Reuters: Western pharmaceutical companies are increasingly struggling in the Chinese market

Source: Reuters 2015-8-12 China's market environment has become more difficult for Western pharmaceutical companies due to the government's increased control over rising medical costs and pressure on prices China has surpassed Japan as the world's second largest prescription drug market, second only to the United States The market has attracted a lot of investment from global pharmaceutical companies in recent years, but the growth rate has slowed down significantly According to a recent analysis by Deutsche Bank, none of the big pharma companies, except AstraZeneca, reported second quarter results, had double-digit revenue growth in the Chinese market Denmark's Novo Nordisk, the world's largest insulin maker, said Thursday that revenue in the Chinese market fell 6% to become another disappointing company Novo Nordisk blamed declining growth in the diabetes market, increased competition from local insulin producers due to low prices, and the build-up of inventories last quarter With the government expanding the coverage of health care benefits, some pharmaceutical executives are still optimistic about the long-term growth prospects of the Chinese market According to IMS Health, an independent consultancy, medical spending is expected to reach $185 billion by 2018 But the short-term outlook seems less optimistic, with healthcare reform affecting prescriptions and increasing price pressures on some drugs Joe Jimenez, chief executive of Novartis pharmaceuticals, the world's most profitable pharmaceutical company, said the expansion of medical coverage has pushed up costs and the Chinese government is now trying to control the rapid growth of recent spending "I think someone is trying to slow it down a bit," he said after quarterly results last month "In addition, on the economic side, it is clear that there is a shift towards sustainable economic growth, which is leading to a decline in overall growth." Chito zulueta, head of emerging markets at Lilly, said the decline in China's market growth was "quite serious", falling to a single digit percentage from about 15% in the past few years Pfizer also said it faced pricing pressure in China, but said China was still a big opportunity for future growth This has led to rough roads for Western pharmaceutical companies, many of which have been hit by a series of corruption investigations GlaxoSmithKline was fined nearly $500 million last year for such investigations Andrew witty, Global CEO of GlaxoSmithKline, said that after the corruption scandal, the company's business in China has recovered, but the market environment is not easy "There is no doubt that we have seen a significant slowdown in the overall Chinese market over the past year or so," he said.