Replies to post #178393 on Biotech Values

[DewDiligence]

Re: Pharmaceutical business in China

You didn't mention that net profits for the drug companies have fallen to 2.1% from 20% a couple of years ago.

The low profit margin in 2013 is a temporary trough, IMO, caused by a combination of overzealous price-cutting (which China has rescinded—see #msg-101717405) and the aftereffects of the bribery scandal, which caused GSK’s losses in China to weigh heavily on the industry-wide average.

…which explains Actavis recent decision to leave the Chinese market.

China’a drug market is dominated by branded generics. To prosper in this kind of market, one needs to have individual brands and an overall company brand with some cachet (e.g. Lipitor, Plavix, Viagra), which is something Acatavis lacks.