China: Pharmaceutical Market to Reach $315 Billion by 2020

According to a July 2013 report by research firm Global Data, China’s pharmaceutical market is set to grow 650 percent between now and 2020, when it will reach a value of $315 billion. This would put China’s market — currently valued at $50 billion — behind only the US drug market in terms of value.

Recent growth has been the result of many factors. First, Chinese consumers are willing and able to pay more for healthcare as their disposable incomes have risen. The annual income of the average Chinese (in PPP) has gone from $2,350 in 2000 to more than $9,200 today. Second, China’s rapidly aging population has meant a higher demand for drugs to treat chronic conditions like cancer and diabetes.

Finally, China’s national government has dramatically boosted public healthcare funding in recent years. In 2009, the Ministry of Health (MOH) allocated $124 billion to increase health insurance coverage for China’s 1.3 billion people. Although national health plans are somewhat limited, by 2011, more than 95 percent of Chinese were covered under them.

According to the report — put out by research firm Global Data — growing consumer demand will offset any future reductions in drug prices. Price reductions are highly likely due to generic competition and pressure from the Chinese government. Faced with more and more patients on its insurance rolls, the Ministry of Health (MOH) wants to bring down the cost of high priced branded pharmaceutical products in China.