003

Table 5: Ministry level agencies with health authority in China, 2006

Table 6: Distribution of drug products in the 2004 Pharmaceutical Catalog

Table 7: Chamber of Commerce’s report recommendations, September 2006

Table 8: Prescription pharmaceutical sales per capita across the US, 5EU, Japan and China, 2005

Table 9: Top five ATC classes by revenue in China, the US and 5EU, 2005

Table 10: Top five ATC classes by volume in China, the US and 5EU, 2005

Table 11: Top domestic and Western pharmaceutical manufacturers in China, 2005

Table 12: Average (mean) sales characteristics of manufacturer groupings, 2004–05

Table 13: Top OTC players in China by value ($m), 2004

Table 14: Dragon Pharmaceutical’s biosimilar product portfolio and pipeline, 2006

Table 15: Advantages and disadvantages of clinical trials and R&D in China, 2006

Table 16: Key R&D investments by the top global pharmaceutical companies in China, 2005–06

Table 17: State Governmental scientific support programs

Table 18: Key drug discovery outsourcing deals involving Chinese service providers, 2005-2006

Table 19: Mean price comparison between domestically produced and imported products, 2005

Table 20: AstraZeneca’s product portfolio in China, 2004–05

Table 21: Novo Nordisk’s product portfolio in China, 2004–05

Table 22: GSK’s therapy franchises in China, 2004–05

Table 23: GSK’s product portfolio in China, 2004–05

Table 24: Leading domestic manufacturers in China ($m), 2004–05

Table 25: Yangtze River Pharmaceutical Group’s Chinese revenue breakdown by therapy area, 2004–05

Table 26: Yangtze River Pharmaceutical Group’s top 10 products in China, 2004–05

Table 27: Harbin Pharmaceutical Group’s Chinese revenue breakdown by therapy area ($m), 2004–05

Table 28: Harbin Pharmaceutical Group’s top 10 products in China, 2004–05

Table 29: Harbin Pharmaceutical Group news, 2005–06

Table 30: Jiangsu Hengrui Medicine Company’s total Chinese revenue breakdown by therapy area, 2004–05

Table 31: Jiangsu Hengrui Medicine Company’s top 10 products in China ($m), 2004–05

Table 32: Jiangsu Hengrui Medicine Company‘s patent list, 2004–06

Table 33: Shandong Qilu Medicines total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 34: Shanghai Pharmaceutical Group – Asia Pioneer total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 35: Shanxi Pude Pharmaceuticals total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 36: JL Weiwei Pharmaceuticals total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 37: Guangzhou Tian Xin Pharmaceuticals total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 38: TH James-Andy total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 39: Shandong Lunan Better Pharmaceutical total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 40: Chongqing Yaoyou Pharmaceutical Company total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 41: Shandong Reyoung Pharmaceutical Company total Chinese revenue breakdown by therapy area ($m), 2004–05

Table 42: Exchange rates*

LIST OF FIGURES

Figure 1: Pros and cons of drug discovery and clinical trials in China

Figure 2: Marketed biosimilar products from Chinese manufacturers, 2006

Figure 3: Size and revenue growth by therapy in the Chinese pharmaceutical market, 2001–05

Figure 4: China’s major trading partners

Figure 5: Total expenditure on health as percentage of GDP, 2003

Figure 6: Rise in cost of healthcare versus income in China, 1989–2001

Figure 7: Proportion of healthcare expenditure versus GDP, 1978-2004

Figure 8: Drug reimbursement in China, 2005

Figure 9: Branded drug price breakdown in China, 2006

Figure 10: Drug distribution channels in China, 2006

Figure 11: WTO timeline for revamping of China’s pharmaceutical distribution networks, 2001–07

Figure 12: Protection of pharmaceutical products in China with or without a patent, 2006

Figure 13: Key steps for drug approval in China, 2006

Figure 14: Comparison of Approvals of New Drug Applications (NDAs) in the US and China, 2004

Figure 15: Comparison of the number of BLA and NME submissions in the US and China, 2000–04

Figure 16: Manufacturing and distribution in China, 2005

Figure 17: The Chinese pharmaceutical market size in comparison with the seven major markets, 2005

Figure 18: Estimates of China’s prescription pharmaceutical market, 2004

Figure 19: Growth of the Chinese pharmaceutical market, 2001–05

Figure 20: Comparison of the Chinese, major seven developed, and emerging pharmaceutical markets, 2001–05

Figure 21: Positioning of emerging countries compared to China, 2006

Figure 22: Distribution of therapy area (ATC class) by revenue in China, the US and EU, 2005

Figure 23: Positioning of therapy classes by revenue from the leading domestic and Western manufacturers in China, 2005

Figure 24: Domestic manufacturers only lead the Western players in anti-infectives, 2006

Figure 25: Distribution of revenues by therapy area (ATC code) for the top 10 domestic and Western manufacturers in China, 2005

Figure 26: Leading domestic manufacturers have outstripped Western players in terms of product launches during 2004–05

Figure 27: Revenue growth of the top 10 leading Western and domestic manufacturers in China, 2001–05

Figure 28: Competitive positioning of top domestic and Western pharmaceutical companies in China, 2005

Figure 29: Competitive positioning of top Western pharmaceutical companies in China and the rest of the world by revenue ($), 2005

Figure 30: Competitive positioning of top pharmaceutical companies in China and the rest of the world by revenue growth (%), 2004–05

Figure 31: Competitive positioning of top pharmaceutical companies in China and the rest of the world by CAGR, 2001–05

Figure 32: Number of new product launches in China by Western manufacturers, 2002–05

Figure 33: Number of new product launches in China by domestic manufacturers, 2002–05

Figure 34: R&D expenditure on Traditional Chinese Medicine, 2002–04

Figure 35: China OTC market value and growth ($), 2000–04

Figure 36: China OTC market by segmentation, 2004

Figure 37: Distribution of OTC medicines in China, 2004

Figure 38: China’s pharmaceutical imports versus exports, 2004

Figure 39: Pipeline drug candidates in China by franchise, 2006

Figure 40: Segmentation of the Chinese pharmaceutical market revenues by license status, 2005

Figure 41: Marketed biosimilar products from Chinese manufacturers, 2006

Figure 42: Size and revenue growth by therapy in the Chinese pharmaceutical market, 2001–05

Figure 43: Competitive positioning of top domestic and Western pharmaceutical companies in China, 2005

Figure 44: Revenue growth of AstraZeneca’s, GSK’s and Novo Nordisk’s imported and domestic products, 2001–05

Figure 45: Revenues and growth of AstraZeneca’s lead franchises in China, 2001–05

Figure 46: Growth and share of revenues and SUs between AstraZeneca and AZ-Wuxi in China, 2001–05

Figure 47: Novo Nordisk – the largest and one of the fastest growing diabetes franchises in China, 2005

Figure 48: Growth and share of revenues and volume between Novo Nordisk and Novo Nordisk Tianjin in China, 2001–05

Figure 49: Revenues and growth of GSK’s lead franchises in China, 2001–05

Figure 50: GSK China – declining revenues and volume, 2001–05