Chinas-pharmaceutical-industry---Poised-for-the-gi

China’spharmaceuticalindustry–Poisedforthegiantleapkpmg.com/cn©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.China’spharmaceuticalindustry–poisedforthegiantleap©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.00ContentsChapter1--TheChinamarket:Big,growingandcomplex1.1Agrowingandstratifiedmarket1.2Healthcarereformsdictateindustrycourse1.3Megatrendsdrivingdrugdemand1.4PlayersracetomeettargetChapter2--Bigplayers–Changingstrategyinthenewlandscape2.1Foreignmultinationalsdeepentheirfootprint2.2Domesticdrug-makersfocusonbulkandbrand2.3Biotechfirmsnurturethefuture2.4TCMtakesmodernisationpathChapter3--TrendsandopportunitiesinChina’suniquemarket3.1Outsourcingopensdrugdiscoveryoptions3.2Qualityandcompliancetobuild‘BrandChina’3.3Mergersandacquisitions,awinningformula3.4Innovationgainsindustryattention3.5FundingoptionsandfiscalincentivesConclusion--Incubatingahealthyfuture©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.1|China’spharmaceuticalindustry-poisedforthegiantleap©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.01TheChinamarket:Big,growingandcomplex©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.3|China’spharmaceuticalindustry-poisedforthegiantleap©2011KPMGAdvisory(China)Limited,awhollyforeignownedenterpriseinChinaandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternationalCooperative(“KPMGInternational”),aSwissentity.Allrightsreserved.Healthspending,whichisnowonly4.7percentofGDPandmuchlowerthancountriesliketheUS,GermanyandJapan,issteadilygoingup.ARMB850billionhealthcarepackagefor2009to2011willtakespendingupto5.5percentofGDP.2Withstakesthishigh,globalpharmaceuticalcompaniesarestronglyfocusedonChinaforfuturegrowth.However,China’shealthenvironmentismarkedbytwodistinctivecharacteristics:severedisparitiesinruralandurbanhealthcaresystemsandgrowingdemandforsuperiordrugquality.Governmentregulationsmustmanagetheseaspects,generatingchallengesandprospects.The2010KPMGreport“TheChangingFaceofHealthcareinChina”highlightstheradicaladvancesinpublicpolicybroughtaboutbythe2009HealthcareReformPlanandtheopportunitiesgeneratedbythesereforms.SuccessinChinathushasmuchtodowithrespondingtotheambitioustargetsandswiftpacesetbypolicy-makers,managingthecomplexitiesofamulti-tieredmarketandbuildingaportfoliothatincludesbothspecialisedandgeneric,low-endproducts.Astrategytoflourishherehingesonidentifyingriskfactorscorrectlyandontime.1.1AgrowingandstratifiedmarketChina’sstatusasoneoftheworld’slargestmarketsrestsmainlyonthesizeofitspopulation,ratherthanitsmaturity.ThepercentageofhealthcareexpenditureinGDPmaybebelowfivepercent,butChina’sshareofspendingondrugsoutofitstotalhealthcareexpenditureisashighas50percent,comparedwithonly13percentintheUnitedStates(US)in20093.However,inmonetaryterms,Chinesepercapitaspendingonmedicineswasamongthelowestintheworld,atUSD35.1in2009.4IndexedgrowthofChinahealthcarecosts0.40.350.30.250.20.150.10.050199019911992199319941995199619971998199920002001200220032004200520062007200820092010OutpatientfeesperHospitalizationcostperUnbanpercapitadisposableRuralpercapitaincomepersonpersonincomeSource:MinistryofhealthofthePeople’sRepublicofChina,20101ChinaseenasNo.2drugsmarketby2015,8Nov2010,Reuters2IMSmarketprognosis2010-2014Asia/Australia/China3IstheChinesemarketfinallyripeforMNCpharmacompanies22May2009,PharmaNews4Pharma&BiotechIndustryOutlook’9November2010,ZacksInvestmentResearchChina’spharmaceuticalindustry-poisedforthegiantleap|4Globalpharmaceuticalmarketrank2003Rank2008Rank2013RankUnitedStatesUnitedStatesUnitedStatesJapanJapanJapanGermanyFranceChinaFranceGermanyGermanyItalyChinaFranceUnitedKingdomItalyItalySpainSpainSpainCanadaUnitedKingdomBrazilBrazilCanadaCanadaChinaBrazilUnitedKingdomMexicoRussiaRussiaAustraliaMexicoVenezuelaIndiaIndiaIndiaNetherlandsAustraliaSouthKoreaSouthKoreaTurkeyMexicoBelgiumSouthKoreaAustraliaPolandGreeceGreecePortugalNetherlandsTurkeyGreeceBelgiumPolandSwitzerlandPolandBelgiumSource:IMSHealth,MarketPrognosis,Sep2009;IncludesPrelimin