Going China

As both sales market and production location, China is currently a controversial topic of debate. With GDP growing steadily at between eight and nine percent a year, China promises plenty of opportunities for Western companies. What it also promises, however, is more and more (lower-priced) competition from the Chinese themselves. Despite starting almost from scratch, the Chinese have already outstripped their Western competitors to become the world’s leading suppliers for some products. Even chemicals made in China are increasingly capturing the market. But what about pharmaceuticals? Given that not even pharmaceutical companies will be able to resist China’s pull indefinitely, the real question to be answered in the long run is this: Does the opening up of China constitute a threat or an opportunity?

A lot of factors speak for the latter. The Chinese pharmaceuticals market is the ninth largest in the world and according to some predictions will advance to fifth place by the year 2010 (see p. 8). It therefore possesses enormous potential, especially as an ageing population, the spread of chronic diseases, a higher standard of living and migration into the cities are improving Western medicine’s image as an alternative to traditional Chinese remedies. Secondly, the FDA’s insistence that from July 2004 onwards Chinese pharmaceuticals manufacturers must produce in line with GMP standards has also created new opportunities for Western companies. The capital that will have to be invested in order to meet this requirement could well force some Chinese firms to seek the support of Western partners, which in turn would make it easier for foreign investors to gain a foothold on the Chinese market. Some 70 percent of all pharmaceuticals on the Chinese market are still made in China, with imports and joint ventures with companies in the West accounting for the remaining 30 percent.

And the threat? This could well reside in China’s huge research potential. That China has long since made the leap from production base to knowledge base—including on the pharmaceuticals market—is certainly no secret. There are thought to be some 200,000 scientists working in China’s biotech R&D alone. Unlike in Europe and the USA, the Chinese are great fans of technical progress, especially genetic engineering, and hence have not placed any major obstacles in the way of genetic and biotech research. With Western medicine now enjoying greater recognition on the part of traditional Chinese medicine, it will not be long before China becomes a pioneer of “traditional Western medicine” as well. The first breakthroughs have already been made, among them the anticancer drug, Gendicine, which was developed to combat tumours of the head and neck and has been on the market since early 2004.
-Dr. Jörg R. Kempf-