China is positioned to become the second-largest pharmaceutical market, after the US, by next year, according to healthcare analysts IMS Health; meanwhile, by growing an estimated 15% to 18% annually, the organisation says its market is expected to reach $155 to $165 billion.
Further research by the same organisation indicates that emerging markets such as China are projected to make up 30% of global medicine expenditures by 2016, spending $35-$40 billion on pharmaceuticals alone.
One reason pharmaceutical use is high in China is that doctors are incentivized to prescribe medications here.
[D]octors receive bonuses from departmental profits, which are also generated from pharmaceutical products and diagnoses, among other options.
However, pricing pressure is likely to increase in China. The Economist reports:
Even the expansion of state health insurance, which will soon cover nearly everyone in China, is not the good news it seems for drugs firms. The government will become a near-monopsony buyer, and is determined to use the power this brings, as well as explicit price controls, to rein in the cost of all but the most innovative treatments.
Pharmaceutical firms face great opportunity in China but also many challenges.