CRI Analysis On Channels And Trends Of China Drug Market, 2013

Aug. 14, 2013 3:10 AM ET
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Providing industry information, market research, indepth analysis and data from China research and Intelligence. China Research and Intelligence publishes market research reports, industry analytical reports, company reports and industry databases. CRI also provides outsourcing and custom services for research agencies and report readers.

CRIREPORT - According to CRI's researches and investigations,, the scale of China drug market reached CNY 600 billion in 2012, with the average growth rate being above 20% in the past five years. Compared with mature drug markets with annual growth rates being 0%-3%, China drug market is still developing at high speed. Moreover, it is the only huge market that develops rapidly in the world.

Related reports: Research Report on China's OTC Drug Market, 2013-2017

Merger and Joint Venture
The localization of multinational pharmaceutical companies are upgrading rapidly in China. It starts from setting up agencies, branches, China headquarters and Asia Pacific headquarters and then building R&D centers and to the current expansion to few 3rd and 4th tier provincial cities. In the past two years, multinational pharmaceutical companies developed in China from cooperating with local pharmaceutical companies in businesses to integrating with local pharmaceutical companies in capital.

In 2014, the China R&D center (USD 1 billion investment) established by Novartis AG will be put into operation in Shanghai Zhangjiang. Meanwhile, Beijing R&D center (USD 1.5 billion investment) established by the U.S. MSD Co., Ltd. will complete the first-phase construction. Not long before that, Britain GSK just announced to upgrade the China R&D center into a global spiritual science research headquarters.

Snatch the Market First
At present, the average costs of developing a new drug are 15:15. In other words, it needs to invest USD 1.5 billion in 15 years. On the conditions of USD 1.5 billion investment and twelve-year patent, it will directly lose USD 125 million if entering the market one-year late.

Because new drugs can enjoy patent prices and policy protection within their patent terms, they have obvious advantages in market. In recent years, multinational pharmaceutical companies are extremely active in establishing D&R centers in China. As to the competitions in varieties, the one that enters the market two month earlier will almost dominate the market.

Competition for Hospitals
Since multinational pharmaceutical companies entered China, academic promotion has always been the most representative aspect in marketing. Because the involved products are almost all within patent terms, the hospital prescription drug sales model of explaining the drug characteristics and advantages to doctors through connecting clinic and pharmacy knowledge is widely recognized and accepted by Chinese doctors.

The essence of this kind of sales model is to make doctors recognize your products through academic communication, exchange and guidance and then to realize sales finally. It is also the sales model that differs from that of domestic enterprises.

In 2012, the growth rate of China hospital drug market was 20.9% with the total sales value being CNY 442 billion (purchase value of hospital pharmacies), which benefited from the healthcare reform and new drugs with high quality. Among that, the sales value of Pfizer ranked the first.

Depreciation Trend
The highest new retail price adjusted by NDRC began to be implemented on February 1, 2013. The average decline rate of seven hundred drugs was 15%, among which the decline rate of Novartis AG "Exelon" (used in curing Alzheimer's disease) was the largest (39%).

Related reports: Research Report on China's OTC Drug Market, 2013-2017

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