China’s pharmaceutical market has been experiencing rapid growth, with projections indicating that it will reach $161.8 billion by 2023, representing a significant 30% share of the global market. Industry expert Fu Xudong, the senior vice president of Bristol-Myers Squibb, highlighted during the World Innovators Meet 2019 that China has emerged as the world’s second-largest pharmaceutical market, trailing only behind the United States. In 2018, the market in China amounted to $127.9 billion, marking a 2.4% increase from the previous year. The sector is expected to sustain this growth trajectory, with an anticipated average annual growth rate of 5% over the next five years.
Several factors have contributed to the remarkable expansion of China’s pharmaceutical market. These include advancements in treatment concepts, enhancements in medical practices, expedited access to new drugs, improvements in healthcare service quality, and adjustments in medical insurance coverage. Fu Xudong also noted that China has made significant strides in new drug development, particularly in areas such as tumors, diabetes, and antibiotics. The Chinese government has implemented various policies aimed at bridging the innovation gap in pharmaceuticals with other leading nations, which encompass the establishment of multinational clinical centers, global sharing of clinical data, acceleration of special medicine approvals, and bolstering clinical data protection.
The acceleration of innovative drug access in China has led to a substantial increase in drug approval speed, with a notable 62% surge. Particularly in the realm of biologicals, the approval of new biologicals witnessed a remarkable 450% spike in 2018 compared to the previous year. The timeline from material submission to final approval has been streamlined to a mere six months. The favorable conditions have also attracted significant investments in the pharmaceutical sector, with China’s medical startups securing a total investment of $2.7 billion in 2018, representing 7.14% of global investment. This figure escalated to $4.5 billion in 2019, comprising 11.61% of global investment.
The shift in China’s pharmaceutical landscape from a generic drug-centric model to a more innovative drug-oriented approach presents new opportunities for market players. The report from Equal Ocean underscores the ongoing transformation in China’s traditional drug research and development paradigm and highlights the burgeoning prospects in new drug development. The pharmaceutical industry is projected to remain a key driver of investment in China’s primary market, underpinned by evolving supply-demand dynamics. The demand for pharmaceutical products in China has surged significantly, with the terminal market volume reaching 1.7 trillion yuan ($242.9 billion) in 2018, reflecting a 6.3% increase compared to 2017.
Looking ahead, Fu Xudong emphasized that the interplay of demand, policy, and capital will serve as pivotal pillars steering China’s pharmaceutical sector’s development. The recent announcement by the National Healthcare Security Administration regarding the inclusion of 70 new drugs in China’s national medical insurance catalog, accompanied by a substantial 60.7% reduction in prices on average, marks a significant milestone. The negotiation process witnessed Chinese and foreign companies competing for innovative drugs across various therapeutic areas, such as anti-HIV and anti-hepatitis C, signaling a shift from the previous dominance of imported new drugs.
As the local innovative drug sector in China continues to ascend, the once unchallenged monopoly of foreign-imported new drugs is being disrupted. Vivian Chen, the vice president of Corporate Affairs at Ascletis Pharma Inc, emphasized the imperative for Chinese innovative drug companies to focus on product development, capital acquisition, talent retention, and policy alignment to drive the transformation towards an innovative drug-centric pharmaceutical market. She highlighted the importance of aligning clinical research of new drugs not only with market demands but also with the evolving policy landscape for market access, indicating that the implementation of a value-based strategic purchase in the national medical insurance program represents the future trajectory of the pharmaceutical industry in China.
- China’s pharmaceutical market poised for significant global market share growth
- Government policies and innovation driving rapid advancements in drug development
- Shift towards innovative drug development presents new opportunities for market players
- Focus on aligning clinical research with market demands and policy direction for market access to drive future growth.
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