The popularity of foreign-made pharmaceuticals in China continues to rise, with imports and joint-venture products accounting for one-third of the Chinese pharmaceutical markets. In some areas of China, especially Guangdong province (which neighbors Hong Kong), foreign-made pharmaceuticals can account for as much as two-thirds of the local market. Among the 50 best selling pharmaceutical products in China, 80% are foreign made.
Why are foreign-made pharmaceuticals gaining so much in China? First, with increased affluence, more and more urban Chinese can afford the more expensive products offered by foreign producers. Second, foreign products are perceived as higher quality than locally made products. Third, hospital sales are important. As over two-thirds of hospital profits in China stem from pharmaceutical sales, hospitals often purchase foreign pharmaceuticals, which can be marked up with higher profit margins than locally made drugs. Finally, foreign firms are more advanced in their marketing and advertising strategies, making their products more attractive to consumers.
Other market factors have also influenced the Chinese pharmaceutical market. For example, over 2,000 registration certificates have been issued for pharmaceutical imports through 2000. In addition, twenty of the world’s 25 largest pharmaceutical firms have established Chinese operations, and many smaller companies have also entered the market. In total, there are almost 1,800 foreign-funded pharmaceutical firms in China today, including joint ventures, wholly owned operations, and holding companies. Finally, illegal channels account for a large portion of pharmaceutical imports, despite government efforts to crack down.