The Rising Influence of Rising Affluence

[DewDiligence]

China’s consumers want access to new (patented) drugs:

http://www.telegraph.co.uk/business/2017/03/04/wealth-less-health-changes-fuelling-chinas-drug-industry-boom

Last year, China overtook Japan to become the world’s second-biggest pharmaceuticals market as measured by how much patients and the state spend on drugs. With more than one billion inhabitants and a rapidly ageing population, it is an extremely attractive destination for drugmakers.

This goes some way to explain why the market has expanded at a compound annual growth rate of 17% over the past six years and is expected to grow from $108bn in 2015 to $167bn by 2020.

More important, though, is that as the economy has leapt forward, China’s middle class has expanded and is growing richer. There are now hundreds of millions of well-educated Chinese who are able to pay for healthcare and are demanding better government provision.

The Chinese pharmaceuticals market has scope to grow even more because its healthcare expenditure per capita and as a proportion of GDP is still low compared with developed countries. [A major understatement! China’s healthcare spending per capita is <5% of the US rate and about 10% of the rate in the EU’s major countries, as can be seen from the chart embedded in this article.]

Only a fifth of total drugs expenditure is on patented, branded medications. This trend has not gone unnoticed by the world’s biggest pharmaceutical companies, which are beefing up their presence.