Espicom's in-depth pharmaceutical market reports are ideal for executives wanting to understand the key drivers in pharmaceutical markets and have access to a wealth of statistical data. Each report opens with an outlook section that provides analysis of the market, 5-year market forecasts, national data projections, market outlook and key developments such as regulation, pricing/reimbursement, intellectual property, health facilities and government policy. The report also provides extensive background information, population trends, health status, health expenditure, organisation & administration, hospital services, medical personnel, healthcare development, market access information, trade data for raw materials and finished products and essential industry contacts. Included with the report are 3 free quarterly updated outlook reports, enabling you to keep up to date with market developments for a year. China, in terms of both its healthcare system and pharmaceutical market, is a nation of contradiction. As the world's most populous country, and one in possession of the fastest growing major economy in the world, the nation offers a vast array of opportunities for overseas investors, complemented by a massive potential workforce and consumer base. The SARS (severe acute respiratory syndrome) crisis of 2003 forced the government to examine the Chinese health infrastructure in great detail and healthcare has become a priority of the present government. Other priorities addressed by the government include the standard of rural healthcare which for many years has differed markedly in its quality to that in urban areas. In particular, the more basic practices of ‘barefoot doctors' are being phased out, and medical personnel in these impoverished regions are now required to pass a more advanced series of qualifications in order to be recognised by the government. Increased investment from overseas in the form of a range of projects continues, and the HIV/AIDS epidemic in China has assumed greater significance, with the establishment of various programmes aimed at attempting to combat the disease.

China remains a very poor GDP country and pharmaceutical expenditure per capita is similar to that in Pakistan or India. Increasingly China is becoming a “2 track” country. While there are some very high quality hospitals and clinics in the big cities, in rural areas facilities are badly-equipped, drugs are in short supply and trained staff are lacking.

But that's just part of the story. The role of traditional Chinese medicine in limiting the growth of western medicine, continuing issues about intellectual property protection, the dominance of “copycat” drugs, a growing AIDS problem, antibiotic resistance, the expansion of Chinese R&D and downward pressure in drug pricing are all part of the mix. POPULATION
China is a large and fast growing market, but it is far from being a rich one. Of the population of 1.31 billion, around 870 million live in poor rural areas with little healthcare infrastructure, and have no money to pay for treatments in expensive county level hospitals. The vast majority of the Chinese population, therefore, has severely limited access to healthcare, especially that provided by expensive imported drugs. The government has plans to recreate some form of the defunct rural health insurance scheme, but it is difficult to see how this will generate the cash to provide anything other than the most basic level of care.

OTC DRUGS
The fastest growing Asian OTC market is China's, growing at a considerable rate each year, and industry analysts anticipate this to continue to flourish over the coming years. OTC drugs only make up only around 10% of the pharmaceutical market in China, so more and more foreign drug companies are entering and/or expanding their presence in the country with OTC drugs. AstraZeneca released its first OTC drug, their anti-acid treatment Losec (omperazole) in China in April 2005. The drug is the first proton-pump inhibitor OTC drug in the country.

GENERIC DRUGS
The Chinese market is dominated by generic drugs. The local manufacturing sector specialises in the production of off-patent generics, such as antibiotics, or copied drugs. It is estimated that around 97% of drugs produced by domestic firms are generics, although many will be counterfeit.

R&D
China's pharmaceutical industry tends to concentrate more on the copying of existing drugs than on developing new ones, with few domestic manufacturers large enough to run effective R&D programmes. However, the increased presence of multinational firms in China, the requirements of the WTO, and current excess capacity all mean that increasing pressure is on the domestic industry to do more than just duplicate existing products. As a result, pharmaceutical R&D is increasingly being encouraged by the Chinese government, at both central and provincial levels. Around one third of China's provinces have highlighted the pharmaceutical industry as a target for development, and universities and manufacturers often collaborate closely on research projects. All drug institutions must be registered with the SFDA.

INTELLECTUAL PROPERTY
The issue of intellectual property rights remains a major problem for overseas companies wishing to supply pharmaceuticals to China. While there is an initially impressive array of legislation, enforcement of regulations is often difficult. The system initially appears in line with international norms, but in practice this is not the case: the infringement of patents is a new concept in China, and those accused of doing so will defend their case vigorously. The Chinese legal system is also poorly equipped to deal with complicated technical issues; judgements are often made on the basis of ‘seniority' or with political considerations to the fore. When penalties are issued, they are reportedly often to be low, and are difficult to enforce. In short, China has most of the necessary legal machinery, but time and effort is required in order to make it work effectively.