Industry Trend Analysis - Leading Domestic Drugmakers To Benefit From Pro-Government Initiatives - MAR 2018

BMI View: Proposals to boost local Chinese drugmakers' manufacturing capabilities of innovative medicines will be supported by a more proactive stance taken by the government. While we expect the government's efforts to improve domestic production facilities will go some way towards improving the country ' s manufacturing base, the benefits are unlikely to be realised over the short-term.

Local pharmaceutical firms in China will benefit from greater government support. A number of government-led initiatives were rolled out in the country over the course of 2017, many of which will have important ramifications for the local pharmaceutical industry such as far-reaching reforms to the country's regulatory system that aims to speed up approvals of medical technologies in the country. In addition, the development of a 'Healthy China' is central to the Chinese government's agenda for health and development. The country's president, Xi Jinping has put healthcare at the centre of China's policy-making endeavour.

In line with the 'Made in China 2025' plan's focus on improving manufacturing innovation and strengthening the industrial base, Chinese domestic drugmakers are developing drugs to cater to the needs of the country's vast ageing population. The domestic market also offers huge potential for sales as the burden of chronic disease in China grows. The country faces several chronic health risks that require constant medication. At least 110mn Chinese are diabetic, and in 2015 China accounted for 20% of worldwide new cancer cases (4.3mn cases). Commenting on this, in a press release in October 2017, Mizuho Bank's industry research department stated that, 'Chinese pharmaceutical companies are doing well thanks to their own expanding market. On top of rising income levels, they are benefiting from the Chinese government's efforts to reform the industry, such as simplifying the process of approving new drugs.'

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