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China Healthcare Market potentials & opportunities

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A Secondary research on China pharmaceutical market potentials and opportunities

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China Healthcare Market potentials & opportunities

  1. 1. China Healthcare Market – Potentials and Opportunities Ritupon Gogoi, Shanghai, Jan 2015
  2. 2. •$9.240 trillionGDP (current US$) •1.370 billionPopulation, total •Upper middle incomeIncome level China •54% of the population is urban (756,300,115 people in 2014), China’s population is becoming increasingly urbanized with large numbers moving to towns and cities. •Over 71% of the Chinese population is of working age, aged between 15 and 64. •By 2050, a third of China’s citizens will be over 60, over twice the current proportion. •By 2022, McKinsey predicts that 54% of urban households in China will become upper- middle-class consumers earning $16,000-$34,000 annually Sources: National Bureau of Statistics of China, world bank
  3. 3. The World Bank projects China will have 7.1 percent growth in GDP in 2015, followed by 6.9 percent in 2016 . Healthcare expenditures as a percentage of GDP have been increasing in China; 5% in 2010, 5.1% in 2011, 5.4% in 2012. The nation’s healthcare spending is projected to grow from $357 billion in 2011 to $1 trillion in 2020. China’s aging population will prompt growth in markets for cardiovascular diseases, dementia, and other age-linked conditions. Increasing affluence is causing a sharp rise in lifestyle diseases such as diabetes and obesity. China - Health Care
  4. 4. China’s total health expenditure (THE) as a share of GDP increased from 4.6 percent to 5.1 percent, which is moderate compared to an increase from 5.7 percent to 6.1 percent among upper middle income countries. 2004 2005 2012 2013 GNI per capita, PPP (current international $) 4,330.0 4,920.0 10,920.0 11,850.0 Population, total (in millions) 1,296.1 1,303.7 1,350.7 1,357.4 GDP (current US$) (in millions) 1,931,644.3 2,256,902.6 8,229,490.0 9,240,270.5 GDP growth (annual %) 10.1 11.3 7.7 7.7 Life expectancy at birth, total (years) 73.8 74.1 75.2 Source – The world bank China - Health Care
  5. 5. 0.00 2000.00 4000.00 6000.00 8000.00 10000.00 12000.00 Government Health Expenditure Social Security Fund Health Expenditure Out-of-pocket Health Expenditure Health Expenditure in Urban Health Expenditure Rural Health Expenditure as percentage of GDP (%) Units in 100 million RMB ¥ 01 02 03 04 05 06 07 08 09 10 11 12 Year Source -China Health Statistics Yearbook 2012 China - Health Care Expenditure Trend 2001 - 2012
  6. 6. • Under the 12th Five-Year Plan (2011–2015) the recent health reform initiatives continue to focus on optimizing resource distribution, encouraging hospital competition, strengthening regulation and accountability, and enhancing human resources and information technology. • In 2013, the government expanded the Essential Drug List (EDL) formulary by adding 213 more pharmaceuticals to the original 2009 formulary list for a total of 520. • In May 2014, the NDRC also established the National Low-Priced Drugs List (NLPDL), which has 1,154 drugs. • The three tiered system of health insurance consisting of the Basic Medical Insurance (BMI), Urban Residents Basic Medical Insurance system (URBMI), and New Rural Cooperative Medical System (NRCMS) covered 90% of the Chinese population by 2011 and aim to provide with universal coverage by 2020. China - Health Care Reforms
  7. 7. NA, 345, 44% EU, 184, 24% EMAP, 178, 23% Japan, 72, 9% Rest of EMAP, 70, 40% China, 63, 35% Brazil, 22, 12% Russia, 12, 7% India, 10, 6% Global pharmaceutical market accounts to $780 Bn for MAT Sep 2014. Of which China holds 8% China – Pharmaceutical Market
  8. 8. 33,721 39,830 52,034 60,227 67,907 - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Mat Sep 2010 Mat Sep 2011 Mat Sep 2012 Mat Sep 2013 Mat Sep 2014 Sales($Mn) CAGR 19% China Pharma Market, US$ Mn 2010 - 2014 China Pharmaceutical market is growing with a CAGR of 19% Source: MAT Sep 2014 China – Pharmaceutical Market
  9. 9. Rank Company Sales $ Mn (MAT Sep 2014) CAGR (2010- 2014) Annual Growth 2013-2014 1 Ke Lun Group 1023 24% 15% 2 Shandong Qilu Fty 976 27% 14% 3 Js.Yangzijiang Fty 943 19% 16% 4 Shanghai Fosun Ph 831 26% 13% 5 Jiangsu Hengrui 804 23% 20% 6 C.T-Tianqing Gp. 661 40% 18% 7 Sihuan Group 634 28% 28% 8 Shandong Ruiyang 534 17% 15% 9 Bj.Shuanglu Pharm 481 28% 14% 10 Jiangsu Hansoh 466 22% 14% Total of Top 10 7353 25% 16% Total China Market 62,818 19% 13% Rank Company Sales £ Mn (MAT Sep 2014) CAGR (2010- 2014) Annual Growth 2013-2014 1 Pfizer 1,501 23% 16% 2 Astrazeneca 1,236 20% 25% 3 Sanofi 945 15% 12% 4 Bayer 909 15% 9% 5 Roche 871 20% 11% 6 Novartis 804 23% 22% 7 Merck & Co 678 20% 15% 8 Novo Nordisk 595 17% 10% 9 Fresenius 534 14% 9% 10 GSK 450 9% -21% Total of Top 10 8,523 18% 12% Total China Market 62,818 19% 13% Top 10 MNCs and Domestic Pharmaceutical Companies in China Source: IMS Sep 2014
  10. 10. China -Therapy Area Market by Value CVM 19% ID 17% CNS 10% Onco 6%Respi 3% Derma 0.5% Uro 0.3% Optha 1% TCMs 18.9% Hospital Solutions 8% IMDs$ 4% Antacids 4% Dietetics 3% Others* 8% Sales by Therapy Area (MAT Sep 2014) Therapy Area Sales (£ Mn) MAT Sep 2014 Market Share % Annual Growth 2013- 14 CVM 11,931 19.0% 13% Infectious Disease 10,375 16.5% 10% CNS 6,334 10.1% 14% Oncology 3,486 5.5% 14% Respiratory 1,867 3.0% 16% Dermatology 307 0.5% 12% Urology 174 0.3% 7% Ophthalmology 375 0.6% 19% Other Therapy Areas# 27,966 44.5% 13% China 62,818 13% TCMs 11,865 18.9% 13% Biopharmaceuticals 1,867 3.0% 14% Source: IMS Sep 2014 Key therapy areas – CVM, ID, CNS contribute more than 45% of total China market
  11. 11. Therapy Area SU (Mn) MAT Sep 2014 Market Share % Annual Growth 2013- 14 CVM 31,960 16.4% 11% Infectious Disease 10,894 5.6% 6% CNS 10,358 5.3% 8% Oncology 635 0.3% 11% Respiratory 8,388 4.3% 9% Dermatology 6,928 3.6% 10% Urology 541 0.3% 6% Ophthalmology 12,277 6.3% 6% Other Therapy Areas# 112,834 57.9% 8% China 194,815 9% TCMs 81,056 41.6% 9% Biopharmaceuticals 213 0.1% 11% CVM 16% ID 6% CNS 5% Onco 0.3% Respi 4% Derma 4% Uro 0.3%Optha 6% TCMs 41.6% Hospital Solutions 3% IMDs$ 1% Antacids 2% Dietetics 6% Others* 5% Volume by Therapy Area (MAT Sep 2014) 11 Source: IMS MAT Sep 2014 China - Therapy Area Market by volume • TCMs are the biggest market holders as a class in China in 2013-14, in terms of volume (~42%) • Except CVM, Oncology and Dermatology other Therapy areas are growing slower than overall China volume market
  12. 12. China – New Drug Market Approval Process Source - CMS Lifesciences Guide
  13. 13. China – Retail Drug pricing approach Drug category Rate of sales expenses Profit margin Class I new drug: New drug never marketed in domestic or overseas market 30% 45% Class II new drug: New drug never marketed in domestic market but marketed overseas which includes a new administration path (oral, injection, etc.) never marketed in either domestic andoverseas markets 20% 25% Class III new drug: New combination of chemical Substances 18% 18% Class IV new drug: Domestically marketed drug with a new administration path or a new dosage form 15% 15% Class V new drug: Drug marketed in domestic market with new applications 12% 12% Generics 10% 10% The retail price cap is calculated based on the sum of the cost of ex-factory or ex-port drugs, tax, reasonable sales expenses, and reasonable profit margin. The NDRC sets different standards for maximum rates of sales expenses and profit margins for different drugs as per the following table:
  14. 14. • Rapidly changing regulatory , competitive landscape and shifting stakeholder landscape. • Global off-patent drugs will have a significant drop in usage as the government will only reimburse them at a price equivalent to a local generic. • Although multinational pharmaceutical companies are largely not affected by the essential drug list (EDL) until now, in future if it is to be expanded to a list of 800 and more effectively implemented, then these companies may need to reconsider their approach to the Chinese market. • The market will remain very difficult for innovative Pharmaceutical MNCs, which will have to wait years for a possible NRDL inclusion. • Because of the rapid development of the legislative environment and the regulatory framework, there is a constant flow of amendments to policies. Which take some time for the government, the legislature, and enforcement agencies, as well as industry, to understand fully what those new regulations meant. China – Pharmaceutical & Health Care Market Challenges
  • alon108

    Oct. 2, 2018
  • adityakelkar10

    May. 22, 2017
  • GeoffroydAntras

    Mar. 3, 2015

A Secondary research on China pharmaceutical market potentials and opportunities

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