Hong Kong Drug Market Update 2017

hong kong drug marketA former British colony, Hong Kong is a Special Administrative Region (SAR) of the People’s Republic of China on the coast of the South China Sea. According to the IMF, Hong Kong has the second-highest GDP (PPP) per capita in the Greater China region at $58,300, compared to $95,100 in Macau, $48,000 in Taiwan and $15,400 in mainland China.

Market Size and Growth

As of 2017, Hong Kong has a population of 7.3 million and an annual GDP (PPP) of $450 billion. Hong Kong’s GDP is growing annually by approximately 2.5%. Hong Kong’s pharmaceutical market is worth $1.8 billion, compared to $1.3 billion in Singapore, and is projected to grow at an annual rate of 8.5% over the next few years. Since 2015, Hong Kong has had the longest life expectancy in the world, surpassing Japan.

Healthcare System

Hong Kong has a dual healthcare system that consists of both public and private sectors. The public healthcare system is funded by the government and provides around 90% of total hospital medical services in Hong Kong. The government’s spending on public healthcare has undergone a 7% average annual increase in the last 10 years. The private system is used by the more affluent portion of the population. While less than 6% of Hong Kong’s GDP is spent on healthcare, residents have access to a high-quality and efficient healthcare system.

While Hong Kong’s pharmaceutical market remains small in comparison to other Asia-Pacific countries due to its small population, the city’s ageing population, increased disease burden, and growing disposable income continue to provide excellent opportunities for foreign pharmaceutical companies.

Regulatory Overview

As a Special Administrative Region, Hong Kong maintains a different pharmaceutical regulatory system than China. Hong Kong’s Department of Health (DH) oversees the city’s pharmaceutical market. Pharmaceutical products in Hong Kong are divided between Western or Traditional Chinese Medicines (TCMs); the former is regulated by the “Pharmacy and Poisons Ordinance,” while the latter is controlled under the “Chinese Medicine Ordinance.”

Drug Registration

Drugs manufactured in Hong Kong can be registered by the manufacturer, a licensed wholesale dealer, or an independent third party located in Hong Kong. Imported drugs can be registered by the licensed wholesale dealer or a subsidiary body of the overseas manufacturer. The initial registration application fee for drug products is HK$1,000 ($130 USD). Upon approval, an additional HK $1,370 ($180 USD) is required to obtain a product registration certificate and registration number. The certificate is usually valid for 5 years (DH).

Western drugs in Hong Kong are divided into three categories according to the severity of the targeted disease and the strength of the medicine’s side effects:

  • Category 1 medicines, or “Prescription Drugs,” include medicines for treating serious diseases and those that could pose threats to health if used improperly. Category 1 medicines must only be sold under doctor’s prescriptions in registered pharmacies, or Authorized Sellers of Poisons (ASPs).
  • Category 2 medicines, or “Drugs under Supervised Sales,” are medicines that may pose health risks with improper usage, but less severe than Category 1 medicines. These medicines may only be sold in registered pharmacies (ASPs), but do not require doctor’s prescriptions.
  • Category 3 medicines are drugs used to treat minor illnesses, and may be sold in common pharmacies, known as Listed Sellers of Poisons (LSPs). These include medicines for the common cold and painkillers.

In August 2016, the Department of Health revised its Category 1 and 2 medicine labels from “Poisons” to “Prescription Drugs” and “Drugs under Supervised Sales” in order to reduce consumer fears and increase sales.

In January 2016, the Pharmacy and Poisons Board of Hong Kong (PPBHK) was awarded membership into the Pharmaceutical Inspection Cooperation Scheme (PIC/S). This agreement guarantees that Hong Kong’s Good Manufacturing Practice (GMP) standards are aligned with international standards.

Foreign Companies in Hong Kong

Western drugs accounted for over 85% of Hong Kong’s domestic pharmaceutical market in 2016. Hong Kong’s strategic proximity to emerging markets in mainland China and Southeast Asia has also attracted a large number of multinational pharmaceutical companies to establish offices in the city. Multinational pharmaceutical companies with Hong Kong offices include AbbVie, Roche, GlaxoSmithKline, Merck, Sanofi, AstraZeneca, Qiagen, and Johnson & Johnson.

In August 2016, Amgen (Thousand Oaks, CA) launched a new commercial office in Hong Kong to meet the firm’s growing demand in Hong Kong and Macau. The new office will facilitate cooperation between Amgen and local healthcare providers, advance the firm’s clinical pipeline, and provide a foundation for future expansion in Asia and globally. The new facility is an addition to Amgen’s existing Japan Asia Pacific (JAPAC) headquarters in Hong Kong, which has functioned as a clinical development hub since 2007.

Demographic and Health Trends

Hong Kong’s elderly population will continue to increase given the region’s long life expectancy and declining birth rates. According the 2016 Census, 16% of Hong Kong’s population was over 65, a figure that is expected to rise over 25% of the population by 2030. In 2016, Hong Kong’s life expectancy was the longest in the world, at 81.3 for males and 87.3 for females (DH). As the population continues to age, diseases such as diabetes, hypertension, and dementia would become more prevalent and increase demand of Western pharmaceutical products.

Non-communicable diseases (NCDs) have also become more common in Hong Kong as a result of unhealthy diets and increasingly sedentary lifestyles. Approximately 60% of deaths in Hong Kong can be attributed to cancer, cardiovascular diseases, stroke and lower respiratory diseases (DH). Lung, colon, liver, stomach and breast cancers are the leading causes of cancer-related death. In 2016, Hong Kong had one of the highest obesity rates in East Asia at 20%, compared to 5% in China and 3.5% in Japan (DH).