The challenges of China for Western drug makers
- After years of growth in the mid-teens, many pharma companies are now facing single-digit growth in China.
- China is attempting to rein in healthcare costs as more of its citizens gain access to better healthcare coverage.
- The only company that achieved double-digit growth in China in the second quarter was AstraZeneca.
While China's market has grown in terms of pharmaceutical uptake, the government is attempting to put a kabosh on unbridled growth—something that has hit some companies very hard, or at the very least affected their earnings trajectories.
For example, Novo Nordisk reported a 6% decline in second quarter sales, compared with last year. Novo attributes this decline to domestic competition in China from cheap generic insulin manufacturers.
But experts are quick to point out that this is a short-term hiccup in a much longer-term growth opportunity. IMS predicts that the drug spending in China could reach $185 billion by 2018. With that in mind, most companies will be staying the course.