CCM: Intensified competition in China's pharmaceutical market 07-22-2016  770

National policies pose great influence on the development of pharmaceuticals industry.


In the past decade, the universalization of healthcare insurance, improvement in financing and the implementation of critical illness insurance boosted the overall domestic pharmaceuticals market: the compound growth rate from 2009 to 2014 reached 19%, according to the Institute for Research of Prosperous Industries (a Chinese institute providing data and information on promising industries).


In 2015, a number of national policies were carried forward - stricter control on healthcare costs, hierarchical medical system, multi-site physician practices, reform on administrative review of medical instruments and precision medicine project - for more effective and reasonable guidance to the pharmaceuticals industry.


After the implementation of healthcare costs control, the pharmaceuticals industry could no longer expand through healthcare insurance and stepped into the period of transformation, for which the overall growth rate decreased.


In 2016, the growth is predicted to further slow down, affected by the stricter control on healthcare cost, fall in bidding price of pharmaceuticals and constraints on the use of adjuvant drugs, antibiotics and large-volume parenteral. The industrial revenue growth rate in the coming three years is expected to be 10%-11%, according to the South Pharmaceutical Economy Research Institute, China Food and Drug Administration.


In the next one or two years, domestic pharmaceuticals industry will experience the following trends:


New GMP Certificate to accelerate M&A between pharmaceutical enterprises


GMP Certificate (Good Manufacturing Practice) has been globally recognized in the management of pharmaceutical production. Pharmaceutical enterprises were required to meet the standards of new GMP Certificate by 31 Dec., 2015, or they will have to suspend production. This has been the "strictest GMP" ever.


So far, the huge number of pharmaceutical enterprises has led to decentralized production, uneven product quality, excess capacity and severe homogenization of drugs. Thus, measures are needed to strengthen supervision, improve production standards and upgrade product quality. In this process, the small- and medium-sized producers will be knocked out. In the long term, it will be beneficial to further industrial development.


Notably, pharmaceutical enterprises are speeding up M&A. Under profit pressure, some enterprises with production approvals for profitable drugs can’t meet the requirements of new GMP Certificate. Thus, they will be acquired by large-scale producers that have already obtained the new GMP Certificate, which will be favorable for the industrial integration.

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 More inferior generic drugs to be knocked out of the market



Generic drugs refer to the drugs comparable to brand-name ones in active ingredients, type of formulations, dosage form and intended use.


  Most drugs available in China are generic ones. So far, they can basically meet the needs of the public. Yet, there are also problems in current market, like uneven quality, relatively low generic standards and imprecise efficacy.



Thus, in Feb. 2016, the State Council issued the Opinions on Quality Consistency Evaluation for Generic Drugs to guarantee the safety and efficacy of generic drugs and regulate the overall pharmaceuticals industry. Accordingly, generic drugs already with sales approvals are required to be clinically consistent with and substitutable for brand-name drugs in quality and efficacy.


Thanks to this policy, quality of generic drugs will get improved and more inferior generic drugs will be knocked out of the market.



Besides, more Chinese pharmaceutical producers choose to cooperate with foreign enterprises. In doing so, they can seize the opportunity to develop first-time generic drugs and improve their strategic business layout. 
 
  Traditional Chinese medicines to be promising 



In Oct. 2015, Chinese Scientist Tu Youyou was awarded the Nobel Prize for medicine, for her work in creating an anti-malaria medicine (artemisinin) from sweet wormwood.


  This offered a great chance for traditional Chinese medicine (TCM). In the coming future, there may be increasing number of clinics focusing on TCM to appear, which will be beneficial to the development of TCM industry.



In the intense industrial competition, there are two ways out for Chinese pharmaceutical producers:

  • Upgrading technology to reduce costs
  • Developing new high value-added products


Thanks to the national supporting policies and reform, domestic pharmaceuticals market has been in an upturn, which is also favorable for technology innovation.


On the whole, despite the heavy pressure, Chinese pharmaceutical enterprises are developing rapidly. Many enterprises, like the ones devoted to developing drugs for tumor, diabetes, cardiovascular disease, orthopaedics and hepatopathy, are expected to enjoy promising market prospect.


 



This article comes from Vitamins China E-News 1604, CCM

 

 


 


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

 

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