The Dragon beckons big pharma

Big pharma continues its fascination with China. The latest big pharma firm to push deeper into the country is the US based Pfizer, with its $200 million acquisition of CStone, a firm focused on cancer therapies. Most big pharma firms such as Amgen, USA and AstraZeneca, UK who have historically focused on mature markets such as the United States, Japan and Europe, are now eyeing China. Let’s explore this shift and what it means for the Chinese pharma industry.

- Ayesha Siddiqui

At a value of around $137 billion at the end of 2018, the pharma market in China has surpassed Japan to become the second largest market, after the US, according to IQVIA. China’s pharmaceutical market will be an increasingly important source of growth for foreign drug companies through 2023, according to a report from credit rating agency Moody’s. Though its growth rate is likely to slow over the next few years, the Chinese pharmaceutical market will still be among the fastest growing markets worldwide, underpinned by domestic regulatory reforms supporting the faster rollout of innovative drugs and continued expansion of healthcare coverage, as per the report.

“The Chinese pharmaceutical market will be a pocket of growth for the entire global industry, with companies exposed to oncology, vaccines and rare diseases standing to benefit in particular,” it said. This explains why large pharma firms have made a number of major structural moves in China. The world’s most populous country offers an enormous opportunity for pharma firms. Drug spending in the country has surpassed $141 billion in 2019, and is on track to grow five to eight per cent year from 2020 to 2024, as per IQVIA.

Recent regulatory reforms have also made it a bit easier for firms to get drugs approved in the country. According to McKinsey, China had approved about 100 new drugs between 2016 and 2018, with many more to come in the next few years.

Chasing dreams

In recent years, firms like Amgen, AstraZeneca and Pfizer have made strategic changes to gain a strong foothold in China. The biggest deal till date, perhaps, was made by Amgen when it bought 20.5 per cent stake in BeiGene, a research-based, oncology-focused biotechnology company for $2.7 billion in cash in October 2019 to expand its oncology presence in China.