China’s pharmaceuticals market growth will accelerate to 20 percent to 25 percent this year, spurred by rising government spending and increased investment from multinational drugmakers. That's according to Katherine Lu, director of China equities at Oppenheimer & Co. The market grew between 16 percent and 18 percent last year, she said.
“Investment is long overdue,” Lu, who covers health-care companies for the New York brokerage, said in a phone interview.
China is expected to become the third-largest health-care market by next year according to the IMF, that’s ahead of projections that this would happen by 2013. The long-term growth outlook for the health-care market is very substantial.
The Chinese government spends $125 billion to start a national health insurance system. China’s pharmaceuticals market, including nutritional products and consumer drugs, will more than double to $110 billion by 2015 from $44 billion in 2008, Credit Suisse AG estimated in a November 2009 report.
The Chinese government is committed to health-care reform,” Lu said. “China’s savings rate is very high because people need to save for health. One way to stimulate spending and free up savings is by spending on health-care benefits.
The prices of pharmaceutical stocks don't reflect the huge opportunities that lie ahead. Emerging stocks like Renhuang Pharmaceuticals (RHGP.OB), Lotus Pharmaceuticals (LTUS.OB), Tianyin Pharmaceuticals (TPI), Biostar Pharmaceuticals (BSPM), etc. have much more room to grow.
Disclosure: Long RHGP, LTUS